A real estate valuation report indicates the current market value of a property. The report includes the exact location of the property, coordinate information and a mapped representation. Photographs taken from the interior and exterior of the property, technical status and debt information should not be missing in the report. The report must present the pros and cons of the property in an unbiased manner and is considered valid for three months.
In this regard, the Real Estate Department of the Ministry of Environment and Urbanization announced that online application for real estate valuation by an appraiser designated by the ministry is mandatory as of September 20, 2021. This step was taken to protect foreign investors from possible fraud and to minimize possible disruptions in the sales process.
What are the Criteria for Real Estate Valuation?
Some criteria are needed to determine the real value of real estate. For a valuation in accordance with these criteria, support should be obtained from a CMB-approved appraiser. The expert reveals the correct value of the property using these criteria. The main criteria taken into account in real estate valuation are as follows:
- The region where the real estate is located, its geographical location and features in the neighborhood,
- Interest in real estate and sales values of similar properties,
- Zoning information and status,
- Land share in case of an independent section, otherwise total land area,
- Architecturally usefulness,
- Construction quality and workmanship standards,
- Infrastructure and transportation facilities,
- Physical obsolescence rate,
- Public fair values and tax-derived values,
- Potential revenue capacity,
- Macroeconomic factors,
- Restrictions and legal status of the property,
- Rights and obligations of the real estate.
Legal Factors in Determining Real Estate Value
When determining the value of a property, appraisers first determine whether there are any legal obstacles that may adversely affect the sale of that property. In order to clarify such criteria, experts carry out legal authority inspections and physical inspection of the real estate.
The legal status of the real estate and the structures on it is checked in many official institutions such as the land registry, municipality, relevant administrative units, cadastral units, institutions related to the protection of cultural and natural assets. In addition, information such as the realizability of the constructions, situations that may prevent the sale potential of the real estate, rights, obligations and liens related to the property are examined in detail.
Reading the Valuation Report Correctly
The estimated value of the real estate may be the most salient information in the valuation report, but it is not the only information in the report. The report also covers the environmental aspects of the area in which the property is located, the past sales activity of the property and the unique characteristics of the property. If this information is missing, the appraisal should only be taken as a reference.
Basic Components of a Real Estate Appraisal Report and Their Meaning:
Date of Inspection:
The report indicates when the property was physically inspected by the appraisers.
Reason for Valuation:
This refers to the purpose of the report, which is determined by the client's intention; it may be for loan procurement, information, taxation, legal processes or other government-related transactions.
Title Deed Information:
The most recently updated title deed information of the property is included in the report, thus providing information on the current legal status of the property.
Location of the Property:
The exact address of the property, including a link to Google Maps, is provided in this section.
Property Details:
A section detailing the physical and structural characteristics of the property. For example, the overall size of the property, available amenities, electricity and water status. If a building is being assessed, this section includes information about the structure and dimensions of the building.
Zoning Information:
Detailed information about the zoning status and characteristics of the area where the property is located is provided in this section.
Regional Market Analysis:
This section provides information about the real estate market of the region where the property is located. The future development of the region and its potential investment value are analyzed in this section.
Valuation Method:
The methods used by the appraiser to determine the value of the property are detailed in this section.
Market Value:
The current market value of the property is stated in this section. In addition, past values may also be needed.
Immediate Sale Value:
This value indicates how much the property could fetch if it were to be sold quickly in the market.
Insurance Value:
This is the value at which the property should be insured for insurance purposes.
Additional Information Included in the Valuation Report
Cadastral Information:
Each valuation report includes a cadastral plan provided by the Land Registry Office showing the most recent cadastre of the property being assessed.
Structural Area Detail:
A plan is attached with the most up-to-date information of the area in which the property is located and the neighboring areas. This is a useful tool for potential development expansions.
Comparative Property Information:
This section shows how the property being assessed compares to other properties with similar characteristics. This is used to understand a possible price range, although the value of the property cannot be determined with certainty.
Satellite Image:
A satellite image provided by the Land Registry and Cadastre Office showing details of the property and its surroundings.
Who Can Prepare the Valuation Report:
If you want to get a valuation report, you should contact one of the professional valuation experts authorized by the CMB. Simply put, only CMB-approved experts can prepare such reports. These appraisers and their companies usually belong to the Turkish Appraisers Association, or TDUB. No person or organization can issue a valuation report unless they have successfully passed the exam conducted by the SPL and completed the necessary trainings. Therefore, it is essential to apply to an authorized expert or organization for a valuation report.