It is not an exciting part of what I do – most of us would rather be ‘doing deals’ – buying, letting or selling. But much of what I do revolves around valuation for clients. At the moment it may not be exciting, but it is certainly interesting and challenging! As you might expect providing advice on what something is worth in the current market can be tricky. And there are quite stringent rules about the valuation in the form of something we lovingly called ‘The Red Book‘.

The methods of valuation are varied, but by far the most used is the comparables basis – which is as simple as it sounds – you get ‘evidence’ of other deals which you compare to the subject property. The art is in making adjustments! So you can value your house easily if you know that the one two doors down sold for ‘x’ – but you have a conservatory and a bigger garden, so your must be worth ‘x+’. Easy.

But what happens when there are few transactions – or worse still none? Or that those transactions are from 18 months ago – before the ‘crash’? Then it gets a bit tricky.

The RICS give some guidance about ‘valuing in uncertain times‘ – which is quite helpful on a technical level. But actually the client still needs a number on which he can rely. After all, that is what they are paying for! And we often have a dilemma – the gap between expectation and reality can be quite significant. Bad news is not easy to sell. We also have one eye on our Insurance policy – which protects us if the value we report is ‘negligent’.

Last week I valued some land which might in the future be suitable for residential development. But there is no Planning Consent in place for it. Nor is there really a market for residential land at the moment – the house-builders are slowly getting back on their feet, but they have no appetite for big deals. The residential market (end users) is patchy. But my client needed a valuation figure on the land to see if there was justification to proceed on another deal…

It would be all too easy to slash the figures, but that too can be wrong – and sometimes could be seen to be negligent (although harder to prove).

So we give an opinion of value – and as one of my old University mates told me ‘we can only do a snapshot’. He is right, the market is moving so quickly. And next year could be as tumultuous again with a General Election looming. But you can only give an opinion as you feel on the day.

Years ago, I heard a great statement (and annoyingly I cannot recall who by) which said ‘you are paid for your opinions not your doubts‘. I think this is a great maxim for our profession, especially at the moment.