CHANGING THE FUTURE OF PROPERTY VALUATIONS BY USING SOUND ACADEMIC METHODOLOGY SUPPORTED BY LEADING EDGE TECHNOLOGIES

DRIVEN BY A DYNAMIC 5-POINT DEPLOYMENT STRATEGY

A unique Automated Valuation System is in the developing process to create accurate valuations and in-depth valuation reports.

Property Valuers usually have a preferred method they like to use because they feel comfortable with what they know best. Some Valuers use one, or a combination, of the well-known methods listed below.

1. Comparable sales approach

2. Cost and invest approach

3. Capitalisation method, rates and diverse costs

4. Residual land valuation method

5. Discounted Cash Flow (DCF)

6. Elements from the International Valuation Standards (IVS)

7. The Property Rates Bil

Each of the above methods has merit, but all of them lack (in various degrees) three fundamental ingredients which are (i) the ability to take full account of the influence of diverse human factors, often concealed, (ii) total objectivity, and (iii) taking into account all factors outside the knowledge and experience of Valuers that influence property values. Conventional valuations are often imperfect because they are a mixture of hard numbers, assumptions and subjective judgements, limited to the knowledge and experience of the Valuer. At the end of the day, any property valuation at present reflects a personal opinion instead of the outcome of sound scientific methodology. Furthermore, conventional methodologies consistently disregard vital, but concealed, influencers of property value outside the scope of the property valuer's experience and knowledge. Therefore, there are on more than one occasion as many property “values” as there are valuators.

This inaccuracy has far-reaching political and financial consequences, which we are now addressing. We will soon present the various stakeholders with a sound scientific statistical model for property valuations – a model that combines all the ingredients of all known methodologies. Additional data is used that is unavailable and beyond the ability of a conventional valuer. We statistically transform subjective elements into quantified objectivity.

A leading South African and a German University have developed this unique statistical model over decades for the Centre for Applied Management & Behavioural Science (CAMS) while serving the members of South African Property Owners Association (SAPOA). An independent company was formed for this purpose and it operated officially from the offices of SAPOA. During this time this experimental company serviced more than 1 000 buildings covering more than 3.5M2 millions of mixed commercial properties comprising Offices (65%), Retail (30%), Industrial (5%). Most of the major property owners were served over many years as well as all the South African commercial banks. The statistical modelling developed by using this invaluable data has been proven to have a fault factor of 0.000005%.

Global Property Excellence (Pty) Ltd is now the sole license holder of this leading edge methodology. For the professional property valuations industry, it is known as the Q5 Automated Valuation Tool (Q5AVT). Conventional property valuations are expensive. It is done on special request; and it consumes the undivided time of a professional specialist and demands traveling cost, because conventional property valuations are disputable and could be, and often is challenged by disagreeing parties. It leads to disgruntled ratepayers. Sometimes it ends after an expensive and time-wasting litigation processes. Whatever the outcome, it always leaves one party frustrated. This is now ending.