What is appraising (valuation) ?

Appraising is the process by which a professionally trained appraiser (valuer) arrives at an opinion. He or she uses specialized skills and applies his or her knowledge and precedence to arrive at a numerical figure, keeping in mind the purpose for which the exercise is undertaken.

Who is an appraiser (valuer) ?

An appraiser is a person who calculates the value of a tangible asset, i.e. land, building, plant and machinery, etc. Heshouldeither be a qualifiedengineer, or an architect;along with an experience of over ten years (alternatively, one can hold a Masters in Valuation with two years of experience). One is also expected to be a member of professional bodies like Practising Valuers Association (India) and needs to keep himself / herself updated by attending the continuing education programmes. A professionally qualified person with adequate experience and exposure, along with the skills to analyze the subjective parameters can get himself/ herself recognized with the institutions concerned.

What is the difference between an appraiser (valuer) and a real estate agent ?

As recorded hereinabove, an appraiser (valuer) is a third party, who has no direct OR indirect interest in the assets valued of asset, whatsoever. This helps in getting an unbiased opinion of value.

A real estate agent AND/OR (seller of capital goods), however, has a direct gain fromthe sale. The value quoted might include his/ her profit. Thus, views expressed need to be judiciously assessed for their worthiness.

What do appraisers (valuers) really do ?

Whenever an assignment is referred to an appraiser, he or she discusses the intended use of the activity (report)with the client.

Subsequently, he or she peruses the related documents and extends his letter of offer with clarity of the purpose, the scope of the assignment and the probable limiting conditions. Heor she thenpersonally undertakes physical inspection,and/ordelegates it to a trained representative.

After getting the onsite information and documents,he or sheanalyzes the informationcollated. The expert then conducts research (over the Internet and/or through various agencies (including government agencies)) and then reconciles this data and analyzes the findings again without losing sight of the purpose;thus arriving at a conclusion.

An appraiser is expected to document and make the disclosures addressing the subject in the reports. He or she should ensure that theintended message is conveyed clearly and there is no room for misleadingmisunderstanding.

What are the aspects that fall underthe appraiser's recognition?

As documented earlier, an appraiser needs to be recognized by various institutions and government departments before extendinghis or her services to clients. An appraiser needs to respect and honor fiduciary responsibility cast by these institutions and departments, even though they may not necessarily be the pay masters. 

Every institution has their own internal guidelines to recognize appraisers (valuers). Usually, if an appraiser has the qualifying degree and experience, he or she would be considered for recognition based on different criteria of different organizations.

Practising Valuers Association (India) is a member of International Valuation Standards Committee; thus their members have studied the Uniform Standards of Professional Appraisal Practice and IVSC standards

What are the appraisers' professional standards?

In the absence of any enactments in India, there is no regulatory mechanism to govern the fraternity of appraisers.

However, certain professional bodies are enforcing self-regulations. Practising Valuers Association (India) admits members who are able to exhibit their awareness of principles of valuation, and comply with the code of ethics.

Practising Valuers Association (India) is a member of International Valuation Standards Committee; thus their members have studied the Uniform Standards of Professional Appraisal Practice and IVSC standards.

Can I use valuer's opinion for any lender ?

Some of the appraisers are recognized by multiple lending institutions. Only if such recognition is made,one can use the appraisal report without changing the purpose being addressed. If this situation does not prevail then it is neither desirable,nor acceptable to the lenders/ financial institutions to go by the opinion of the appraiser.

Who "owns" the appraisal findings/ valuation reports? 

Appraisal/ valuation reports are owned by the clients who appoint the valuer. However, whenthe assignment addresses the issue of confidentiality, the appraiser is expected to clearly mention under whose instructions the assignment is being done. The report is then submitted to the intended users in a sealed envelope.

What should I look for when hiring an appraiser ?

Clarity of purpose of the assignment isof utmost importance. One should look for a reputed, credible and recognized organization to get the appraisal report, as the findingsare subjective and could be misleading.

How can I find a qualified appraiser ?

Almost all leading valuers and appraisers have their own websites. If you want to avail such services, you shouldconduct adequate research to ensure clarity of understanding. A decision may be made bygauging the appraiser's affiliationto professional bodies like Practising Valuers Association (India), etc.

What is the amount I have to pay for such services ?

Feescharged varies from an orappraiser-to-appraiser. Only in case of solicitation of reports for the department of Income Tax,the fee is ascertained as per the Wealth Tax Act.

What do the alphabets after appraisers' name mean?

Normally, the alphabets after the name of appraiser demonstrates his qualifications and/ or his membership with other institutions.

What if I don't agree with an appraiser ?

An appraiser's opinion is based on certain information and data collected by him or her. Usually, there is no error in arriving at the opinion of the numerical value for the purpose under reference. However, if you can bring to the notice of the appraiser any error/s that have crept in,orcomponents which have not been considered, there is a chance of the appraiser getting RE-CONCILED.

What about appraising OF Business, paintings, jewelry, etc.?

This portal is specifically addressing the appraisal of tangible assets i.e. land, buildings, plant and machinery, etc. However, if any other assistance is required, pleasecontact us.