Property Valuation Report

How to value a property? I calculate the rental yield, cash on cash return, and of course to factor in the “Bank, School, Hypermarket, Highway, and Environment” – my favorite 5 important factors in selecting a property, too.

I received a property valuation report recently for a secondhand apartment in Kota Damansara, which I think is quite a comprehensive report. The property valuer adopted the Comparison Approach.

The most interesting part of the report is their “Residential Mortgage Score (REMS) Template – Non Landed Property”, which I think we should familiar with it as the weightage of each criteria tell us what type of property we should go for and what property not to buy. Please refer to below table:

	CRITERIA	SCORE	ASSIGNED SCORE BY VALUER	WEIGHTED SCORE
	SECTION A - LOCATION (25%)
(a)	Macro Aspect
	Most preferred / established area	10
	Preferred and established area	8
	Average preferred area	6
	Less preferred / new development area	4
	Non established / Sub-urban area	0
(b)	Micro Aspect
	4 points will be deducted from the location if the property is affected by severe negative features	-4
	2 points will be deducted if the property is affected by less severe negative features	-2
	Please state the negative features here ___________
	Note: Negative features, if any (e.g. flood / landslide prone area, notorious criminal activities area, near cemetry / waste disposal site / sewerage / oxidation pond, others etc that may affect the accessibility / market preference towards the location)
	TOTAL LOCATION SCORE - WEIGHTAGE:	25%
	SECTION B - SUPPORTING DEVELOPMENT WITHIN THE VICINITY (10%)
(a)	Street Width - dual ways neighbourhood road
	More than 30 feet width - good	2
	20 to 29 feet width - average	1
	Less than 20 feet width - poor	0
(b)	Commercial Area
	Note: Presence of commercial area within close vicinity e.g. shopping centres, hypermarkets, wholesale markets, retail centres, office towers, colleges, hotels etc.
	Less than 2 km from the property - good	2
	2 to 5 km from the property - average	1
	More than 5 km from the property - poor	0
(c)	Highway
	Less than 5 km from the property - good	2
	5 to 8 km from the property - average	1
	More than 8 km - poor	0
(d)	International or Major Local Retailer & F&B Operator
	Availability of outlets less than 2 km - good	2
	Availability of outlets 2 to 5 km - average	1
	Availability of outlets more than 5 km - poor	0
(e)	Availability of Public Transportation in the Vicinity
	Well supported by public transportation e.g. LRT / KTM Komuter / Monorail / buses and taxis	2
	Public transportation not easily available	0
	Additional Features: Maximum 2 points should be allocated for any additional positive features	+2
	SECTION C - NEIGHBOURHOOD OCCUPANCY (15%) - APPROXIMATELY WITHIN 5 KM FROM THE SUBJECT DEVELOPMENT
	Almost full occupancy - 90% to 100%	10
	Well occupied - 70% to 89%	8
	Moderately occupied - 50% to 69%	6
	Poorly occupied - Less than 50%	0
	TOTAL NEIGHBOURHOOD OCCUPANCY SCORE - WEIGHTAGE:	15%
	SECTION D - EASE OF DISPOSAL (20%)
	Easy to dispose - within 3 months	10
	Market Norm - more than 3 to 6 months	8
	Longer time required - more than 6 months to 12 months	5
	Difficult to dispose - more than 12 months	0
	TOTAL EASE OF DISPOSAL SCORE - WEIGHTAGE:	20%
	SECTION E - TENURE (10%)
	Term in Perpetuity - Freehold or 999 years	10
	Leasehold with remaining lease period of 70 to 99 years (Peninsular) or Leasehold with remaining lease period of 40 to 59 years (Sarawak)	8
	Leasehold with remaining lease period of 50 to 69 years (Peninsular) or Leasehold with remaining lease period of 30 to 39 years (Sarawak)	6
	Leasehold with remaining lease period of less than 50 years (Peninsular) or Leasehold with remaining lease period of less than 30 years (Sarawak)	0
	TOTAL TENURE SCORE - WEIGHTAGE:	10%
	SECTION F - PROJECT & FACILITIES (10%)
	Developer's profile (for property completed less than 1 year)
	Good - Listed in KLSE as property based company with good track record	5
	Average - Property based company with acceptable track record	3
	Poor - Company with bad track record	0
	OR
	State of maintenance / management of the project (for property completed more than 1 year)
	Well maintained - all facilities are operational	5
	Fairly maintained	3
	Poorly maintained - Bad condition / dirty compound / unkept grasses etc	0
	Facilities Offered
	Good - Full condominium facilities
	Average - Apartment facilities ie. 24 hour security etc
	Poor - No facility
	TOTAL PROJECT & FACILITIES SCORE - WEIGHTAGE:	10%
	SECTION G - CONDITION OF THE SUBJECT UNIT (10%)
	State of Maintenance
	Well maintained with no visible structural defects	3
	Fairly maintained	2
	Poorly maintained - Bad condition	0
	Finishes
	Quality finishes	3
	Average finishes	2
	Poor finishes	0
	Additional Features: Maximum 2 points should be allocated for any additional positive features	+2
	TOTAL CONDITION OF THE UNIT SCORE - WEIGHTAGE:	10%

Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.