Nai Pickard

How to choose a valuation company?

The client for valuation services in Ukraine has a lot to choose from – The Ukrainian State Property Fund registers more than 5 thousand valuers. Among them there are representatives of large and small valuation firms, real estate agencies, and international consultants. The offers vary as to their level of services, experience and objectiveness and, of course, prices.
So, the client usually faces a dilemma – which company to pick? In the process of selection we recommend to keep the following criteria in mind: 

1.    The size of the valuation company

A small company is not able to cope with a large number of requests, as this requires sufficient number of specialist employees and the support systems to back them up.
Often valuation departments are parts of banks, consulting companies or real estate agencies.  For real estate valuations it is preferable to work with consultants, professionally operating in the sphere of real estate valuation and agency services, as they have a direct access to the current market information due to their participation in real estate transactions. Such valuators use high-quality market statistics, real sales data and draw customer’s attention to the legal aspects of the valued properties. Also of equal importance is the fact that property valuation should be the main or at least one of the main activities of the company – such companies usually employ more professional and experienced specialists, than those where valuation is a minor business.
One more important thing – it is desirable for the valuation company to have regional coverage, which means it has direct access to primary market information. This allows such valuation companies to render quality valuations of regional assets.

2.    Number of qualified valuators in the company

A sufficient number of valuators with necessary education employed in the company is a high guarantee that the valuation will be completed in time.
The data about the number of professional employees is not a secret – on request the company should give a copy of their valuation license and where it is stated the number of qualified employees.

3.    Trust of international banks for a valuation company

For valuation services banks often have approved lists of accredited firms – real estate valuators, which include both local and international companies with representatives in Ukraine.  Accreditation in banks shows the trust, which a bank has for a valuation company. That is why it is beneficial to ask whether the valuator in question is accredited with international banks and with which.

4.    Professional indemnity insurance, the value and the insurer

The insurance policy confirms that the valuator has insured its responsibility before the clients from its own professional mistakes. If the activity of a valuator is proved to be erroneous, the insurer has to compensate the client for the losses incurred.

5.    Membership in professional organizations, international qualifications

There are several professional organizations in Ukraine in the sphere of valuation – PUASA ( Pan-Ukrainian Association of Specialists for Appraisal), Association of Experts on Valuation, Society of Land Valuators  and others. Their aim is to improve the methodology of valuation, the development of the skills and to promote the ethics of the valuators and to ensure a vehicle for the exchange of experiences and information. Membership in such organizations ensures that the valuation company receives up-to-date methodological support and also the possibility to participate in the legislative process. For customers it is an additional guarantee of the professionalism of a valuation company and its adherence to ethical norms.
Primary of the international organizations in the sphere of valuation is RICS (Royal Institution of Chartered Surveyors), which represents the interests of consultants in different spheres of real estate, land tenure and construction. To achieve RICS membership is difficult as it is granted only to those applicants that satisfy their exacting requirements of education and experience, and is prepared to maintain those high standards.
The price of valuation works and the terms of their fulfillment
As a rule, quick and cheap valuations almost always turn out to be of low quality. Inspite of the fact that the low price might be a forcible argument in the valuator’s selection, this criterion should not become decisive. It is most likely that a low cost valuation will be of low quality.  And the process is speeded up, the quality will suffer.
There is also another extreme as when some international companies proposed by a bank to a client for valuation services, may request a high price.  So it may be better to choose a firm, which can offer a “the golden mean” between quality and price.
Hopefully, this information will be useful for potential clients for valuation services.

Text: Igor Sirenko, Head of Valuation Department at NAI Pickard, MRICS
Source: Property Times № 24 (365), 18–24.07.2011