Valuation: Meaning and Concepts
The definitions of valuation were given by various scholars. For instance, Baum and Crosby (1988) refer it to the estimation of the open market value or the prediction of the most likely selling price. It was also seen as the estimation of the capital or rental value of land and/or buildings at a certain time. (Richmond, 1985: I). He particularly included time in the definition as a major determinant of value.
Ifediora, (1993:7) considers valuation as the art and science of determining, at some specific date, for a specific purpose or purposes and by one authorized, the monetary value of the property rights encompassed in an ownership; and the value so determined. It is a form of social science which provides a solution to a question "how much?''. Also, it involves engaging rational and measured investigation and reasoning after systematic collection and analysis of data. All the above make a valuation to be regarded as a science.
The final presentation of valuation report requires good composition excellence of style and clarity of expression-the essential features of art. The presentation and communication of the rigorous data collection and analysis (the scientific aspect of valuation) makes valuation an art.
The essential portion of the definition is the specific date. The passage of time has been having direct effect on value of property especially in an unstable economy of developing nations. The impact of inflation or deflation on the values of commodities is an element of time. The modification of value is always been brought about by economic, social, political and governmental changes over time. The date of valuation is presumed to mean the day on which tape measurements and market surveys were carried out. The value arrived at today, would be different from what may likely be determined on the same property in ten years time.
Valuation is always been carried out for a specific purpose or purposes which is or are to be determined by the client. The purpose of valuation leads to the basis of valuation, which is to be determined by valuer. The basis of valuation is having bearing on the method(s) to be adopted by the valuer: the purposes for which a valuation is being required include, sale, purchase, mortgage, rating and taxation, probate, insurance, compulsory acquisition, rental etc.
For a report to be recognized as a valuation report, it must be prepared by one authorized. The one so authorized by law in Nigeria to carry out valuation is called an Estate Surveyor and Valuer. This is a person who has undergone academic training and has acquired practical experience, recognized as a valuer by Estate Surveyors and Valuers Registration Board of Nigeria (E.S.V.A.R.B.O.N).
Generally speaking valuation is the process of making an estimate or worth of real property or other assets for a particular purpose. Put differently, it is the determination in monetary term the worth or value at specified date and for special purpose of the property rights encompassed in ownership.
