Most people read the figure on the front page of a valuation report and file the rest, but the rest is where the work sits. Those sections record what was valued, the basis adopted, the evidence relied on and the conditions attached, and if you ever need to rely on the report they decide whether you can.
Here is what a certified valuation report contains, section by section, and what to look for when you read one.
The instruction and the purpose
Every report opens by recording who instructed the valuer, the property being valued, the interest held (usually the fee simple, sometimes a leasehold or a part interest), the date of valuation and the purpose of the report. None of this is boilerplate. The purpose determines how the valuation is framed, what standards apply and who is entitled to rely on it. A valuation prepared for a lender is a different document from one prepared for tax or for a property settlement, even when the figures land in the same place.
Check that the stated purpose matches the reason you commissioned the report, and raise any mismatch before you use it.
The basis of value
The report must state the basis on which the property has been valued. For most purposes this is market value: the estimated amount for which the property should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing, where each party acted knowledgeably, prudently and without compulsion. That definition comes from the International Valuation Standards and is the one courts and the ATO generally expect.
Other bases exist. Insurance replacement cost is not market value at all; it measures what it would cost to rebuild, which can be a long way from the price a buyer would pay. A retrospective valuation for capital gains tax applies the market value definition at a past date, such as the date a home first began producing income. The basis must match the purpose, and the report should say plainly which one is being used.
The inspection record
The report records when the property was inspected and what the inspection covered: the land, identified by its lot on plan description and title reference, the site area, the improvements, their construction, accommodation and condition, and the planning controls that apply, along with anything unusual observed on site.
Read this section against your own knowledge of the property. If the report describes a full internal inspection, it should read like one. Where the inspection was external only, or the valuation was prepared as a desktop assessment, the report must disclose that, because it changes the weight the opinion can carry.
Comparable evidence and adjustments
Market value is demonstrated through sales evidence. The report should set out recent sales of comparable properties with enough detail to show why each was selected: sale date, price, land area, improvements and location relative to the subject property.
No sale is a perfect match, so the valuer adjusts. A sale six months old may need adjustment for market movement. A larger block, a superior renovation or a busier road each pulls the comparison up or down. The report should explain, sale by sale, whether the evidence sits above or below the subject property and why. Three sales at similar prices do not settle the question if none of them truly compares, and one strong sale, properly analysed, can outweigh five weak ones.
The reconciliation
Once the evidence is analysed, the valuer reconciles it to a concluded figure. This is the reasoning step, and the report should show which sales carried the most weight, what range the evidence supports and where within that range the subject property sits. For income-producing property the report will often cross-check the conclusion with a second method, such as capitalising the net income. The concluded figure should be traceable back through this reasoning. A report that jumps from a list of sales to a number with nothing in between deserves less confidence.
Assumptions and limiting conditions
Every valuation rests on assumptions, and the report lists them. Typical assumptions include that the title is good and marketable, that the site is free of contamination, that the improvements comply with approvals, and that information supplied by the client or third parties is accurate. Limiting conditions then restrict who may rely on the report and for what.
Readers tend to skip these pages, which is a mistake. If an assumption fails, say a structural defect emerges that no visual inspection could reveal, the valuation may no longer hold. Read them, and if one does not match the facts as you know them, tell the valuer before relying on the figure.
Why the stated purpose matters
A valuation prepared for one purpose generally cannot simply be reused for another. A report for mortgage security is addressed to the lender and framed around lending risk. A report for a family law property settlement is generally prepared under court rules, commonly on a single expert witness basis where both parties jointly instruct the valuer. A retrospective report for capital gains tax addresses value at a past date and must stand up to ATO scrutiny. A self managed super fund needs market value evidence its auditor will accept for each financial year’s accounts.
Handing a lender’s report to the ATO, or a two-year-old report to a fund auditor, invites rejection. Just as importantly, the reliance clause usually confines the valuer’s responsibility to the named party and the stated purpose, so a reused report may give you no recourse if something is wrong. If your purpose has changed, ask whether the report can be updated or reissued, and where the tax or audit treatment is in doubt, check the requirements with the ATO, the fund auditor or your legal adviser first.
Signatures and registration
The report closes with the valuer’s signature, name and qualifications. In Queensland, valuers are required to be registered with the Valuers Registration Board of Queensland, and the report should state the signing valuer’s registration number. Membership of the Australian Property Institute, and the Certified Practising Valuer designation, indicate the valuer is bound by the Institute’s professional standards and code of ethics.
Check that the person who signed the report is the person who took responsibility for the work. If the signature block carries no registration number, ask why before you rely on it.
If you have a report in front of you and something in it is unclear, or you need a valuation prepared for a specific purpose, call the practice on 07 5550 4055 and talk it through.
