All those involved in property development and usage - from the humblest first home-buyer to the most powerful multi-national entrepreneur; from the smallest local councils to the biggest State and National government bodies - must have the best advice they can get. In some cases, millions of dollars of investors' funds are at stake; in others, someone's life savings.
The days when someone with an interest in real estate could go out with a tape measure and a clipboard and make a quick assessment of a block of land are gone. Today's property professionals must possess a rare combination of skills and knowledge in the diverse fields of surveying, building, economics, the law, building construction, planning and management.
Increasingly, these property professionals are being called on to perform a variety of roles in which their technical valuation skills are being applied to consultancy, negotiation, arbitration, management and investment advice.
Recognition of the rapid evolution in the traditional role of the valuer has led to a number of major changes. In recent years, many tertiary institutions have adapted their courses to provide students with more relevant knowledge and expertise.
- What do Valuers and Land Economists do?
As the property industry becomes more complex in today's volatile and internationalised market, the role of the valuer is becoming more demanding. The career opportunities are rapidly expanding.
Valuers give expert opinion on pricing property for sale, purchase, compulsory acquisition; values for statutory purposes, rating, land tax, capital gains, asset values for prospectuses and balance sheets, and provide expert evidence in court proceedings.
Land economists deal with investment feasibility and land use studies; project management documentation and administration of building contracts; administration of building maintenance and repairs; building insurance; negotiation and documentation of property sales and leases; property management (including budgeting and financial controls); administration of leases; investment performance analyses; and estate management (including land and strata subdivisions).
Valuers and land economists are found in private practice, consultancies, banks, finance companies, property management firms, property and trustee companies, and in Local, State and Federal government. In many cases they will end up running their own businesses or rising to a senior level in private or public sector employment.
Graduates from the Valuation Stream of the Bachelor of Business - Property can, subject to satisfying work/professional experience criteria, join the Australian Institute of Valuers and Land Economists as either Valuer or Land Economy members (or both) allowing significant flexibility in career development.
- What is a Valuation?
A valuation is an expert opinion of the value of a property. This opinion is formed after the valuer has obtained all relevant facts and information on the property concerned.
A valuer does not create value, but rather interprets the marketplace to properly assess the value of property.
There are three basic methods used to estimate the value of property. These are sales comparison, cost method (summation) and income approach (capitalisation). The valuer chooses the most appropriate method, often using more than one of the methods to fully check against the principal method.
- A brief description of each method is as follows:
- Sales Comparison involves the analysis of recent market transactions, and the application of this information to the property being valued.
- Cost Method is based on the depreciated replacement cost of improvements added to the land value.
- Income Method is based on the potential rental income of the property.
There is considerable preliminary work to be undertaken, including title searching, investigation of easements, encumbrances, planning considerations, and other statutory matters - all of which may affect the value of the property. The valuer inspects the property, analyses the collected data and general information about the neighbourhood and community, and takes steps to satisfactorily "identify" the parcel of land in the legal sense. This involves reconciling actual occupation boundaries as compared to the title information. When the report is presented, the valuer is able to support any conclusions reached, and to clearly explain the basis of valuation to the client. In all cases the report is of a self-explanatory, professional nature. It is compiled to stand as evidence in negotiations, documentation and legal proceedings, and is in itself a legal document.
Valuation fees compare favourably with the charges as levied by other professionals. At present the Institute publishes a recommended scale of fees, which varies from State to State. The scale is based on an ad-valorum calculation, that is on the ultimate value of the property concerned. It is held that, in comparison to the importance of the decisions to be made as a result of the report itself, the level of fees is not significant.
- Valuation as a Career
The Australian Institute of Valuers and Land Economists is firmly of the opinion that the practice of land valuation and its ancillary services offer a worthwhile and challenging career. For anyone leaving school, and seeking a position with a satisfying initial salary and good prospects of advancement, and at the same time encouraging self-reliance, initiative and exercise of sound judgement, the career is well worthy of consideration. This advice is equal for both male and female aspirants, as in recent years there has been a considerable increase in the number of female valuers, when compared to older norms.
To those who show the necessary ability, there will always be positions available, especially after qualifying, with private enterprise and in Government service. However, anyone contemplating a career in valuation must be prepared to undertake the necessary preliminary and practical training and study; moreover, they must possess certain attributes and qualifications because the very nature of the work makes it imperative that character and reputation must be beyond reproach at all times. As noted earlier, the Australian Institute of Valuers and Land Economists is the valuers' professional body, and it insists on high standards of skill and conduct from its members.
The valuer is becoming more important in a community sense. Opinions and decisions made by members of the profession affect the interest of many individuals and companies. Estimates of value made by public officials who are valuers, and by valuers in private practice, are required especially for purposes of land taxation and rating, gift and death duties, and for taxing - such as capital gains. Such estimates of value also form the basis of many private transactions.
It is, therefore, important that a valuer should possess adequate knowledge, skill and experience which will give weight to any opinion formed. Integrity and due sense of responsibility go without saying. Every valuation should reflect the independent opinion of the valuer who makes it. The code of ethics set down by the Institute stipulates that it should not be otherwise. A valuer must not act contrary to judgement - and of course it would be quite wrong to accept any instruction to carry out a valuation contingent on reporting a pre-determined or specified value, or upon any finding to be reported.
It is also a valuer's duty to hold as confidential a valuation, until released from this obligation by the client or the due process of law. No financial inducement or unfair competition in respect of fees or charges is to be entered into, and consequently the guideline scale of fees has been developed by the Institute. This scale accounts not only for the valuer's skill, experience and care, but also for the responsibility of the correctness of the valuation.
Because continual changes in living patterns bring about improvements and refinements in economic and development concepts and techniques, the valuer needs to spend time on research and development. To aid this process the Australian Institute of Valuers and Land Economists runs seminars and professional development programmers for members. These courses are quite separate to the formal education courses described elsewhere in this brochure.
In summary, since its inception, apart from administration and services to its members, the main consideration of the Australian Institute of Valuers and Land Economists has been the provision of adequate education and training of valuers to protect the exacting standards it sets down for members. In Victoria, it has achieved this through a close working relationship with RMIT. Today, it is generally considered that the candidate who can survive the necessary series of increasingly searching examinations conducted throughout Australia under the auspices of the tertiary education authorities, and prove the adequacy of practical valuation experience, may be regarded as competent to advise the public, and to represent the Institute in a Court of Law.
- Plant and Machinery Valuation
Recent amendments to the membership provisions of the Australian Institute of Valuers and Land Economists provide and additional category for valuers skilled in the valuation of plant and machinery.
Plant and machinery valuations are required for many purposed including:
Insurance
Acquisition/Takeover
Merger
Dissolution
Insolvency
Financing
Disposal, including forced sale
Accounting, including company assets
Rating
Taxation
Plant and machinery valuers are responsible for the valuation of a wide variety of assets ranging from household contents to mining equipment worth millions of dollars. Almost any asset which is not land and buildings, but which is the subject of a valuation, falls within the province of the plant and machinery valuer who, in turn, must meet the same exacting requirements of the Australian Institute of Valuers and Land Economists as all other membership categories.
The Commonwealth Institute of Valuers (later the Australian Institute of Valuers & Land Administrators) was formed by a small band of private and public valuers meeting at the South Australian Hotel, on Adelaide's North Terrace, on November 5, 1926, at the instigation of S.F. (Dick) Whittington. In 1990 the Institute and the Society of Land Economists voted to merge, and from 1 January 1991 became the Australian Institute of Valuers & Land Economists. In 1926 Australia was still a young country and, in the heady days of the 1920s, its rural and suburban lands were being settled at a rapid rate. Responsible, independent and professional valuations were essential to protect the public interest and keep the property-based economy of Australia on track.
More than 60 years later, similar challenges face professionals working in the property industry. But today the challenges are more complex. Increasing deregulation of the property industry, banking and finance; more foreign investment, increasingly sophisticated communications technology, new building materials, and more conscious planning decisions combine to make the world of real property more complex.
- Eligibility
Anyone who has completed one of the recognised valuation or land economy courses offered at tertiary institutions around Australia may apply to join as an associate member provided they have the equivalent of two full time years' practical experience in valuation or land economy within the four years immediately prior to application. Those who have experience in valuation, join as valuer members; those who have experience in land economy join as land economy members; those with expertise in both fields may apply for dual membership. Oral examinations are conducted by the Institute as part of the entry criteria.
Graduate membership is now available to those who have graduated but do not yet have the required practical experience in either valuation or land economy.
- Why Join?
The professional expertise of the Institute's members is acknowledged by the corporate sector, the government sector and the courts. Legislation in all Australian States has endorsed the educational and professional standards set by the Institute.
In a very real sense, membership of the Institute opens up career opportunities which would not otherwise be available to practitioners in both the private and public sectors. Membership of the Institute offers high rewards financially and professionally.
Through the Divisional organisations that have been formed in each State and Territory, the Institute maintains close contact with all developments that impinge on the practice of valuation and land economy. This includes changes in the law, in government, in planning procedures, in major property developments, economic trends and education. Members are continuously informed through the quarterly journal, "The Valuer & Land Economists", regular newsletters; sponsored textbooks and regular corporate meetings. Membership of the Institute helps members to keep in touch with what is happening in the market place and this is supported by an ongoing Professional Development Program.
Each Division holds regular meetings to discuss and decide on important matters of policy and action. Members skills are constantly being upgraded through seminars and workshops which provide direct access to technical information, changes in practice and the expertise of leading national and international bodies.
The Institute holds membership of the following accredited international bodies:
- The Pan Pacific Congress of Real Estate Appraisers, Valuers & Councillors
- The International Assets Valuations Standards Committee
- The International Association of Assessing Officers
Through these affiliations the Institute plays a leadership role in raising the professional standards of valuation and land economy around the world, including those of many developing countries.
The Institute, with members Australia-wide and affiliation with a world-wide outreach, provides links with a limitless range of strategically placed business and professional contacts. No matter where you travel, there is always someone you know you can call on for introductions, advice and business assistance.
Last but not least, the Institute's men and women represent a wide cross-section of the Australian community. They are a rich source of social contacts and friends.
The Institute is a resource that will serve members throughout their professional careers and beyond.
- Further Information
The Divisional Executive Officer of the Australian Institute of Valuers and Land Economists in your State, or Valuer members can provide further information. The contact number for the Victorian Division is shown in the Contact List and Institute members are listed in the Yellow Pages.
