K. SILADASS

Valuation of Immovable Property

by K. Siladass

         

          When a person wants to buy a house there are few things he will have to consider, and the most important facts would be whether the house is sold free from encumbrances, whether the price asked for is reasonable compared to other properties in that locality. When it is a house which is for sale the question is whether it is vacant or it is occupied. The price of a house would much depend on various factors, especially, whether the sale is with vacant possession or without it. If there is a tenant occupying the house, the value will depend on the desire of the buyer: whether, he wants it for his own occupation or he is just buying it as an investment. If the buyer is thinking to occupy the house upon completion of the sale the price would be higher. On the other hand if the house has been tied down with a tenancy for a long period the chances are that the buyer who wants immediate occupation would not venture to buy. If it is an investment the buyer will consider the duration of the tenancy, if it is too long then, his investment will not be too lucrative considering the fluctuating temperament of the property market. The value may appreciate but that is a long term plan. For the immediate purchase the price of the house would not fetch a higher value because of the sitting tenant.

          It is possible that the willing seller is tied down with a long tenancy may sell the house to the sitting tenant at price less than the market value because the owner need not go into the cumbersome process of getting the tenant out.

          If the price is agreed and the parties conclude the sale and purchase, say for three million ringgit, documents would show that amount; but, when it is submitted for valuation, the valuation office would have their own value. They do not consider the tenancy of the house and its value. Therefore, if the valuation is more than the sale price, it does not mean that the purchaser has bought it at a lower price. If that is the case at least fifty percent of property transactions in the country would be subjected to adjustment of the sale and purchase price after valuation by the valuation department. Are we going to say that the sale price to be adjusted according to the valuation? Ludicrous.

         

Assuming that the government valuer values the property less than the sale and purchase price could the buyer turn to the seller and say that he has paid more than the actual value, therefore, there should be an adjustment on the price? Unheard of. Only those with warped thoughts would venture into this type of unrewarding exercise with the hope of political gains. It is just lying on one’s back and spitting. You know where the spittle will land.