Real estate valuation is an integral part of the real estate industry in the UAE and is often overlooked by buyers and sellers who are solely focused on listing prices. Valuation involves determining the value of a property or real estate asset, not necessarily what it will sell for on the market. Therefore, it’s essential for anyone involved in real estate to understand that a property’s value isn’t necessarily its market price.
Valuation professionals play a crucial role in professional valuation; their work is often relied upon by various parties, such as buyers, sellers, banks, and other financial institutions. Because a professional valuation is used to supplement other legal and financial matters, the process must adhere to certain legal and ethical considerations to ensure its credibility and integrity.
Valuation in the UAE and Abu Dhabi maintains international standards, which enables trust and dependability within our system.
The Emirates Book Valuation Standards
The Emirates Book Valuation Standards (EBVS) is the framework that governs real estate valuation in the UAE. The EBVS follows the International Valuation Standards (IVS) and implements them fully.
The IVS consists of mandatory requirements that must be followed during a professional valuation process in order for the valuation to be complete according to international standards. These requirements do not impose specific standards or processes but rather principles and perceptions that should be considered during the valuation process.
These standards are designed to foster transparency and limit subjectivity.
Honor and Integrity
One of the legal considerations that real estate valuation professionals need to be aware of is adherence to the principles of honor and integrity, in addition to the Code of Conduct and Ethics. These principles mean that valuation professionals should conduct themselves professionally, honestly, and fairly when performing their duties. Furthermore, valuers should ensure that their reports are based on objective and verifiable data.
Professionalism includes performing work accurately and according to the principles of valuation for consistency of output.
Avoid Conflicts of Interest
Valuers should avoid conflicts of interest and ensure their reports are unbiased and accurate. To do so, they should also act as an independent third party in any valuation process, even if their client is also their employer, as is the case with a valuation ordered by a bank.
Furthermore, a valuer should not have other real estate interests that could affect their interests. For example, they should not act as a bank, financial institution, or company/broker/real estate developer. This is to ensure that their reports are objective and impartial and that they are not influenced by any external factors.
A legal consideration is compliance with the valuation standards and real estate appraisal procedures stipulated in the Emirates Book Valuation Standards. These standards provide guidelines for conducting real estate valuations in the UAE. Valuation professionals must ensure that they follow these standards and procedures when conducting valuations to ensure that their reports are credible, leverageable, and accurate.
A professional valuer in Abu Dhabi must maintain the confidentiality of the information they are provided on a property. This could include taxes, debt, income, or any other related information that could be perceived as confidential. They should respect their clients’ privacy and ensure that confidential information is kept secure and not disclosed to unauthorized parties.
Transparency of Qualification
Valuers must disclose their name and license number in all communications to maintain transparency. This makes it easier for clients or other parties to trace communications and ensure that they have the necessary qualifications and experience to carry out valuations and that they operate within a regulated and monitored environment.
The Real Estate Regulatory Agency maintains a registry of registered valuers, and any person who is not registered in the registry should not be used to perform real estate appraisal processes.
Valuation professionals in Abu Dhabi should maintain accurate record-keeping and reporting systems. Electronic record keeping must include copies of reports, communications and correspondence, as well as any written notes.
Avoid Illegal or Immoral Activities
Valuation professionals should also respect professional ethics when dealing with colleague valuers. They should avoid any illegal or immoral competition and refrain from publicly criticizing their colleagues’ work. Valuation professionals should act with professionalism and integrity and should avoid any actions that could harm the reputation of the profession.
Valuation professionals play a crucial role in ensuring the valuation process is conducted professionally, transparently, and with integrity. Adherence to legal and ethical considerations is critical to ensuring the credibility and integrity of the valuation process. Understanding and adhering to these legal and ethical considerations ensure that valuation reports remain credible, objective, and verifiable, which is vital for the real estate industry.