By Mashe Umaru Gwamna
An Estate Surveyors and Valuer (ESV) George Madu, has emphasized on the need for property to be valued before been sale.
Madu made this known to our property reporter in Abuja, yesterday.
“Property valuations is very germane when taking decisions on sale of properties.
“ Property valuation is an essential tool in today’s business environment because it guides project investment financing or refinancing decisions by business owners and investors.
“Valuations is an important measure needed for business and investments decisions such as the sale of property”.
He explained that following the credit crunch of 2009, which gave birth to the International Financial Reporting Standards (IFRS) and International Public Sector Accounting Standards (IPSAS), both the private and public sector now need regular valuation of their assets to set their books right and take informed investment decisions.
According to him,” Valuation principally provides advice to owners or interested parties on the most probable amount that is realizable in a sale transaction.
It is also without gain saying, within the extant laws of Nigeria, that the service of the Estate Surveyor and Valuer is sacrosanct in this respect.
“Valuation helps to determine the market value of properties for the owners of such property. This is so because property owners may need to know the worth of their assets based on the motivation for which the property was acquired”.
“A valuation is required at first to know if the property can actually attract the loan amount applied for.
”In the early 2000s, the Federal Government of Nigeria wanted to auction some of their residential properties, formerly occupied by Ministerial Directors in Lagos State, since most Ministerial offices had relocated to Abuja.
“Estate Surveyors and Valuers were commissioned to embark on this exercise in order to set an auction reserve for all the eligible properties in this regard.
“Valuations by Estate Surveyors and Valuers were required to be carried out to guide the corporation in the process of selling such property assets. Owing to the nature and volume of the forfeited assets, the Corporation needed to know the most probable recoverable amount from those acquired properties amidst prevailing market and economic realities.”Madu said.
He said government must not be seen to underestimate the worth of these properties built with tax payers’ money. By the time the auctions took place, the valuations served as reserve figures below which government must not sell and above which a sale can sail through.
“Our financial institutions like commercial banks, mortgage banks, bank of industry etc, require valuations to advise them on the amount of loan to advance when collateral (property asset) is presented by the prospective borrower.
“These transactions are referred to as Mortgages; hence, come with provisions of foreclosure of the borrower’s right to the pledged property in the event of the loan going bad.
“Consequently, the financial institution will want to know the current amount that can be recovered from the forfeited asset as against the outstanding loan amount.
A valuation is also required in this instance of sale because of the fact that the book value of the mortgage property may be out of date with market realities.
Meanwhile, the Asset Management Corporation of Nigeria (AMCON) Act 2010 was enacted and Section 35 empowered the Corporation to exercise all rights and powers in relation to Eligible Bank Assets (EBAs) and security interest connected thereon.
“AMCON, in exercising part of its mandate set by the CBN, needed to ascertain the worth of all the bank assets/properties acquired in order to partially or fully recover the exposure of the Federal Government in rescuing the affected banks by way of sale of some of the assets”.
He explained that recently, there has been series of forfeited property assets by notable Nigerians who have been charged by government for diversion of public funds linked to the acquisition of such properties.
“The office of the Attorney General of the Federation via the Ministry of Justice now requires the valuation of such properties to enable government determine their worth and the likely revenue that can be generated from the auction or sale such properties for budgeting purposes.”
