Two valuations, two results: examining differences transparently

Do both documents actually answer the same question?

Read the brief and description of the result in both valuations. A proposed asking price, automated indication and market value report may serve different purposes. A bank document may also address a different purpose or definition of value. Request the actual definition instead of assuming equivalence from the heading 'property value'.

The LBG defines market value by reference to the price usually achievable in fair market dealings and regulates judicial valuations in particular. Not every private estimate is automatically subject to all its report requirements. Its separation of purpose, findings and valuation nevertheless offers a helpful review structure. Also record whether a single share, an entire property or a particular right was valued.

Foundations: RIS [1]

Transfer the main details into a shared matrix

Record the details from each document with their source location. The issue date is not always the valuation date; the inspection date may also differ. Market conditions, tenancy agreements or structural condition may have changed between two valuation dates. A current signature does not turn a calculation for a historical date into a present-day valuation.

Foundations: RIS [2]

Which discrepancy is an error, and which is an assumption?

Mark evidenced data errors first. Examples include a transposed plot number, a missing tenancy extension or a loggia added twice. Such points are corrected using a specific document. List unresolved facts separately, such as an attic room's approval status still awaiting clarification. A plausible assumption does not become an established finding merely because both valuations adopt it.

Professional assumptions must be considered separately. Future sustainable income, a cost allowance or remaining useful life may have a justified range. Ask about data sources, relevance to the property and uncertainty. A cost quotation, for example, is evidence for a defined scope of work; it does not prove that market value falls by exactly that amount.

Check the justification for methods and parameters

Different approaches may be appropriate where they reflect different characteristics of the property. In selecting a method, the LBG requires regard to current professional knowledge and fair market dealings. Using several approaches does not imply a prescribed arithmetic average. What matters is a justified derivation of the result that takes market conditions into account.

Ask method-specific questions: which completed transactions support the comparison and how were differences adjusted? How was the capitalisation rate justified in the income approach? What cost basis and reductions in value underpin the cost approach? § 10 LBG describes specific requirements within the Act's scope. Outside that scope too, these questions help assess whether an explanation is transparent.

Foundations: RIS [1] · RIS [3]

Turn two amounts into a specific review brief

Ask for a reconciliation using the same starting basis. First, confirmed data errors are corrected. Then the differences in the remaining assumptions and the extent of their effect on the result are shown. Where possible, change one assumption at a time; interdependent variables need a connected scenario. Otherwise, individual effects may be counted twice when added together.

Prioritise questions by their importance to your decision. An unresolved tenancy status may matter more than a small rounding discrepancy. If significant differences are not explained transparently, a targeted independent review can be commissioned: using the same documents, the same valuation date and explicitly identified points of disagreement. The aim is a robust basis for a decision, not necessarily an identical amount in every professional analysis.