Valuing the purchase price of property: Is the purchase price of property the best evidence of value?

Publisher:
Vince Mangioni UTS
Publication Type:
Conference Proceeding
Citation:
The 12th Annual Confernece of the Pacific Rim Real Estate Society, 2006, pp. 1 - 14
Issue Date:
2006-01
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The role of the valuer in undertaking a valuation is to determine the value of the property being valued. In the case of mortgage valuations, where the purchaser has agreed and exchanged contracts on a property, it may be presumed that the role of the valuer is to confirm or reject the purchase price as value. In the case of rejecting the purchase price as value, the market value is determined by the valuer. In the competitive mortgage market there is pressure on the valuer that suggests the purchase price of property is ultimately the best evidence of value. This paper firstly determines the purpose of the mortgage valuation given the proposition that the purchase price of property is the best evidence of value. Secondly cases have been reviewed that have presumably endorsed the proposition that the purchase price of a property is the best evidence of value. An examination of these cases will define the criteria valuers are to use to establish whether the purchase price of property is the best evidence of value. An examination of cases involving the refinancing of property where there is no sale over the subject property, coupled with an absence of comparable sales evidence has been undertaken, in establishing the importance of sales evidence in the valuation process.
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