DESIGN AND IMPLEMENTATION OF ESTATE VALUATION MODELLING SYSTEM

Description

CHAPTER ONE

INTRODUCTION

• Background of Study

This research is on Design and implementation of estate valuation modelling system. Estate surveying and valuation in Nigeria dates back to the beginning of creation. At creation the first estate was established by God in the Garden of Eden, Adam and Eve were put in charged of it. Thus, Adam and Eve were the first estate surveyors and values known to man.

However, to this end, we are concerned in developing a computerized based system that will be used in the estate valuation practice to eliminate the challenges posed by the present manual method used in the esteem profession.

For an object to have value it must be scared related to the demand. In other word it has to be limited in supply related to the demand. If an object is in it ample supply and there is little or no demand for it then in the economic sense the object has no value. For there to be an increase in the value of an object there must be an increase in the demand or a corresponding decrease in the supply. Thus, valuation is the art, science and practices of determining the value of all the description of property and of all the interest therein. The managing and developing of estates and other business concerned with the management of landed property.

Valuation entails securing of the optimal use of land and its associated resources to meet social and economic needs. Determining the structure and condition of buildings and their services and advising on their maintenance, alteration and improvement.  Valuation entails determining the economic use of land resources by means of financial appraisal for building of industries.

The need for an effective, accurate and efficient valuation method is what every estate firm looks for. The increasing state of data, record generation and the implication of such are becoming more evident as challenges are becoming elaborate with frequent technological innovations.

Valuation is a problem solving process in which the influence of sociological, economic, government and physical forces are analyzed in relation to the property. Having an effective valuation calculation system is one of the major challenges facing most of our estate valuation firms, yet most of the firms freely admit they have difficulties handling adequately.

The recent development of course has much emphasis to place on the computerized method of estate valuation. These can be accomplished through some discrete skills that can be learnt by people in the estate management profession.

In valuation, no matter how complex or simple the question, the solution requires the interpretation in terms of money, on the influence of economic, sociological , physical and government forces on the specified property.

The scientific solution to valuation problems is crystallized in an automated valuation process.

A change in these valuable tool will require a conscious departure from the traditional practice, especially the use a computerized method in lieu of the manual method, has valuation is the art of estimating the value for a specific purpose of a particular interest in a property at a particular moment time taking into account all the features of the features of the property and also considering all the underlying economic factors of the market, including the range of alternative investment.

It is obvious that the valuation process should be reviewed periodically, and if expectations are significantly different from the pervious estimates, the valuation charges for the current and the future should be adjusted, based on the standard valuation values for the stipulated period.

By studying and outlining the various techniques that can be used for valuing properties and investigating the extent to which they are used in Nigeria, investors and practitioners can gain a better understanding and have a set goal on which based a more convincing judgment on investment action.

With computerized method of estate valuation in place, estate surveying and valuation firms however will onto such a system as a channel for strengthening the contributions to be made.

However, valuation should be seen as a service rendered by the estate valuers called the stewards or the Agents that acts on behalf of the owners or the investors. Thus, the valuers should be men of honor trusted in different fiduciary relationships, thereby explaining the sobriquet attached to the profession of estate valuation.

• Statement of problem

As economic of the world globalize and capital becomes more mobile, valuation gains momentum in privatization, joint ventures, mergers and acquisition, restructuring to create values. The purpose is to computerize the estate valuation methods, access the risk face by professionals in the valuation field, estimating the market price subject to series of assumption, with whatsoever the future occurrence will be, to alleviates the poor practices and explore the good ones.

In the cause of this project the researcher is not only concerned with anticipating what the future occurrence and attempting the desirable ones more likely and the undesirable ones less likely.

• Aim and Objectives of the study

This study is aim at developing a model, an effective; computerize valuation modelling system that would bring about efficiency, reliability and effectiveness in the valuation system which will replace the manual method presently used. And a computerized method of reaching a value for valuated properties, expected to help in property management fields including other relevant authorities.

The following are the objectives of estates valuation modeling system:

1. To eliminate the problems associated with the manual method used in the establishment.
2. To determine how properties are valued, and the valuation techniques used in property valuation in Nigeria and ascertain the risk involved in the valuation process and the level of awareness of clients regarding approaches used in valuing their properties.
3. To provide remedies, recommendation and practical guides on how to make the process an effective tool to determine the functionality of properties
4. To understand the difference between price and value.
5. To guider investment/buying/selling decisions.

• Significance of the study

This research work will be of an immense significance to organization embodied with estate management, in that, it is aim at developing a model, an effective, reliable computerized method of reaching a value for valuated properties, expected to help in property management.

It intends to advance the organization technology on how to computerized valuation process and show how different valuation techniques affect properties value. This study will also help firms to ascertain the degree of functionality of properties.

To other professional bodies and students this research work will serve as a reference material, people in related field, who might conduct research into related field, will find this research work useful.

The recommendation and some suggested solutions to the problems stated would enhance the management of valuation firms to review some aspect of valuation systems that may affect them.

• Scope of the Study

Valuation is an embracing topic in the determinant of the value and functionality of a property.  For the purpose of this research work, the researcher shall be limited to estate valuation in the context of Akwa Ibom State Property and Investment Company (APIOC). Reference shall be made to selected documents in the establishment.

• Definition of terms

The definitions here are contextual and adopted for the purpose of this study.

1. Valuation: Valuation is the process of determining the current worth of an asset or a company, or making an estimate of worth of real property. It can also be an Estimation of the capital or rental value of land or buildings at a particular point in time.
2. An Estate: In layman’s terms, an estate is somebody’s net worth in the eyes of the law. That means your bank accounts, your home, your car, and any smaller assets you have to your name. It also means any rights and licenses. But an estate in this work is referring to as net worth of a person at any point in time alive or dead. It is the sum of a person’s assets – legal rights, interests and entitlements to property of any kind.

• Estate valuation: is the process of valuing real property. The value usually sought is the property market value. Selling (whether by auction or otherwise) and buying or letting (as agent) of real and personal property and that of the interest therein.

1. Modeling: is the process of representing a real-world object or phenomenon as a set of mathematical equations. More specifically, the term is often used to describe the process of representing 3-dimensional objects in a computer. All 3-D applications, including CAD/CAM and animation software, perform modeling.
2. Agent: One who agrees and is authorized to act on behalf of another, a principal, to legally bind an individual in particular business transactions with third parties pursuant to an agency relationship. Or One who acts for or in a place of another (the principal) by authority from him, one entrusted with the business of another.
3. Value: The monetary worth of an asset, business entity, goods sold, service rendered, or liability or obligation acquired. Or its can also be The extent to which a goods or service is perceived by its customer to meet his or her needs or wants, measured by customer’s willingness to pay for it.

• Appraisal: An appraisal is a valuation of property, such as real estate, a business or an antique, by the estimate of an authorized person. A judgment or assessment of the value of something.
• Perpetuity: A bond or other security with no fixed maturity date. Or a disposition of property which attempts to make it inalienable beyond certain limit fixed.

1. Discount rate or capitalization: The rate expressed in percentage form at which a future income flow is turned to present value. It shows the different between the net income of a property and the capital value.