To : All Banks, Merchant Banks and Financial Institutions
Date : 15 August 1996

Dear Sir / Madam

VALUATION REPORTS

This general circular arises from recent requests by a number of banks and financial institutions seeking clarification on valuation reports submitted for loan purposes by clients and/or persons registered with this Board as Valuers and Appraisers.

The Board would first of all like to state that all valuations must be conducted in accordance with the highest professional standards. All valuation reports must conform with the provisions of the Valuers, Appraisers and Estate Agents Act 1981 and the Rules made thereunder.

The Board has prepared a Manual of Valuation Standards which prescribed minimum standards for all valuation reports and a copy of this manual can be obtained from the Secretariat of the Board.

Valuation Standard 4 of the said Manual sets out the contents of a valuation report and a perusal of this Standard dictates that a report must be comprehensive. The Board thus does not recognise such valuations as "Brief Valuations", "Check Valuations", "One Page Valuations", "Desk Top Valuations", "Verbal Valuations" etc. In fact the Board would urge all Lenders not to entertain such valuations and we also warn that in the event of a dispute the Board will not lend its support to Lenders who make use of or encourage such valuations.

Updates of valuation reports done previously by the same Valuer or Appraiser/firm are permitted and such updates can be communicated to the client by way of a letter. However the property must be reinspected and all required searches and investigations done in accordance with normal standards before the value is reported. Full revaluations, as opposed to updates, are however encouraged in cases where the previous valuation is more than 2 years.

Proforma valuations are also allowed but under the strict conditions as stipulated by the Manual. Such valuations are only permitted where the Valuer/Appraiser and the Client Lender agree on an arrangement for mass review, checking and updating of previous valuations done by the same firm. The rationale for such valuations is merely for the Lender to obtain a degree of comfort as to the continued existence of the required security value of the property. In such cases Valuers/Appraisers may conduct valuations based on facts as contained in the previous report and these fact are then viewed in the light of the general market condition as existing on the date of the new valuation. In providing such valuations Valuers/Apraisers are required to clearly state in the proforma that the valuation should not be used for additional funding.

The Board looks forward to your kind cooperation. Please do not hesitate to contact the Board should you require any assistance or further clarification.

Thank you.

Yours faithfully

 

LEMBAGA PENILAI, PENTAKSIR DAN EJEN HARTATANAH MALAYSIA
DATUK HAJI SAHARI BIN HAJI MAHADI

President

c.c All Registered Valuers, Appraisers and Estate Agents