It is human nature to create controversy even where it does not exist. Expert values have been fighting, in vain, to find out whether valuation is an art or a science. To set this rift at rest, Justice Viscount Simon of the House of Lords in Gold Coast Selection Trust case held that “valuation is an art and not an exact science. Mathematical certainty is not demanded, nor indeed is it possible”. Thus valuation cannot be tied up by rigid laws of nature or science.
It also cannot work under fixed and inflexible set up of principles because it has great dependence in human nature and individual’ thinking. It can not be said that vacant flats are always required to be valued on comparable sales method. Sometimes circumstances may demand value estimation by Rental Method. Hence two flats in the same building may have different values for the same area. Similarly two adjacent plots in the same area may have different values because one plot falls in garden reservation and another plot is marked for commercial user.
An old case of human intelligence affecting value of property is worth studying. An open plot of land was offered for sale in a posh locality of Mumbai. But there were no buyers for the plot because it was subjected to the covenant that no construction above 5′ would be allowed to be put up in the plot. Owner failed to sell plot for 2 years in spite of his best efforts. One day a person came with an offer of Rs. 10 lacs with condition that the deal be completed in 2 days time. Owner was too happy and he immediately agreed to sell the property, but he also let the buyer know about the covenant.
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The purchaser replied that he was aware of that restriction. After the deal was completed, the curious vendor asked the purchaser about the proposed use to which the land would be put and he came to know that the purchaser intended to put up a petrol pump on the said plot. Thus human intelligence changed a `bad covenant’ into a lucrative business use. The plot worth few thousands fetched a price in lacs. That is why it is said that stream of thoughts are the wings gifted by the nature to the whole mankind. With these wings of thoughts, we can solve many riddles.
One may wonder why Harshad Mehta’s flat in NCPA Apartment at Nariman Point in April 2000 fetched only 460 lacs whereas a similar flat of Chabrias at the same period of time in the same building fetched 603 lacs. Both flats were sold in the open market. The reason for low price in the case of Harshad Mehta’s flat was the forced sale under court’s auction order. Purchasers exploited the distress condition and offered less price. It was a case of a unwilling seller and sale in the shortest period of time. In the other case, plenty of time for the free sale was envisaged, hence higher price was available.
It is thus clear that value of property goes on changing depending upon facts and circumstances in each case at relevant period of time. Value assumes new colour and new meaning with the prefix or adjective attached to it. 5. 2 Meaning of value with different adjectives attached to it : It is an estimate of price likely to be fetched in the open market.
It is the present day value of the property derived by deducting depreciation amount from the replacement value of the property. The bungalow built in 1980 and having replacement value of Rs. 4 lacs in 2000 will have net present value of Rs. 16 lacs. 8 lacs are attributed to – depreciation. It is an estimate of price the property of an unwilling seller would fetch in open market in shortest possible time. Non performing assets of a bank if auctioned in the market will have a forced sale value.It is the actual value or true value of the property. In India, property owners understand this aspect very well because of black money involved in sale/purchase. Intrinsic value may be Rs. 10 lacs but sale agreement value may be hardly Rs. lacs. It is the value of the property estimated in accordance with the provisions of the concerned statute. Value for Wealth Tax purpose is worked out as per rule 3/schedule III of W. T. Act. It is not market value but statutory value and normally it is much lower than market value. It is the estimate of sale price of the old building after it has completed its probable service life. An old bungalow of 70 years age still in occupation of owner will have only salvage value in the market.
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Getting a clear picture of the Indian online real estate market is not straightforward, as as least four of the country’s property portals claim market leadership. If one conclusion can be drawn about India, which had a population of 1.21 billion in early 2011, it is that this is a particularly competitive market with portals working hard to gain the advantage. Here is a rundown of some of the key ...
It is a value to an individual buyer or seller for personal reasons. A person may pay 20% higher price for a flat than its market price, because his brother stays in the adjoining flat. It is the estimate of price offered by unwilling purchasers due to some stigma attached to the property. House may be believed to be haunted or it is built on burial ground. It will have low price. It is the value fetched in open market due to religious reasons or beliefs. In the South all plots at T road junction are considered inauspicious and such plots fetch low price.
