Property owners should always understand what constitutes the market value of their property and how this compares to a property’s selling price.
Rob Roper of Roper & Associates says when registered valuers determine the open market value of a property, they stipulate whether the figure includes or exclude VAT and if it includes or excludes the agent’s commission.
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They also stipulate that all the necessary research establishing the property value has been undertaken; that the property does not have any restrictions on its title deed and/or the local authorities’ town-planning and building controls that may be prejudicial to the property and so affect the value negatively.
“Both the buyer and seller must have full knowledge of the rights to the property usage, development potential and any title deed/lease agreement restrictions.”
A good example of this, he says, is the Department of International Relations and Co-operation which paid R100 million for a site in New York on which to build a new embassy, only to discover that they were not allowed to develop the site.
“Therefore, the R100m is not the open market value.” Roper says “selling price” is a loose term that can mean the anticipated price of a property but is not necessarily the amount achieved or registered in the Deeds Office.