27 March 2020,
Dear AVAA Members,
For valuers, the uncertainty which permeates all markets will inevitably lead to challenges, not just in terms of carrying out valuations and determining value, but also in the reporting of those values in a way that is both helpful and informative to users. At the same time, we should not lose sight of the important role that professional valuers can, and will, play in restoring confidence to turbulent markets through the provision of well-evidenced and transparent valuations.
The AVAA aim to provide guidance to their members in relation to COVID-19.
IVS Valuation Report Disclosure Requirement
In accordance with IVS 103 Reporting, para 10.2, the Valuer should include in any report or advice a clear and accurate description of any significant uncertainty that directly impacts the valuation and its outcome. This is a requirement under IVS 103 Reporting para 10.2 which states:
“To provide useful information, the report must set out a clear and accurate description of the scope of the assignment, its purpose and intended use (including any limitations on that use) and disclosure of any assumptions, special assumptions (IVS 104 Bases of Value, para 200.4), significant uncertainty or limiting conditions that directly affect the valuation.”
Given the unknown impact that the current COVID-19 outbreak will have on the Australian non-real estate market, the AVAA considers that its Members should include a disclosure relating to significant Valuation Uncertainty in their valuation reports.
“The outbreak of the Novel Coronavirus (COVID-19) was declared as a ‘Global Pandemic’ by the World Health Organisation on 11 March 2020. We have seen global financial markets and travel restrictions and recommendations being implemented by many countries, including Australia.
The market is being impacted by the uncertainty that the COVID-19 outbreak has caused. Market conditions are changing daily at present. As at the date of valuation we consider that there is a significant market uncertainty. This valuation is current at the date of valuation only. The value assessed herein may change significantly and unexpectedly over a relatively short period of time (including as a result of factors that the Valuer could not reasonably have been aware of as at the date of valuation).
We do not accept responsibility or liability for any losses arising from such subsequent changes in value. Given the valuation uncertainty noted, we recommend that the user(s) of this report review this valuation periodically.”
Stay safe and be kind to each other,