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Who is an accredited real estate evaluator?

The resident who has passed all the training tracks offered by the Saudi Commission for accredited residents in the evaluation branch in which he wishes to work, and has completed all field training hours, to hold the status of an associate member and continue training and attending courses until obtaining a fellowship certificate after completing 3000 hours of experience, and the fellowship holder can obtain a license to practice the profession and establish a company of his own if the general conditions apply to him, and in this case, he is called an accredited evaluator. No person is entitled to practice the valuation profession in any branch of valuation unless he is licensed to practice the profession in the same branch.

These requirements include:

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The Saudi Authority for Accredited Valuers was established in 2012, to localize the valuation profession in the Kingdom of Saudi Arabia, regulate the valuation sector, and control intentional misinformation, to preserve public money and prevent deliberate misinformation, which protects the rights of individuals, companies, and government agencies related to financial and real estate issues.

The authority began its work by developing laws and regulations governing real estate appraisal services in the Kingdom of Saudi Arabia following international valuation standards and has developed a set of specific rules and regulations that organize and monitor the work of real estate valuation companies.

Then the work of the Authority developed gradually, as it started by launching training programs for all branches of valuation, and it organized the issuance of fellowships and accreditations to become only through it, as before the establishment of the authority, valuers were trained at the academies of some valuation companies operating in the Kingdom of Saudi Arabia, such as Qaim Company, which was previously known as Qaim Real Estate Appraisal Company.

In this article, we will talk about the Saudi Authority for Accredited valuers, its programs, and its services.

What is the Saudi authority for accredited valuers?

It is the regulator of the valuation profession in the Kingdom of Saudi Arabia, and the source of regulations and legislation that allow valuers to do their job following international valuation standards, as well as provide qualification programs to accredit and qualify practitioners for this profession based on scientific foundations and global practices.

What are valuation sectors according to “SAAV”?

The issue of idle land is one of the issues most talked about by the real estate market in the Kingdom of Saudi Arabia, especially after the passage of the idle Land Fees Law, which was passed in 2013, intending to encourage investment and real estate development in the main cities in the Kingdom. Whether in cases of consensual sale and purchase, or cases of a forced sale, mortgage and insurance issues, and others.

Therefore, the Saudi Authority for Accredited valuers issued many recommendations and legislations related to the evaluation of idle land and their effect on idle land law.

First and before talking about valuing idle land, we must talk about what idle land is, the white land fee system, the stages of white land fees, and their objectives to understand their impact on the evaluation process.

• Increasing the supply of undeveloped lands to achieve a balance between supply and demand

• Providing residential and commercial lands at fair and suitable prices for middle-income individuals.

• Protection of fair investment competition.

• The city of Riyadh

• The city of Jeddah

• Dammam metropolis

• Mecca

• Medina

• Aseer suburb

• The city of Taif

• Jizan region

• Main & sub roads.

• Water, electricity & telecommunications.

• Sewage & flood drainage.

• Educational & health services.

• Security & religious services.

• Price range based on cadastral segments.

divided the spaces into three segments, the first: ranging from 10 thousand square meters to 1.0 million square meters. The second: It starts from more than 1.0 million square meters to 2.0 million square meters. The third: It starts from more than two million square meters or more, and the price of a meter of land decreases from the first to the third segment, and accordingly, the evaluation of the land is started from the segment to which it belongs.

• Types of terrains

Whether there is a “mountain, sea, valley” on the land, the presence of any of them on or around the land will reduce their final value by 30 percent.

• Ten parameters standard

It includes ten parameters for the availability of services and facilities or not, the relative weight of each parameter has been estimated, which is deducted from the value of the land if the estimated ratio for each parameter is not available, roads with a weight of 25 percent, religious services with a weight of 1 percent, security services with a weight of 5 percent Health services weighing 1%, educational services weighing 5%, torrent drainage weighing 3.7%, water weighing 11.4%, sewage weighing 11.8%, electricity weighing 25%, communications weighing 3.5%, the total is The total for those weights is relative to the coefficients to 92.4 percent of the estimated value of the land. To understand the role of these relative weights for utilities and services, in the absence of any of them according to the distance needed to calculate them or not, the value is deducted at the same relative weight of the service or facility. For example, on a land whose value was estimated at 1.0 million riyals, it was found that there is no availability of electricity, water, sanitation, and flood drainage, meaning a total of 51.9 percent for those facilities and services. One thousand riyals only, which is the value upon which the white land fee will be calculated 2.5 percent, which will amount to only about 12.0 thousand riyals, which is the amount of the fee that is less than the amount of the fee on the land “25 thousand riyals” by 51.9 percent, in case it is calculated based on its original value “1.0 million riyals.”

Why do both parties need evaluation services? In this case the Ministry of Housing and the owner of the land?

The fair valuation of idle lands is the only way to protect the rights of owners and government agencies alike, and it avoids double evaluation and the discrepancy between the valuation price and the actual price.

This ensures that government rights are not lost.

Based on the above, the two parties to the case must obtain an approved evaluation issued by evaluation offices accredited by the Saudi Authority for Accredited Valuers.

real estate appraisal and asset valuation, in general, has transformed in the last ten years from a mere activity practiced by those who work in real estate development and investment, to an independent profession organized with special requirements and qualifications, which is subjected to government supervision and requires years of study and training to obtain Membership and fellowship.

What’s the definition of an accredited real estate appraiser?

an accredited valuer is a valuer who has passed all training courses and finished all requirements by “SAAV” in a specific valuation sector,

those who wish to open their valuation facility, should complete 3000 hours of experience and pass fellowship exams.

these are called certified valuers.

What agencies need Real Estate valuation services?

• judicial authorities

• individuals for buying and selling

• governmental entities

• investment entities

What are the main purposes of Real Estate valuation?

• Mergers and acquisitions.
• Buying and selling.

• Mortgage.

Why should companies & individuals work with only Accredited valuers?

• Accredited valuers are qualified and hold many years of experience.

• Accredited valuers are licensed professional experts that follow IVS, national laws, and legislation.

• Accredited valuers are completely independent and impartial.

What are the documents that the accredited valuer must hold, and be shown to the client?

What are the personal characteristics that must be met by Real Estate valuers?

• Impartiality and complete independence.

• Honesty, accuracy, and organization.

• Self-confidence & adaptability

• Knowledge and well education

• Understanding market variables and being able to adapt to them.

Also called financial statements, they are written reports that explain quantitatively how a company uses or distributes its funds and assets.

Companies issue financial reports regularly and include detailed information to ensure accuracy. Typical financial reports also include income and cash flow statements, the capital statement, and the general budget.

Financial reports have different types, and their preparation is governed by the International Reporting Standards, which is known as IFRS. It is applicable in nearly 120 countries, including the European Union, most of Asia, and the Americas, and in the United States of America, the generally accepted accounting principles (GAAP) are still applied.

Before starting to prepare financial reports according to the fixed asset’s standard, companies must receive a full valuation of the company’s assets, and this valuation is usually called an accounting valuation, or valuation for financial purposes.

What are the types of financial reports?

What is the purpose of issuing financial reports?

According to the International Accounting Standards Board (IASB), the goal of financial reporting is to provide information about the financial performance, and changes in the financial status of an organization, which is useful to a wide range of bodies in making economic decisions.

Objectives financial reports:

• Providing information to investors, shareholders, and financiers.

• Providing information to protect the rights of employees in the public and private sectors.

• Providing sufficient information about the companies listed in the stock market.

• Facilitating the legal audit process.

What is IFRS?

International Financial Reporting Standards (IFRS) set common rules so that financial statements can be consistent, transparent, and comparable around the world. IFRS is issued by the International Accounting Standards Board (IASB). They specify how companies must maintain and report their accounts, defining types of transactions, and other events with financial impact. IFRS was established to create a common accounting language so that businesses and their financial statements can be consistent and reliable from company to company and country to country.

What does valuation have to do with financial reporting?

Valuation companies provide valuation services to companies in financial reports, to help legal auditors and accountants calculate the exact value of the assets owned by the company, also called accounting evaluation, or evaluation for financial purposes, which is the process of evaluating the company’s assets to prepare financial reports.

Many accounting evaluation methods are used when preparing financial statements to evaluate the assets of the company.

Valuers usually follow choose the appropriate valuation method.

based on the type of assets that the company owns, available information, and the previous financial reports of the company.

valuation process of the company’s assets for financial reporting is extremely important, since errors in estimating the value of the assets, whether intended or unintended, may lead to legal problems that would harm business owners, and may give incorrect results about Net income or loss, which negatively affects investors or shareholders.

• Ensure that the company provides true information about its financial status.

• Providing valuation reports that apply to IFRS in cases of corporate mergers or acquisitions.

• Determining and recognizing cases of depreciation of assets according to the market situation.

• Determining the exact value of intangible assets according to IVS

• Checking financial flows and comparing them to provide an acceptable opinion about the company’s financial assets following the International Financial Reporting Standards.
• Adopting international financial statements and ensuring that international standards are met.

How to come up with the best valuation report?

• Look up different valuation companies present in the Saudi market, which provide valuers accredited by the Saudi Authority for accredited valuers, who hold a fellowship.

• Contracting with the company to provide valuation services for financial purposes.

• Determining the scope of work, the type of assets, their size, and all the data that the valuer needs to start their work.

• Executing the valuation without interference from the client or one of their employees.

Many investors, factories, and production line owners, or those in agribusiness don’t have a clear image of the true value of their equipment, which may be important for many reasons.

business owners may want to buy or sell a truck or a used machine and need to know its fair value, or insurance coverage for the equipment, or use it as collateral for financing purposes.

So, to do this you need to work with machinery valuation companies, which are usually the same companies evaluating different assets, but specialized in evaluating machines and equipment through accredited valuers specializing in this particular branch, including us “QIAM” for valuation services.

What are the purposes of evaluating production lines, equipment, and valuation approaches “methods”?

1. Buying or Selling machinery

When buying or selling used equipment the most used methods are:

Fair market value, structured liquidation value, forced liquidation value

The choice of suitable method depends on the different conditions of sale and purchase, and in most cases, the value is lower in cases of a forced sale, as the owner does not have sufficient time to obtain a buyer at a better price and so on.

2. Insurance

Usually, insurance companies need to know the true machinery values for insurance claims, or to ensure that they have adequate insurance coverage, or in cases of wanting to obtain new insurance, so it is imperative to receive valuation reports through accredited valuers before you ask for insurance services.

Used methods:

3. Financial reporting & Finance purposes

business owners may own machines and equipment that they don’t plan to sell and want to continue to use, but need to know their market value for the financial reporting, or finance

usually, the cost approach method is used but some banks may offer to ask for a valuation report based on the forced liquidation value.

Examples of machinery that can be evaluated:

What are the three stages of the machinery & equipment valuation process?

1) Pre-contracting stage:

that includes meeting with the client, verifying them, introducing them to the valuer and the facility in which they work, approaches and methods used in the valuation process for machines, equipment, and industrial establishments, discussing risk management, determining the scope of work, resources, and schedule, inform them with fees and costs, and signing contract.

2) Pre-evaluation stage:

It includes receiving the evaluation request, determining the purpose of the evaluation, determining the machinery and equipment to be evaluated, determining the valuation date and the appropriate value basis, and collecting typical information for the asset to be evaluated, including:

Collecting cost and market data, including:

Collecting diagrams & architectural plans, including:

Geographical diagrams, site diagrams, location of machinery and equipment, process flow diagram, piping and instrumentation diagrams, and machinery workflow plans.

3) evaluation stage and report & Report issuing

It is imperative to choose the appropriate approach and method for evaluating machinery and equipment, based on several considerations, including purpose and value basis, type of machinery and equipment, and the information provided by all evaluation parties.

After completing the previous steps, the valuer should begin writing the evaluation report in compliance with international valuation standards, national or international accounting standards, regulatory issues, financial services regulations, and all concerned parties.

What should the appraisal report for machinery and equipment contain?

The Saudi Authority for Accredited valuers requires that the evaluation report include the scope of work, the valuer’s information, the client’s information, assets to be evaluated, the purpose of valuation, the basis of value, and other conditions.

The laws also oblige valuers to include the used method, reasons for choosing this method, methods applied, the assumptions presented and evidence of these findings, and the main reasons for any result.

The report should also contain other elements, including:

three appraisal methods are considered when valuing a piece of equipment: