Before you sell or value your rent roll, you need to ensure you are working with a valuer who genuinely understands the industry you operate in.
During the pandemic, many personal relationships felt the strain and there was an increase in divorce and separation in Australia. In addition to this, a lot of professional relationships ended with partners going their separate ways.
If you are dealing with a relationship breakdown, business-related or otherwise and own a real estate agency, you may find you need a valuation of your business, including your rent roll. Sometimes, a valuer can even be called on to give evidence in court.
Before you choose a valuer, there are some important points to be aware of.
Use an industry-specific valuer
Someone who doesn’t understand how a rent roll works within the real estate industry may not be able to come up with an accurate value.
For example, because rents rise over the years, historic income from rental properties may not accurately showcase current day value. A non-specific valuer might not understand this and may apply an incorrect valuation formula.
There is also the ‘goodwill’ value of your rent roll. If you have a good reputation in the industry, it can affect the value of your business. An experienced and specific valuer will be able to work with you to determine how this influences the amount your rent roll is worth.
Other factors to consider include:
The stability of your rent roll and how long you have had properties on your books
The risks your business faces in terms of staff stability and customer reliability
Competition in your area
Average benchmarks and where your business sits in relation to them
Current buyer demand.
To add to this, there are the expenses involved with running this area of your business, plus the trends followed by the property industry itself. Each can affect the outcome of a rent roll valuation.
If you use a generic valuer who doesn’t understand how these elements come into play, you may end up with a figure which is far from accurate. This can affect the outcome of an assets distribution during a personal or professional separation.
See more: How to value a rent roll
Know the court requirements
Different courts also have different requirements, so finding a valuer/expert witness who understands how to value a rent roll based on what the courts want is important.
As a very basic example, in the Family Court of Australia, the contents of an expert witness report should:
state the reasons for their conclusions; and
(b) include a statement about the methodology used in the production of the report; and
(c) include the material referred to in subrule (2) in support of the expert witness’s conclusions.
If you’re using a valuer who doesn’t follow the right methodology and isn’t able to support their conclusions in court or present information in the right format, you might find your case ends up being longer and more drawn out.
Ideally, whether you are leaving a marriage/long-term relationship or exiting a partnership, you will work with a valuer who has specific experience reviewing rent roll values and presenting them in court. This will make life easier for all stakeholders, including the judge and your legal team.
Get an accurate rent roll valuation and move on to the next chapter
If you are facing a crossroad in your life or career, having an accurate valuation of your business and rent roll will help you resolve disputes and gain clarity on what the future will look like.
By working with an industry expert, you can avoid the stress of having two valuations which vary widely, or ending up with a valuation which doesn’t correctly reflect the hard work you have put into your business.