Property Valuation
Synonyms: Real Estate Valuation، Property Appraisal، Real Property Valuation
Last updated: 2026-09-25
Short Definition
Property valuation is a professional process in which an accredited valuer estimates the value of a property or real estate interest at a specific date, on a stated basis of value such as market value and for a stated purpose such as sale, financing or litigation.
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Legal Basis
Property valuation is governed by the Accredited Valuers Law issued by Royal Decree No. M/43 dated 9/7/1433H and its amendments, including Royal Decree M/190 dated 22/11/1444H, which placed the Authority under the supervision of the Ministry of Finance. Article 3 prohibits practising valuation without a licence for the relevant sector; Article 14 requires the valuer to sign reports personally; Article 20 requires disclosure of any direct or indirect interest; and Article 17 requires valuation records to be kept for ten years. Penalties under Article 32 include suspension for up to one year, a fine of up to SAR 200,000, licence revocation, removal from the register and imprisonment of up to one year. Valuers must apply the International Valuation Standards adopted by TAQEEM.
Practical Example
Khalid wants a mortgage to buy a villa in Al-Narjis, Riyadh, at an agreed price of SAR 2,400,000. The bank appoints an accredited valuer licensed in the real estate sector, who inspects the villa, analyses comparable sales in the district and cross-checks with the cost approach: land of 450 m² × SAR 3,200 = SAR 1,440,000, plus buildings with a replacement cost of SAR 1,150,000 less 15% depreciation (SAR 172,500) = SAR 977,500, a total of SAR 2,417,500. Giving most weight to the comparison approach, the report concludes a market value of SAR 2,350,000. If the bank lends on the lower of price and valuation, a common practice, Khalid must cover the SAR 50,000 gap on top of his down payment, or renegotiate with the seller using the report.
Common Mistakes
- ✗Confusing the asking price or transaction price with the assessed value; price is a negotiated figure, value is a professional opinion on a stated basis.
- ✗Relying on a broker's estimate or a verbal opinion for financing, litigation or financial statements; these purposes require a report from an accredited valuer licensed in the real estate sector.
- ✗Using an outdated report; value is tied to the valuation date and some bodies cap report age, e.g. real estate funds may not rely on a report older than 3 months when buying or selling.
- ✗Withholding information from the valuer, such as leases, building violations or mortgages, or pressuring the valuer toward a target figure.
- ✗Not stating the purpose and basis of value in the instruction; market value differs from investment value or liquidation value for the same property.
International Differences
Many countries use the International Valuation Standards (IVS) or the RICS Red Book. In the UAE valuers are generally required to register with the local land authority, such as the Dubai Land Department. In Turkey, valuation for banks and capital markets is carried out by firms and experts licensed by the Capital Markets Board (SPK). In Egypt, mortgage finance relies on valuers registered with the financial regulator. Saudi Arabia is distinctive in having a dedicated law and a single professional authority that licenses each valuation sector separately and formally adopts IVS.
