Model for Nama property valuations not the norm
Against a background of an inactive property market and discussions about the appropriate formula for pricing the transfer of property-backed loans to the National Asset Management Agency (Nama), an issue arises about concepts of valuation. The valuation debate is of the utmost importance given the proposed establishment of Nama and the legislative basis for its operation. Concepts and methodologies of property valuation, while apparently simple, are in fact quite complex. To understand valuation it is necessary to start by distinguishing between concepts of price, worth and value; terms that are frequently used interchangeably. Price can be taken to mean the actual observable exchange price achieved in a market, though this can be affected by the specific and unique terms and conditions of a particular transaction. Market prices are the evidence for valuations.