propertyvalueProperties have many valuations associated with them, which can be very confusing.

Here is a very short explanation on some of the most important valuations that homeowners will come across and how these impact you when you decide to sell your home.


It is human nature for us to value possessions, especially our homes. This is completely understandable for your home because of housing’s ranking on Maslow’s ranking. Our home not only is functional and aesthetic, but we often build up an emotional bond with our property. We also often see our family home as a major asset/investment in our estate. It is therefore completely understandable that we should attribute great value to our home. 


The municipal valuation is determined by the municipality as part of the Municipal Property Rates Act 6 of 2004. Many homeowners are aware that the municipality was valuing property but very few homeowners actually had a valuer in their homes. This was because of the sheer size of valuing all homes in a city. In most cases, in my experience municipality in most cases valued properties slightly higher and the reevaluated based on appeals. 

This value is not necessarily the same as the market value. In many cases, a homeowner may be surprised when an estate agent values their property at less than the municipal value. They will very often laugh and the go off and come back with their municipal valuation certificate or rates account and point out the municipal valuation. 

Sadly, this valuation is only relevant to determine your rates and is in no way an accurate market valuation of your property. Incorrect municipal valuation can result in you paying more rates than you should. Speak to your estate agent to confirm that your municipal valuation is correct.


This valuation is the cause of so much confusion. As a homeowner, you will often get a letter from your home insurer saying that your home is valued for RX,000,0000,000; which sounds great. But sadly, this amount is often an incredible amount. a home of say R1,000,000 may have an insured value of R1,600,000 (for illustrative purposes only). 

This value is the replacement value of the property, should it be completely destroyed. In other words, when a home burns down, the rubble must be removed and foundations have to be removed. As you will realise your home may have signs of wear and tear but the new building will be new, rebuilt at present building costs and will be a completely new home. This value is used to determine the premium for your insurance and will be of no concern to buyers.


When you need a mortgage bond (bond) or you sell your property and a buyer needs to finance the purchase using a bond; the financial institution will need to determine the value of the property. 

This is used to evaluate the property, which will form the basis of the bank’s security. In this case, a registered valuer will be sent by the bank and they will conduct a physical, on-site evaluation. This will include measuring the property, evaluating the property based on similar sales in the area based on its nature. 

This value is very much closer to the market value because if a buyer buys a property, it is highly unlikely that the bank will grant a loan for more than this value.  


This value is the value that the property will have to buyers who are willing and able buyers. This is value based on buyer’s perception of value. Buyers usually have an innate understanding of value and this they augment by viewing similar properties. 

Buyers very quickly get an idea what they perceive to be fair value for a property. In addition, buyers have become increasingly informed as a result of the impact of information availability. In addition, many buyers are assisted by experienced buyer’s agents. This means that buyers very often have a very good personal idea of what they consider fair value, which is informed to a lesser or greater extent, based on their research.


When deciding to sell many sellers have an exaggerated idea of value due to the impact of the values 1-4 above. Some sellers can be flexible if their estate agent can inform them as to trends, comparable sales and a clear view of the current state of the market and how it impacts their home’s value. If an estate agent has done their research, this phase will be effective in that an effective marketing strategy can be formulated. It also allows for the correct determination of the listing price (the price you will see in the paper or on the internet).

Buyers are attracted by an advert by a listing price which is close enough to the range they are buying in. If you list too high, a buyer who will love you home at the right price does not come to see it. The other side of the coin is not so pleasant. A buyer who for example is in the market at R2,000,000 has a clear idea after a very short time of what R2,000,000 can buy. If a home which is worth R1,800,000 is priced at R2,000,000; the buyer will come view it and will quickly feel short-changed and will not only not make an offer but will be either frustrated or even angry at their time being wasted. The net result is that you will not get written offers.

However, if property’s listing price is close to the buyers’ perception of value, not only will you get tremendous interest but you will get written offers. Interestingly, even if you get a buyer who makes an incredibly high offer (usually due to them being out of town buyers), the offer will usually fail because the banks will not grant the bond.

The objectivity of the estate agent is key to get an objective view of your property, if this estate agent also knows the market and does extensive research, they should be able to quite accurately determine the optimal listing price for the property and realise the optimal price of your property in the shortest possible time.

Knowing the difference between these valuations and knowing how to understand the difference is key to choosing the correct value to list your property on the market.

Clinton Begley (PPRE MPRE CEA B.PROC (NMMU)) is the co-founder, Principal/Director at BOLD REALTY, in Port Elizabeth, South Africa. In addition, to his passion for people and real estate, he is also an experienced trainer, coach, and mentor. He holds a B.Proc degree through the Nelson Mandela Metropolitan University and is a non-practising Attorney, Notary, and Conveyancer (with over a decade of experience). His legal and real estate experience is augmented by studies towards an MBA degree through the Nelson Mandela Metropolitan University Business School, which he is scheduled to complete soon. This article reflects the personal opinion of the author only, it is NOT intended as legal advice nor may any reliance be placed upon it. The article is purely for information purposes and you are advised to consult an expert before making any decision.

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