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Property Appraisal Report: Do not look only at the last line*
Mr.Kitti Patpongpibul**
President, Housing Mortgage Association
Vice President, Valuers Association of Thailand
*This is a summary of Mr. Kitti's speech given on August 23, 2002 to the executives of the Provincial Electricity Authority (PEA) in the closing ceremony of the property valuation seminar course. The course was organized by the Thai Real Estate Business School (TREBS) for the PEA.

**Mr.Patpongpibul was one of the founders of the Valuation Association of Thailand, established in 1986. Currently he is the President of the Housing Mortgage Association. Previously, he was Deputy Governor of the Bank of Thailand, Managing Director of Nakhon Thon Bank and Managing Director of the Government Housing Bank (GHB). At the GHB in 1987, instead of using the Bank's internal staff, he started to organize outsiders to do the appraisal work for the GHB. With the intention to maintain check and balance, set high professional standard, speedy and fair service for the Bank's credit clients. After a few years, other financial institutions followed his example. Mr. Kitti's initiative was the true beginning of the property appraisal profession in Thailand.

        Many appraisal report users only focus on last figure, "the appraised value" without giving any thought to the basis of calculation, analyzing methods and how the data are acquired. Focusing only on the final value figures may result from the misunderstanding of the nature of property valuation work or from the habit of some customers who try to put pressure on the appraiser to state the value as his/her wishes or believes.
        In fact, the first thing that user should bear in mind is..…" Does the appraiser have done enough research?" How reliable is it? Is the analysis sound enough? If these considerations in the report are satisfied, then we can checkout if the value is appropriate in the light of those findings. Emphasizing only on the final value may be rendered as the intention to have the appraiser stating the valuation as one requires. The work and contribution of the appraiser to the client is then diminished in value. Besides, the appraiser is often times lobbied to give the distorted value to satisfy the clients. In some cases, the service fees will depend on the value appraised.
        We can classify mal-practices into three major categories. The first type is that only the appraiser does not properly survey and research or analysis. The second type occurs when appraiser conspires with financial institution's dishonest clients. The most dangerous type is that when the financial institution's officer conspires with the dishonest client and rogue appraiser. This can even bankrupt the financial institution.
        In addition, the client should bear in mind that it is not the appraiser's duty to certify or guarantee the appraised value. It is also an obligation to the client to use his judgment. The client should not rely on the appraiser's valuation alone. As in the case of medical surgery, an agreement from the patient or from his or her relatives not to claim damages if there is any unexpected mistake is needed before a surgeon can operate on the patient.
        If we look at it fairly, we will see that the appraisal fee is very small compare to the property value. For example, a house costs about Bht.1,500,000 (AREA's survey on average house price in Bangkok Metropolitan) the appraisal fee charged is around Bht. 2,000 or 0.13% while the house broker fee is around 3%. Thus, how could the appraiser guarantee for the unexpected mistake? An English court passed judgment using this reason when a case is taken to court. However, the client can bring the action to the court if he found the appraiser is dishonest.
        Note that it is very important for the client to study the whole report and use his own judgement and see if the appraised value is appropriate and sound according to the survey and research carried out and reported by the appraiser. The client should also ask the appraiser to explain the value appraised if he does not understand any part of the findings or the bases used because both the appraiser and the client cannot just look at only the last sentence. It is also the appraiser's standard and ethic to clarify the source and the bases used which finalize his or her professional's opinion.
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