Valuation is an estimation of the worth of something, especially one carried out by a professional valuer. Valuation of Real Estate is a multidisciplinary subject involving study of economics, law, building construction, study of human behavior, social customs and study of government policy. Some valuers call it an “Art” and some others call it a “Science”.
Valuation is both Arts and Science. It is an Art of estimating the value of the property based on scientific data.Valuation of the property is a very old concept. We can date it back with the time of beginning of civilization of human mankind. Man had learnt how to cultivate land and grow agricultural produce for his food requirements. He had also learnt art of developing land by erecting small huts for protection and shelter of his family members and for his associates in the group. This development of immovable property (asset) was also associated with development of herds of cow, horse, sheep etc. which we may call as development of movable asset.
This development of community settlements, an advent of civilization, also gave rise to system of exchange of commodities between different community groups. This exchange system was called barter system. To assess fair barter value, it was necessary for the group leader, to estimate fair worth of a commodity in terms of labour of its production and its need to his community as against worth of the commodity offered by him in exchange. Thus valuation of assets started with the beginning of civilization. We can say that earliest valuers were those group leaders (Community chief or Kabila chief).
A barter system is an old method of exchange. This (Barter system history) system has been used for centuries and long before money was invented. People exchanged services and goods for other services and goods in return.
Subsequently, exchange of commodity was evaluated in terms of money. Today we can say that women are the best valuers because every day they estimate value of a consumer goods in the market place, they haggle a lot and obtain fair exchange value for their money. Ultimate settled price of the commodity is between a willing buyer and a willing seller. Final settled price may or may not be same as original estimate but price is normally pretty close to the estimated value. This is the exact process of Valuation.