Establishing Value at a Point in Time
Requests for retrospective valuations are becoming much more common, particularly in family law matters. Retrospective valuations are often necessary to establish a property’s value at the beginning of a relationship, thereby determining contributions for each party in the event of a separation.
These requests can be quite complex, and accurate information must be gathered at the outset to ensure a successful outcome. A detailed Agreed Statement of Facts is prepared at commencement, outlining the valuation instructions and agreed property details. This document forms the backbone of the valuation process and helps avoid complications down the track.
The Australian Property Institute (API) provides valuable guidance through its published paper on retrospective valuations, aligned with International Valuation Standards. This is a resource our team frequently refers to when undertaking this work.
The Importance of a Specific Date
One of the first challenges in a retrospective valuation is identifying the exact valuation date. While memories of relationship milestones may be hazy over time, valuers need a precise date to anchor their assessment. Some of the valuations I’ve completed date back as far as 1996, and yes, I was already a practising valuer back then.
Property & Market Complexities
Two key layers of complexity characterise retrospective valuations: the physical property itself and the market conditions prevailing at the time of valuation.
- The Physical Property
Properties often undergo renovations or improvements after the retrospective date. To determine the property’s condition at that earlier time, valuers rely on an Agreed Statement of Facts detailing any works completed. A current inspection can help us work backwards, though non-inspection reports are possible with careful qualification.
The further back the valuation date, the harder it becomes to reconstruct the property’s original state. We draw on historical photos from CoreLogic, owner-supplied images, and council records—including plans and approvals—to piece together an accurate picture. - The Market at the Time
Understanding historic market conditions is equally important. It is essential that the valuer has a good working knowledge of the market as of the assessment date, and it is a distinct advantage if the valuer was actively working in the profession at that time, as they can recall firsthand the style of properties, building materials, and broader market sentiment.
Not every valuer practising today has worked through periods of declining property values, yet these downturns are very real and influence accurate assessments.
Valuation Methodologies in Retrospective Valuations
The Market Approach (Comparable Transaction Method) is the primary method of valuing residential property, based on comparing sales of similar properties to the subject property to determine its value. It can be challenging to decide on the property attributes of sales properties that have undergone upgrades since the date of sale. The older the assessment date, the more difficult it becomes to find reliable data, especially before 2004, when platforms like CoreLogic and other websites began improving their archives.
A point of contention is the use of sales after the valuation assessment date. In the circumstances of a valuation for family law purposes, it is acceptable to use sales relatively soon after the assessment date, provided the valuer understands market movements between the sale and valuation dates, and there’s a lack of evidence leading up to the valuation assessment date.
The valuer must understand the market at the time of the assessment. I recently completed a retrospective valuation dated in 2000. Having worked as a valuer at that time, I could recall what was happening in the market. It was a very specialised property, so I contacted older local agents who were active back then and interviewed them to gain deeper insights into the market for that property type.
The Cost Approach (also known as the Summation Method) is a practical secondary method, particularly for older assessments. By combining land value with construction costs at the time, valuers can cross-check results from the Market Approach. Valuers use various construction cost reporting sources. At Acumentis, our long-held library of Rawlinson’s Construction Cost Guides, dating back to the 1980s (almost back to when Tim Rabbitt was valuing houses), provides a unique resource for accurate cost estimation.
Retrospective valuations involve a far higher degree of research, time and professional judgement.
The overarching message here is that experience isn’t just helpful, it’s essential for completing retrospective valuations, and we at Acumentis have it in spades. During a recent presentation to a legal firm, we calculated that between Commercial Director Paul Robbins, Business Valuations Director Teri Roberts, and myself, we bring close to 90 years of combined experience to this highly specialised work, and we like to think we’re only just getting started.