In short
Four terms carry most of the confusion. Market value is what a property should exchange for between willing, unpressured parties at a stated date. The effective date is that date. The capitalisation rate is the yield the market requires, and it converts commercial income into value. WALE measures how long the income is contracted for. Everything else below builds on those.
A to Z
A — C
- Adjustment
- The amount a valuer adds to or deducts from a comparable sale price to account for differences in land size, condition, position or improvements relative to the subject property.
- API
- The Australian Property Institute, the professional body whose practice standards and code of conduct accredited valuers work to.
- Appraisal
- An informal market estimate, usually free and usually provided by a real estate agent as a marketing tool. Not a valuation, and not accepted by banks, courts or the ATO.
- Arm's length
- A transaction between unrelated parties each acting in their own interest. Sales that are not arm's length are poor evidence of market value.
- Basis of value
- The specific definition of value the report applies — most commonly market value, but sometimes market rent, insurable replacement value or in-use value.
- Body corporate levies
- Contributions payable by a strata owner for administration and the sinking fund. High levies or a weak sinking fund reduce unit values.
- Capitalisation rate
- The yield the market requires for an asset of a given type, location and risk, derived from analysed sales of comparable tenanted property. Value equals net income divided by this rate.
- City Plan
- The Gold Coast City Plan — the local planning instrument setting zoning, overlays and development provisions that constrain or enable a property's use.
- Comparable sale
- A recent arm's-length sale of a property genuinely similar to the subject in type, location, size and condition. The core evidence in residential valuation.
- Cost base
- The tax value from which a capital gain is calculated. Where no purchase price exists — inheritance, change of use — a valuation establishes it.
D — I
- Discounted cash flow (DCF)
- A method that projects income and expenditure over a defined horizon, including a terminal value, and discounts the total to present value. Used for investment-grade and development assets.
- Easement
- A registered right for another party to use part of the land — a drainage line, access driveway or service corridor. Can restrict building and reduce value.
- Effective date
- The date at which the assessed value applies. A valuation is a point-in-time figure and cannot be assumed to hold at any other date.
- Encumbrance
- Any registered interest or restriction affecting the title — mortgage, caveat, covenant, easement — that may constrain use or transfer.
- Gross versus net rent
- Gross rent includes outgoings; net rent excludes them because the tenant pays them. Valuations work from net income, so the distinction is critical.
- Highest and best use
- The most valuable use of a property that is physically possible, legally permissible and financially feasible — which may not be its current use.
- Improvements
- Everything built on the land: dwelling, sheds, pools, driveways, fencing, landscaping. Assessed for quality and standard, not just presence.
- Incentive
- A rent-free period or fitout contribution given to secure a commercial tenant. Amortised over the lease term when calculating effective net rent.
- Income capitalisation
- The primary commercial method: net market income divided by a market-derived capitalisation rate.
- Instruction
- The written brief defining the engagement — the property, purpose, effective date, basis of value and who may rely on the report.
L — R
- Land rate
- Value expressed as a rate per square metre of site area, used to benchmark land and industrial holdings against comparable site sales.
- Lettable area
- The measured area of a commercial premises that can be leased, calculated to a defined standard. Rent and value per square metre both depend on it.
- Loan-to-value ratio (LVR)
- The loan amount as a percentage of the lender's assessed property value. A low valuation raises LVR, which can trigger mortgage insurance or refusal.
- LRBA
- Limited recourse borrowing arrangement — the structure through which an SMSF may borrow to acquire property. Attracts close valuation scrutiny.
- Market rent
- The rent a property would achieve if let on the open market at the effective date. Determined separately from capital value, and required for rent reviews.
- Market value
- The estimated amount for which a property should exchange at the effective date between a willing buyer and willing seller in an arm's-length transaction, after proper marketing, both parties acting knowledgeably and without compulsion.
- Outgoings
- Property running costs — rates, insurance, body corporate levies, land tax, maintenance. Whether they are recoverable from tenants directly affects net income.
- Passing rent
- The rent actually being paid under the current lease, which may sit above or below market rent.
- Professional indemnity
- Insurance a registered valuer holds against claims arising from their professional work. A condition of most lender and legal panels.
- Registered valuer
- A valuer registered under the Valuers Registration Act 1992 (Qld) and listed with the Valuers Registration Board of Queensland. Only they may legally value property in Queensland.
- Reliance
- The named party permitted to depend on the report for the stated purpose. Other parties cannot rely on it without the valuer's written consent.
- Residual land value
- Site value derived by working back from projected end value less construction, holding, selling costs and developer profit. The standard approach for development sites.
- Retrospective valuation
- An assessment of market value at a past effective date, using only evidence available at that date and the property's condition as it then existed.
- Reversion
- The point at which a lease expires and rent moves to market. A large gap between passing and market rent makes the reversion a major value driver.
- Revetment wall
- The retaining structure along a canal or waterway frontage. Its condition and remaining life materially affect waterfront property value.
S — Z
- Sinking fund
- The strata reserve held for major capital works. An underfunded sinking fund signals future special levies and reduces unit values.
- SMSF
- Self-managed superannuation fund. Trustees must report fund assets, including property, at market value each financial year.
- Strata title
- Ownership of a defined lot within a shared scheme, with common property held collectively. Applies to most units, townhouses and commercial suites.
- Summation method
- Land and improvements valued separately then combined. Used for unique, rural or hinterland property where comparable sales are scarce.
- Tenancy schedule
- A summary of every tenancy in a commercial property: areas, terms, commencement and expiry, options, review structure and current rents.
- Terminal value
- The assumed value of an asset at the end of a discounted cash flow horizon, capitalised and discounted back to present value.
- Valuers Registration Act 1992 (Qld)
- The Queensland legislation governing who may practise as a valuer and the conduct required of them.
- WALE
- Weighted average lease expiry — average remaining lease term across tenancies, weighted by income. Longer WALE generally means lower near-term releasing risk.
- Yield
- Annual income as a percentage of value or price. Tighter yields imply lower perceived risk and produce higher values for the same income.
- Zoning
- The land-use classification applied under the Gold Coast City Plan, determining what may lawfully be built or operated on the site.
Something in your report you don't recognise?
Call and ask. A valuer who cannot explain their own report in plain English hasn't finished writing it.