Everything you need to know about a valuation certificate?

Valuation certificates are the basis of business decisions in finance, real estate, business, and legal documents. Applying for a loan, selling property, or searching for an investment to develop a business is always a sure way to determine how much your asset is worth. That is where the value of a valuation certificate lies. At Auction Dunia, we understand the importance of accurate asset valuation and offer reliable valuation services tailored to various industries.

So, what is a valuation certificate? Why is it needed? Who provides it? In this blog, you will get all these answers and make yourself understand valuation certificates and their applications in different industries better.

What is a valuation certificate?

A valuation certificate is a document that mentions the approximate value of an asset as estimated by a qualified and experienced valuer. The certificate can be issued for any number of assets, for instance:

• Real estate
• Jewellery or precious metals
• Vehicles
• Equipment, machinery
• Shares or securities
• Intellectual property or brands

It has proper information like the current market value of the asset, basis of valuation, methods used, and date of valuation.

Who issues a valuation certificate?

There must be the signature of a professional valuation agency or a certified professional valuer. Professional and legal organisations that license and regulate the valuers are available in every country. For example:

• In India, the valuers must be registered under the Insolvency and Bankruptcy Board of India (IBBI) or with other regulatory authorities, depending on the asset type.
• For valuing property, the certificate is generally signed by a chartered engineer or registered real estate valuer.
• For gems and jewels, the valuation certificate is signed by gemologists or chartered jewellers.
• For vehicles, approved vehicle appraisers or insurers are permitted to give a valuation report.
• For business assets, financial analysts or chartered accountants do valuations as per agreed accounting norms.

What is the information found in a certificate of valuation?

Though the format varies for every asset type, there is a prescribed form of certificate of valuation that should contain the following:

• Name and contact details of a valuer
• Name of the owner of the asset
• Description of asset
• Purpose of valuation
• Valuation approach
• Valuation date and date of inspection
• Market value or fair value of the asset as of the date of valuation
• The stamp and signature of the valuer
• Objectivity and independence statement

The certificate is signed over the valuer’s or the valuer firm’s letterhead.

What is the importance of a Valuation Certificate?

Asset valuation certificates are required in the majority of legal and financial situations. They are required due to the following reasons:

1. Loan and mortgage approvals

Banks and financial institutions generally require a certificate of valuation of an asset or property before providing loans or mortgages. It enables them to determine collateral value and lending risk.

2. Income tax and capital gains assessment

To sell or transfer ownership of real estate, the valuation certificate is utilised for computing capital gains and taxes thereof. It is useful, especially where properties have been acquired decades ago under different market conditions compared to the present.

3. Visa and immigration purposes

Embassies might require valuation certificates on properties or assets when seeking visas, especially business or investor-type visas, to determine your financial situation.

4. Business deals and mergers

Valuation is very important while selling, merging, or purchasing a business. Fair value is allocated between the tangible and intangible assets of the firm in the form of a certificate.

5. Court hearings and divorce settlement

In court hearings, such as disputes over property or distribution in the event of divorce, the valuation certificates are submitted before the court to help divide the assets.

6. Disclosure of assets and insurance

For insurance or tax announcements of assets, valuation certificates assist in verifying the value of your property or valuable assets like jewellery, antiques, and art.

Types of valuation certificates

Let us talk about the common types of valuation certificates according to asset categories:

1. Property valuation certificate

Sealed by registered property appraisers or civil engineers to ascertain the market value of real estate, houses, or buildings.

2. Jewellery valuation certificate

Granted by gemologists or jewelers to determine the market price of diamonds, gold, or other gems.

3. Certificate of valuation of the vehicle

For insurance cancellation, resale, or hypothecation. By automobile engineers, licensed automobile dealers, or insurers.

4. Certificate of valuation of business assets

For machinery, equipment, plant, and goodwill. Required in the case of a merger, presentation for investment, or financial restructuring.

5. Certificate of valuation of shares

Valuing shares of a private company for income tax purposes, investment, or share transfer.

Methods utilised in asset valuation

Values utilise the following methods based on the type of asset:

• Market approach – Derived from recent comparable market transactions.
• Cost approach – Derived from the replacement cost of the asset less depreciation.
• Income approach – Derived from the ability of the asset to produce cash flows or income.

Professional valuers have been instructed on how to recognise the most suitable method in compliance with the final purpose of the certificate.

Is a valuation certificate legally binding?

The valuation certificate is not a legal title instrument, yet it is compared to an instrument of subsidiary type with contents having a legally effective nature. It must be authenticated by a known and learned authority so that banks, the courts, or government offices can accept it.

Spurious or defective valuation certificates of wrong content would be subject to legal penalties, fines, or rejection. Correctness and authenticity become a necessity in such a situation.

How long does a valuation certificate remain valid?

There is no general validity of a valuation certificate, yet institutions attempt to keep a certificate valid for:

• 3 to 6 months for movable goods
• 12 months for immovable property

The value of the asset may change over time due to changes in the market, so always ask the requesting authority about the particular requirements of validity.

How to obtain a valuation certificate?

Below is a simple step-by-step guide to obtain one:

• Determine the asset to be valued.
• Go to a certified valuer or an agency approved by the government.
• Book an inspection of the asset.
• Provide supporting documents such as proof of purchase, past valuations, etc.
• Pay the fees asked (usually asset type and value-based).
• Get the certificate within two days.
• Ensure the certificate is properly signed, dated, and stamped to be valid.

 

Conclusion

A valuation certificate is not just a formality—it’s a trusted document that reveals the true value of your property and plays a vital role in various financial, legal, and administrative processes. Whether you’re selling real estate, applying for a loan, or managing wealth, a professionally acquired valuation certificate brings credibility, transparency, and confidence to the table.

At Auction Dunia, we ensure your assets are evaluated accurately by experienced professionals who understand the dynamic nature of the market. With constant market fluctuations, staying updated with your asset’s value is key to making informed and timely decisions.