Land valuation system
The land market in Jordan has witnessed an exceptional prosperity
during the last few years. Land prices have increased ten-fold in some
places, in Amman and elsewhere. This situation has necessitated
developing a modern evaluation system, and training appraisers to use the
system property. DLS has taken the responsibility to do this, because this
subject is not being taught in the local academic institutes. A land valuation
system has been established and applied since 1998.
1- General
 Who is interested in land valuation (LV)?
Almost everybody, whether in the public or private sector, is interested
in LV, especially the banks when giving loans, the government when
expropriating land, municipalities, land agents, housing sector investors,
law courts, construction companies and all citizens in general.
 Who will assess the immovable property?
LV experts in the DLS, the banks, the law courts………
1-1 Definitions:
Value, price, immovable property, market value
Factors affecting market value:
The commodity use or benefit, and its scarcity or abundance in the
market
2- Laws, bylaws and regulations are those of DLS.
3- Committee of land valuation experts (CLVE)
One LV committee has been established in each of the 3 regions of
the country, and they are under the LV Directorate in the DLS center.
Each committee consists of a president and 3 members besides a
secretary, and an assistant, who is also a staff man.
The LV committee should have office equipment with maps,
computers, printers, and cameras. It is located within the main LRD in
each region.
3-2 The LV committee’s tasks:
1- Preparing reports about land market values.
2- Fixing the land base value on the base price maps.
3- Collecting data about rent value per m².
4- Establishing the general bases and rules of valuation.
5- Providing the public with LV information.
3-3
The committee of experts has the right to get any information
necessary to decide the property value. It gets it by legal means, with
the support of courts and the government authorities.
3-4 Legal status:
Experts committees are considered independent public entities
Legal supervision: DLS/Ministry of Finance.
Technical professional supervision: LV Directorate/DLS
3-5 Legal responsibility:
The CLVE members are not deemed responsible personally, but the
government, represented by DLS, bears all the legal consequences.
3-6 financial status:
The CLVC members get reasonable indemnities. Their values are
decided by the DLS Director General, according to special regulations.
4- Data base:
4-1 Content
- Village name
- haud (block) name and number
- parcel no.
- sheet no.
- Sale contract no.
- Valuation card no.
- Type of transaction
- No. of floors
- Real estate photo
- Land area
- constructed (built) area
- Land estimated value
- building estimated value
- Type of building
- Type of land
- zoning status
- Annual rent value/m²
- declared sale price
All the above data are acquired from the valuation card in all its 4
forms .It contains Information:
- about the contract
- about the land parcel
- about the building
- which permits to value the land and the building
- which permits to take an appropriate action about the estimated
value
5- Factors affecting the real estate value:
1- Regulations and their amendments e.g.
 In the year 2000, the law of lessors and tenants was amended.
In 2001, the law of mortgage on real estate was amended.
 City planning and zoning modifications, or extending the urban
zoning areas
 Taxes (sales tax) imposed on the services of land agents
2- Economic situation:
 Money liquidity level
 Interest rates on credits, income of real estates.
 Supply and demand, e.g. concerning certain types of houses,
such as low income flats.
 Inflation
 Un-employment

3- Land market situation (Stable, prosperous, or inactive)
4- Land market trends
5- Building cost: materials, labor
 Immovable-related factors:
1- Location
2- Topography
3- Technical aspects (geometric form, frontage length, depth, type
and quality of construction.
4- Zoning regulations (Land occupancy ratio, i.e. Ratio of building
area to land area), maximum allowed building height.
5- Available services and infrastructure
6- Environmental factors (Noise, high voltage electric lines,)
7- Method of exploitation
8- Building age, wear and depreciation
6- Land parcels value/m² map (Index) valuers prepare and use this
index to show data concerning each land parcel:
E.g.: (70/p)/2001/5
70: 70 JD/m², is the price for this same land parcel
P: planned by the municipality
2001: year of sale contract
5:No. of the valuation card
6-1 Purpose of indexes:
- They help to prepare the “Base value map” for each hawd
(block of parcels) and neighborhood (quarter)
- They are used to prepare the annual land values reports
7- Base value map
7-1 Definition: It shows the mean value per square meter in a
certain hawd (block) or quarter. These maps are usually good for
one or two years. Thus it gives a mere general indication of the
average value/m2 in the concerned area. Of course, the
particular aspects of each parcel are not considered here.
The base map should be available to the public. However, a
specific land parcel value cannot be deducted from the base
map, but the parcel must be visited and assessed, taking into
consideration all positive and negative aspects related to it.
7-2 Purpose of base value map.
It gives an indication of land prices in a certain area. It shows the
principle of transparency that the DLS adopts in dealing with all
its clients: citizens, banks, courts, land agents, valuers, etc.
8- The Land value report
8-1 Legal aspect
It is considered as a legal reference if it is issued by a licensed
valuer or an authorized entity such as the DLS.
8-2 Objection
The concerned person has the right to object to the report. The
objection will be reviewed by the committee of land valuation
experts (CLVE) at DLS, unless the same report has been
sanctioned by this same committee. Its decisions are considered
final and uncontestable.
8-3 Conditions:
The preparation of the reports needs a serious and precise
search and investigation of the concerned real estate, and
making a correct and unbiased decision, based on the available
data, and the expert’s experience.
8-4 The value report contents
8-4-1 The Introduction, it includes:
 Defining the client who asked for the report, and the owner of
the real estate.
 Its objective
 The real estate registry data (village, hawd, parcel no., area…)
 Legal aspect of the real estate.
 Date of the report
 Date of the valuation
8-4-2 Real estate description
 Land: location, legal aspect, area, development, zoning type
 Type and area of the building that can built on the land
 Any attachments or rights on the real estate that might affect
the value
 Taxes and fees imposed on it
 Type of use and if it is temporary or permanent use
 Proximity to services and roads
 Shape, soil type, environmental effects
 Connection to sewage water network
 Ratio of unexploited area
8-4-3
Description of the building and any improvements on it
 Improvements:
 Type and purpose
 Year of construction
 Presumed life span of improvements
 Exterior improvements
 The main building
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Type of exterior and interior walls
Floors
Stairs
Insulation
Actual use of the building
Electromechanical system (heating, conditioning, lifts)
Interior decoration
Doors, windows, blinds
8-4-4 Valuation
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Land value
Building value by yield (income) method
Building value by cost method
Building value by comparison method
Lump sum value (land and building as estimated by the valuer)
Lump sum value (land and building as estimated by the LRD
director)
 Signature of both of them
8-4-5 Report annexes
 Plans
 Calculations
 Photos
11-
Real estate valuation (The Arabic manual gives general introduction
and the explanation of the three main valuation methods)
12-
Mathematics of valuation
(The Arabic manual gives formulas and examples.)
No.
1
2
3
4
5
6
7
8
Type
Cost JD/m²
Separate simple house (popular
90
category)
Simple flat
80
Separate stone house
140
villas
210
palaces
325
Flats, store
140
Commercial/shops
100
Commercial/offices
140
The actual price table
Cost + benefit
115
110
175
265
400
175
125
175
Another table gives the estimated values of orchards, forest trees and plant
hedges. The table gives the value of different types of trees according to
their age.
- Estimating the value of vacant roofs, taking into account the value of
common facilities, which include the land.
Principles of building valuation
An ad-hoc committee worked on this subject in 2001 and came out with
the preceding table concerning buildings, together with a number of
standards and principles which are stated hereafter:
1-
The aim of real estate valuation in DLS is to collect legal fees required
in transactions such as sale and subdivision, to find the fair
compensation in case of expropriation, the appropriate price for an
accredited land, mortgage, distress or debt execution.
2-
The legal fees according to the law of land registration fees no 26 for
the year 1958 has taken into account the relations of parentage or
partnership, and the type of transactions, so all real estates should be
valued fairly (with no regard to the relation between the different
parties).
3-
The correctly estimated values are a true indicator of the economic
activity.
4-
One of the 3 valuation methods (cost, yield and comparison) should be
used as an exact indicator of the real estate value.
5-
The land and the buildings should be appraised separately
6-
Every building consists of 3 main parts: foundations, walls and pillars,
and ceiling
If the building has 4 stone frontages, then the foundations share is 35%
of the building cost, the walls 40% and the ceiling 25%.
If the building is made of bricks and pillars, then, the foundations share
is 40%, walls and pillars 25%, and the ceiling 35%.
7-
Buildings differ according to their purpose: residence, commerce or
industry.
8-
Buildings differ according to the type and quality of their finishing.
9-
Buildings have a virtual life age. They are depreciated at the end of this
term. The age of the building is determined by referring to the building
documents.
10- Some buildings are made for investment. They are meant to bring
income by renting or sale.
11- In case of selling residence flats (condominiums) the right of
overtopping and number of floors (existing and permitted) should be
considered in the valuation process
12- The infrastructure of the building, and if it is suitable, is taken into
account.
13- If the actual age of the building is greater than the virtual life age, then
the value is considered to be 30 JD/m² whatever the actual age is.
14- If the building is ruined or obsolete, according to official documents,
then the cost of demolishing it and getting rid of the rubble and debris
will be subtracted from the value of the land (calculated by the yield
method???)
15- Buildings of special purpose, such as factories, hotels, hospitals, and
outstanding buildings such as palaces and malls, will be appraised by a
special committee, including specialists related to the type of the real
estate to be appraised.
16- If the buildings of special use such as factories and hotels are to be
appraised for the purpose of selling them, then only the building will
be appraised, without considering the machines, restaurants, etc.
17- If the building belongs to one owner, and it consists of several floors,
not yet partitioned, then the property is dealt with as flats with
respect to the price/m2. The value/m2 of the services floor is values
at 60% of the estimated value of the other floors.
18- When appraising a building which is one of a group of buildings on a
non-partitioned piece of land, then the appraisal will only concern this
building.
19- If the building comprises commercial stores or shops overtopped by
residential flats or offices and clinics, then each type will be appraised
separately.
20- In appraising a residential building on a land organized as commercial,
then the possibility to change the use of the building should be
considered, or else it will be appraised according to its actual use.
21- The services floor in a partitioned multiple-floor and multiple-flat
building, will not be given a value, but its value will be distributed
among the other flats and floors.
22- The un-partitioned services floor in a building or a villa will be
appraised at 40%-60% of the value of an occupied floor.
23- If the store is partitioned into 2 levels, and the upper part has no
separate entrance, then this upper part is valued at 40 JD/m².
24- If the building is on a sloping piece of land, which is served by 2 roads,
one on its lower border and the other on its upper border, then the
underground floor which is adjacent to the lower road will be
considered identical to the ground floors in nearby buildings, which
profit from the surrounding land. The ground floor adjacent to the
upper road will be considered as first floor.
25- The value of the vacant roof will be the cost of one m² of the roof
multiplied by its area, plus the share of the roof in the land and the
common services and facilities.
26- The metallic constructions, like hangars, will be appraised by
considering the metallic beams, the height of hangar in the middle and
the sides… etc.
27- Good or deluxe flat building: consists of 4 floors, 8 flats, 4 stone walls,
lift, central heating…
28- Simple (low category) residential house, one floor, frontages aremade
of cement blocks. No central heating, etc.
29- Simple flat building: more than one floor,
30- Medium quality house: one floor, one frontage made of stone, and the
other 3 of cement blocks….
31- Medium quality flat building: one stone frontage, several floors and
flats, flat area around 200 m²…
32- Residential villas: 4 stone frontages, special architectural style, at least
2 floors of 200m² or more….
33- Palaces: stone building, on a large and distinguished land parcel.
Excellent architectural style….
34- When deciding the type of building, all remarks recorded at the left
side of the table should be accounted for.
35- The metallic hangar is appraised at 50-65 JD/m².
36- The value/m² of the roof = the cost of 1 m² of the building (Skeleton) x
25% (in stone buildings)
37- All prices in the table apply for the first floor in multi-floor buildings.
38- The value/m2 for the ground floor, which profits from the property
land, will be increased by 40 JD.
39- The value/m2 for the second and third floors will be decreased by 20
J.D
40- The value/m2 for the underground floor will be 40 JD less than that for
the ground floor, the second underground will be decreased by 50 J.D
compared to the ground floor,….
41- The prices in the table will be decreased by 10% for real estates in
governorate centers other than Amman, Az Zarqa’ and Irbid.
42- Assessed land value = sold area x base value/m² + positive or negative
qualities.
43- Trees are valued as in the related table (not included here), which is
used at the Ministry of Agriculture.
44- Extra constructions, such as retaining walls, swimming pools… will be
appraised and added to the total estimated value of the real estate.
45- Any ratios or values not mentioned in the valuation card must be
determined by the valuer or investigator.
46- Positive and negative aspects must be considered by the valuer and
included in the final value of the real estate.