In WA, when valuing a property affected by contamination, what approach must the valuer take?

Q: What is the correct answer to: In WA, when valuing a property affected by contamination, what approach must the valuer take?

The correct answer is Assess the impact of contamination on value, including estimated remediation costs, stigma effect, and any restrictions on use under WA environmental legislation. Option C is correct because when valuing contaminated land, the valuer must assess the full impact on value including estimated remediation costs, the stigma effect (market perception), restrictions on use under the Contaminated Sites Act 2003, and the classification status on DMIRS' contaminated sites register.

Q: What background knowledge is needed for this Valuation question?

Contamination affects value through direct costs (remediation), indirect costs (stigma — the market's reluctance to buy even after remediation), and use restrictions (certain activities may be prohibited). The contaminated sites register classification (investigation required, remediation required, remediated, decontaminated) also affects value.

Q: What is a good way to remember the answer to this Valuation question?

Value contaminated land by assessing: remediation costs, stigma effect, use restrictions, and classification status. All reduce value below clean equivalent. Think of contamination as layers of value reduction: cost to clean up + market reluctance + restricted use = significant value impact.

Q: What exam tip applies to this Valuation question?

Don't forget the STIGMA effect — even after remediation, market perception can further reduce value below clean equivalent.

Q: How does this Valuation concept apply in Australian real estate practice?

A valuer assesses a former service station site in Bayswater classified as 'contaminated — remediation required'. They estimate: clean site value $800,000, remediation cost $200,000, stigma discount 10% ($60,000). Assessed value: $800,000 - $200,000 - $60,000 = $540,000.

Question

ValuationWAHARD

In WA, when valuing a property affected by contamination, what approach must the valuer take?

Answer Options

A

Ignore the contamination as it is an environmental issue, not a valuation matter

B

Value the property as if clean and note the contamination as a caveat

C

Assess the impact of contamination on value, including estimated remediation costs, stigma effect, and any restrictions on use under WA environmental legislation

D

Refuse to value the property until contamination is remediated