Case Study Flashcards
- You carried out COI checks in accordance with RICS Global Professional Statement – Conflicts of Interest (1st Edition, March 2017). What did you do to comply with this PS?
carried out a conflict check on property, borrower, client, and connected parties on our internal system. Also sent out an email.
kept record of no conflict and proceeded to issue terms of engagement
- You reference Gross Development Value as a Special Assumption value, what does this mean?
An assumption that either assumes facts that differ from the actual facts
existing at the valuation date or that would not be made by a typical
market participant in a transaction on the valuation date.
- What were contained within your terms of engagement? You refer to VPS 1, is this mandatory? When would you depart from VPS 1-5 of the Red Book?
ToE
yes mandatory apart from the 5 exceptions:
agency
expert witness
negotiation
internal purposes
statutory
- What H&S did you take into consideration when inspecting the site
risk assessment for PPE
high vis jacket and boots
- Why did you look at resale evidence as well as new build evidence? What was the difference in pricing? Did you note a new build premium?
difference in pricing was approximately £30psf - which is approximately 7%
- Brick Kiln Lane comparable – did you allow for an element of quantum when arriving at your GDV?
Yes - my units were larger than Brick Kiln Lane and therefore had a lower rate psf adjusted for quantum
Charlotte’s meadow comparable - Why did you use this comparable?
substantially larger so mainly used the sales values here to compare to my largest 5 bed property.
Charlotte’s meadow comparable - Why were the plots rate psf wildly different for this comparable?
spoke to agent and plot 2 had higher specific due to buyers preferences
The oaks comparable - why were these substantially higher?
was a plot and build plot purchase but also plot 2 skewed this data. Plots 1 and 3 in line with the subject (especially plot 3). Plot 1 a lot larger than my smaller 5 beds hence quantum.
Overall location was marginally less exclusive.
- How much weight did you attach to your Sold STC evidence at Brick Kiln Lane? Was this your best comparable?
brick kiln lane was my most salient comparable - spoke to agent -only higher psf because of quantum
- You mention you were not informed as to whether the Borrower’s costs included professional fees, external works, or contingency. Did you try to clarify this with the Borrower at the time?
yes - asked client and borrower and borrower was being non-responsive, sent a property information form upon being instructed but they were lax at giving me information,
- How did you conclude the external works were an additional £20 psf?
our usual assumptions are between £10 and £20 psf. picked the higher amount due to the landscaping and garages
- Why did you adopt 10% contingency? Is this standard practice?
usually between 5-10% at that time - picked 10 to account for volatility with build costs at that time
- Why did you conclude that your opinion of MV was lower than the purchase price? Had the site been market tested
the site wasn’t market tested as it was an off-market transaction and accordingly MV was not established through the sale i.e. they overpaid!
Looking at your analysis of comparable evidence and demonstrating average – why might a straight average across developments may not be the best method?
A straight average doesn’t take into account the nuances between the different comparables, specification, size, specific location etc.
