Case Study Flashcards
Why did you choose a residential disposal for your case study?
I thought it was a good example to show the breadth of my experience. The pathway guide stated that up to 30% of my experience could be in different property sectors and I thought it was a good example to show I had exposure to that, in a process which I had control over from start to finish.
What pre-instruction checks did you carry out?
Internal conflicts of interest check – asked within my firm and I considered my own interests, personal and financial.
What were your aims and did you meet these?
To provide a high standard of service throughout which would meet my client’s objectives of;
- Secure exchange of contracts by 31st of March 2018, being my client’s financial year end
- Secure best price
- Reduce holding costs
How did you strike a balance between these?
The offer eventually accepted was in line with Montagu Evans assessment of value – but also achieved exchange of contracts prior to the end of March. Whilst it may have been possible to achieve a higher price, this was not guaranteed and so I feel an appropriate balance between the two was struck.
What was included in your internal ToE?
- Identification of the surveyor
- Scope of services
> Review of legal due diligence and title docs >Inspection and Measurement
> Appointing and managing a marketing agents
> Overseeing legal process to completion
- Period of engagement
- Confirmation of terms (signature)
Talk me through the key characteristics of the property that affected value.
Location, Condition, fixtures and furnishings, size
What tenure did your client hold?
As the term of the lease was over 100 years it was thought not to have a material affect on value. I reviewed the lease terms of the comparable properties, which were all similar in nature in terms of ground rent/service charge.
How did the planning use affect value?
As the Property was C3 use in a self contained apartment block I do not feel the planning use affected value
Do you think tenure had an effect on value?
No. under the Leasehold Reform Housing and Urban Development Act 1993. Subject to owning the flat for two years, the leaseholder can force the landlord to grant a new lease for a term expiring 90 years after the end date of the existing lease.
- The leaseholder will no longer pay peppercorn
- Will have to also pay landlord half of the uplift in value from new extension.
Do you have to pay the landlord for this? (long lease extension)
Yes price for leases extension should be calculated by a professional valuer, designed to compensate the landlord for loss of ground rent and the right to get the flat back at the end of the term postponed. Landlord also entitled to half the ‘marriage value’/uplift in value as a result of the extension.
Why had the property not previously sold, in your view?
I believe the marketing period was too short to generate the required interest and market conditions had declined.
Talk me through your review of previous marketing efforts.
I requested information relating to the previous marketing efforts, for example the Auctioneer’s interest report I saw that only 2 people had downloaded the legal pack and there were no viewings. I confirmed with the agent the previous marketing channels used, which included an auction catalogue and the auctioneer’s website and targeted marketing for individuals who had previously expressed interest in similar properties. They also confirmed they had not marketed on the major property search portals/local property blogs.
What areas did you consider needed to be improved on? (Marketing)
- The marketing period – by nature couldn’t be improved by Allsop though I felt this is something that we could improve as a team.
- Marketing channels – I thought that marketing on local property blog websites would increase the audience.
Talk me through your desktop due diligence.
I reviewed the title documents and the report on title to ensure a clean and marketable title. I wanted to ensure a title restriction wasn’t the reason for the lack of interest.
Read the lease, environmental (flooding), planning, legal, contamination, to ensure that there are no materials which may be detrimental to the sale of the property.
Talk me through your safe inspection.
- In accordance with surveying safely, 2011
- I carried out a desktop pre-assessment
- Print off floorplans / site plans
- Planned my journey
- Told someone I was going & put it in my outlook calendar
- Consider the location
- Consider the external property (flat roof
- Consider the internal of the property
How did you know the property was piled foundations?
This is typical for when there are high loads, particularly in South East London where there are less good less good load bearing ground conditions/high loads. This was also confirmed by the developer after inspection.
How did you know it was a cavity brick wall?
No Headers were used.
How else can you tell if its a cavity brick wall?
Evidence of a cavity tray
Did you inspect the roof?
I did not but I am aware it is made from felt.
Why did you not take PPE?
I didn’t deem it necessary as it was a secure, modern residential block which appeared to be in excellent condition, after speaking with the property manager who had visited recently it was not deemed necessary.
How did you assess comparables?
I assessed my comparables on a number of criteria including
- Specification
- Location
- Condition
- Car Parking
- Date
How did you apply the hierarchy of evidence?
I focussed on recently completed transactions for which full data was not available but which sufficient evidence could be obtained.
I did not use any asking prices or historic evidence
How did you calculate net effectives?
I did not calculate net effectives
What specification did the property have?
The property was of reasonably high specification with high quality fixtures and fittings.
Why did you measure to GIA?
As per the information paper, comparable evidence in property valuation, 2012“ Whatever the property type and the basis of measurement, it is essential to ensure that the valuer applies the same method of measurement to the property being valued as is used in analysing the comparable evidence.” – This has since been corroborated by the latest comparable evidence guidance note – comparable evidence in real estate valuation (1st edition 1st October 2019, effective 9th October 2019)
What is the definition of GIA (resi)
Gross Internal Area is the area of a building measured to the internal face of the perimeter walls at each floor level
Whats the difference between GIA and IPMS 3B?
- Measured to IDF as opposed to surface wall.
- Areas occupied by the reveals on windows if assessed as IDF included
- Balconies – Included but stated separately
- Accessible roof terraces included but stated separately
Why would you use IPMS 3B and not IPMS 2?
.
Because I was measuring the area in exclusive occupation
How would your measurement differ with the introduction of IPMS?
I would measure using IPMS 3B, I would measure to the internal dominant face which would have been the surface of the large longer window in the reception room and bedroom.
What did you include in your GIA measurement?
Measured to the surface of the wall, above the skirting board, included the kitchen units and built in cupboards included this in part of the room measurement but identified it separately, as per residential agency guidelines within code of measuring practice within property measurement second edition.
How did you ensure accuracy? (measurement)
I checked my measurements with the existing floorplans
How did you assess current MV?
I analysed my comparable evidence and made adjustments in relation to the subject property. Once I had analysed the information available I applied a rate psf and multiplied this by the GIA of the property. I then sense checked the value with other similar transactions to ensure I was happy with the valuation.
Talk me through your assessment of market conditions.
Royal Woolwich Military Academy is a site which provides a setting desirable to prospective buyers. Woolwich is soon to benefit from Crossrail and whilst prices saw an initial jump as a result of this they have since stagnated, consummate with the wider London property market.
- The academy has not seen the same level of continued house price growth as houses closer to the Crossrail station due to 33 minute walk.
What is a ‘base value’?
The value used for the business case for the disposal of the Property.
What are your client’s requirements around disposal business cases and base values?
Disposal business case should never be set at a price below the external market valuation.
Why had the property been listed at auction?
In the hope of achieving certainty of sale and a relatively short timetable for the disposal of the property.
Why had it failed to sell even at a reduced guide price?
I believe this was due to the intensive nature of the marketing period and the property did not appeal to a national audience, such as the typical auction purchaser.
How did the Red Book apply to your advice?
PS 1-2 applied as with all written valuations however VPS1-5 I was exempted from as it was for internal agency purposes.
Why did you use the comparable method?
Because the property had no development potential, wasn’t an investment property or niche property.
Do you know of any recent guidance relating to the use of comparable evidence?
Yes. RICS Guidance note comparable evidence in real estate valuation (1st edition), October 2019.
What was included in that? RICS Guidance Note ‘Comparable Evidence in real estate valuation (1st Edition) October 2019
General principles of comparable evidence e.g. should use several comparables rather than single transaction, should be recent or similar, verifiable, consistent with local market practice
What does it say specifically about analysis of comparables (2 things)? RICS Guidance Note ‘Comparable Evidence in real estate valuation (1st Edition) October 2019
- Establishing a common measurement or other comparison standard (i.e. measuring on GIA for my case study in line with comps – will be IPMS going forward).
- Making adjustments – Need to consider how purchaser in the market would respond i.e. to a refurb/renovation – simple cost adjustment or further adjustment to reflect cost and time uncertainty to undertake works?
Why is an external valuation required?
An external valuation is required in line with internal governance. To demonstrate accountability as a public body that market value is always achieved for the disposal of NHSPS sites.
How did you liaise with Montagu Evens to establish a new valuation?
I critically analysed their valuation, gathered my own comparable evidence and formed my own opinion of value. I believed market conditions had declined in the six months since Montagu Evans last valued the property. I emailed my comparable evidence to Montagu Evans and asked them to refresh their valuation in light of the new evidence which they duly did resulting in a revised valuation of £240,000.
How did you apply your understanding of the Blue Book?
- I reported all offers as soon as was reasonably possible until contracts exchanged
- I kept a record of all offers received
- I kept my client unformed of negotiations and continuously sought instructions during this process
What recommendations did you give on marketing and route to market?
I recommended selling by private treaty due to the flexibility it would provide relating to the marketing period, which I considered would be key to successfully disposing of the property in the desired timeframe.
