Market Appraisal

Question 1

What does Market Appraisal encompass?

Answer 1

Activities which enable a surveyor to advise a client who is considering marketing their property what sort of price parameters they consider likely.
- Not a detailed reflection on MV but lets clients consider whether or not to market their property and how important issues such as timing, marketing approach and the competitive environment may affect them.

Question 2

What is the difference between MA and a formal valuation?

Answer 2

MA often incorporate an element of hope value and some forecasting. Valuations rely much more than appraisals on detailed analysis of comparable evidence. MAs are not Red Book Global valuations

Question 3

General issues to consider when doing a MA

Answer 3

Current economic background to the relevant property market:
- Market Influences; e.g. SDLT, rates, overseas buyers, development activity, interest rates and mortgage finance availability, current LTV ratios, understand current IRs
- Interpreting the market as an expert:
- National and local data; Trends and hotspots, key players: developers, lenders, buyers, renters, sellers… development pipeline, supply & demand (current conditions/ forecasts)

Question 4

Per each example: the following needs to be considered when pricing the property

Answer 4

How did you gather comparable evidence?
How did you reflect comparable information to price the subject property?
How would you deal with a situation where there was little comparable evidence?
Which pricing technique did you use (e.g. comparative pricing or residual pricing)?
What risks to pricing did you consider?
Any property specific attributes or limitations which affect pricing, e.g. physical characteristics, lease terms, location or ‘special purchaser’ possibility?
Did you think a competitive or cautious approach to pricing was sensible?

Question 5

Per each example: the following needs to be considered when potentially marketing the property

Answer 5

What did you consider regarding timing of bringing the property to market?
How the best price could be achieved, e.g. improving the property’s condition?
What were your thoughts on a potential negotiation strategy?
How did you / could you have approached the promotion of the property through advertising and introductions?
How did you consider the client’s budget to ensure good value for money?

Question 6

Per each example: the following needs to be considered when managing the instruction?

Answer 6

Was an inspection or survey undertaken?
Did you issue suitable terms of engagement (and what did these include)?
How did you report to your client?

Question 7

For each example to L3: ensure that you can discuss the following:

Answer 7

• Current and forecasted supply and demand trends, and where such information can be obtained
• Risks associated with the use of economic, social and property market forecasts
• How forecasts will affect your client’s property and its market ability in the short, medium and long terms

Question 8

When will a MA not be appropriate

Answer 8

When a client needs advice for the following:
- A purchase report which includes a valuation
- Secured Lending valuations
- Tax returns
- Accounts purposes
- Charities Act 2011 and 2022 valuations

Question 9

Things to remember:

Answer 9

If a professional opinion is given, it is advice
if any advice is given, suitable professional indemnity insurance must be in place