Market Appraisal

Question 1

What is the difference between a Market Appraisal and a Red Book Global Valuation?

Answer 1

A Market Appraisal = informal (can be undertaken by anyone)
Valuation = formal (can only be undertaken by a RICS qualified surveyor, RICS Registered Valuer)

• An appraisal is gives an indication of what the property could be achieved in the market based on their assessment of the local market and transactions.
• An appraisal is therefore not a valuation and cannot be used for lending/funding purposes.
• A valuation has to comply with the Red Book, undertaken by a qualified person (a Chartered Surveyor would comply) and a valuer carrying out a formal valuation has Professional Indemnity Cover and therefore a fee will be paid.
• Normally there is no fee for a market appraisal.

Question 2

What guidance does RICS provide for estate agents?

Answer 2

UK Residential Real Estate Agency (6th Edition, 2017) - the ‘BlueBook’

Question 3

What are the limitations of market appraisal?

Answer 3

• Not a Red Book Valuation
• No PII cover
• Cannot be relied upon for secured lending purposes or financial reporting purposes

Question 4

Why are market appraisals carried out?

Answer 4

• Wanting to sell a property because of DD (debt or divorce)
• Get an indication of what their property could sell for (assess financial position)
• Assess whether vendors should move or improve
• Considering selling the property

Question 5

When should terms of business be given?

Answer 5

Before they are committed or have any liability towards you CHECK

Question 6

What is your duty of care as a real estate agent?

Answer 6

• To work with due skill, care and diligence
• Use our best endeavors to achieve the best possible outcome for our client
• To not release or misuse any confidential information
• Not appoint a sub agent without client permission
• Ensure all staff are appropriately trained and supervised
• To not accept instruction beyond field of experience

Question 7

What is included in a marketing strategy?

Answer 7

• Price
• Method of sale
• Marketing period
• Analysis of current market
• Approach to marketing
• Agreement to client regarding viewings TOB
• Arrangement for holding keys TOB
  CHECK

Question 8

What do you keep records of when undertaking market appraisals?

Answer 8

• Comps (source of comps)
• Inspection and measurements taken
• Reasons for adjustments of comps
• Must keep for 6 years - under the Limitation Act 1980

Question 9

What must you not deliberately misrepresent in a MA?

Answer 9

The price of the property - comes under the Estate Agent Act 1979

CPRS 2008 -

Question 10

What advice should estate agents provide?

Answer 10

We should provide realistic and justifiable advice based on our best professional judgement (RICS Bluebook)

Question 11

What is paramount in offering market advice for a sale?

Answer 11

• Ensure that is explicitly clear to the client that it is an estimate of the market price and NOT a formal red book valuation.
• If not it would be judged as a valuation from a registered valuer not a competent estate agent

Question 12

When reporting advice to the client what do you do?

Answer 12

• Advice in writing - always have everything confirmed in person. - - Forms part of strategy and advice and must be transparent and clear and include information on current market conditions.
• Estimated period of completion
  CHECK

Question 13

What is included in a market appraisal letter? (for lettings)

Answer 13

• The Price
• Marketing Strategy
• Potential tenants
• Fees