Market appraisal Flashcards
What is market Appraisal?
When you value a property for sale or disposal purposes.
It is based on the sellers individual requirements, market conditions, expectation sand known market activity.
Based on some Hope Value and not fully based on market evidence.
What is hope value?
An element of market value in excess of the. existing use value, reflecting the prospect of some more valuable future use.
What were the key elements of the industrial appraisal?
Located in Yate
4,000 sqft
Asking rent £9.50 psft / c.£40k - competitive price
Needed a unit for storage with roller shutter access and a storage yard.
MA: What are the difference between a RBG Val and MA?
Market appraisals are carried out before putting a property on the market to give the vendor an idea of what is possible in terms of selling price. This might not be a true reflection of what the property is actually worth.
Red Book valuations are evidence-based opinions, formed by the comparison of relevant market data and the conducting of a profits method valuation.
Formal valuations are relied upon and required for lending purposes, and are used to satisfy a lender that the loan requested against a property is in line with its value, ensuring they do not lend beyond its value. As such, when comparing a market appraisal with a formal valuation, you will find that the market appraisal – based on hope – is likely to be a higher figure than the formal valuation – based upon evidence.
MA: Why does your advice not meet RBG standards?
Market Appraisals are not bound by the requirements within the Red Book. It includes the minimum content of a valuation report, the valuer’s qualifications.
These valuations can only be undertaken by an RICS surveyor who is a member of the RICS Valuation Registration Scheme where as an appraisal does not need to be undertaken by a surveyor. This is because Red Book vals can be used for secured lending purposes.
A Red Book valuation is designed to meet the high standards laid out in the professional standards and valuation technical and performance standards. An appraisal can be provided on an non reliance basis. It is merely offered as a guide to pricing.
MA: What factors affect sales process / marketability?
-The current market conditions
-market sentiment
-competition / on the market properties.
-The length the properties have been on the market
-Supply and demand
-Relevant comparable evidence
-My clients requirements such as speed of sale
-sale approach.
MA Herefordshire: What are the different ways of marketing?
Open Market and confidentially. Both have different pros and cons.
OM
+Full market coverage
+ Large buyer pool
+ PR
-Timewasters
-less quality of buyers
Conf
+higher quality of buyers
+ confidential nature makes it feel exclusive
- less buyer pool
-no PR - longer process
MA Herefordshire: What adjustments did you make?
Adjustments I made were related to the specification of the proposed lodges.
The lodges were of permanent construction and therefore less in demand and popular than the moveable lodges. Therefore the rate I applied the the proposed lodges on site were reduced.
Similar I adjusted for locational factors as this property was in a secondary location.
MA Bristol: How can recent market movements affect the marketability?
This relates to recent lettings and the prices paid for the comparable units.
Within this instruction this there was a limited amount of lettings within the vicinity which was evident with the amount of vacant units on the park.
MA Bristol: How can thin demand affect marketability?
What incentive could you offer?
This will effect the properties void period due to the limited demand for similar sites in the premises hence why they were still vacant.
I advised that an increase rent free period would be most appropriate. Perhaps 6 months. Or a reduced deposit.
Other incentives could be shorter term certain, alienation provision to enable tenant to assign or sublet. Not contracting out the lease, perhaps increased repair obligations on the landlord.
MA: Herefordshire: What is a multi faceted marketing approach?
This entailed utilising a number of marketing techniques such as mailouts, local PR, signboards, website listings.
