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APC > Measurement / Sales / Vals important questions > Flashcards

Measurement / Sales / Vals important questions Flashcards

1
Q

What are the three valuation approaches?

A
  1. Market (comp)
  2. Cost (contractors)
  3. Income (investment / profits / residual)
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2
Q

What are the six basis of value?

A
  1. Market Value
  2. Market Rent
  3. Fair Value
  4. Investment Value
  5. Equitable Value (Not UK)
  6. Liquidation Value (Not UK)
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3
Q

Define Market Value:

A

Estimated amount an asset or liability should exchange:

  • On valuation date
  • Between willing buyer & seller
  • Arms length transaction
  • After proper marketing
  • Where parties have acted knowledgeably, prudently and without compulsion
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4
Q

Define Market Rent:

A

The estimated amount that an interest should be leased:

  • On the valuation date
  • Between Willing buyer / seller
  • on appropriate lease terms
  • in an arms length transaction
  • after proper marketing
  • When parties have acted knowledgably / prudently / without compulsion
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5
Q

Define investment value:

A

Value of asset to particular / prospective owner for individual investment or operational objectives.

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6
Q

When is a red book valuation mandatory?

A

Mandatory unless:
1. Advice for negotiations / litigation
2. Valuer performing statutory function (excl. statutory returns)
3. Internal purposes - w/o liability and not shown to 3rd party.
4. Agency / Brokerage work (unless purchase report required)
5. As evidence for Expert Witness

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7
Q

How do reporting procedures differ for loan security values:

A

Comment on:
1. Environmental consideration
2. Suitability as loan security
3. Factors which conflict with MV definition.
4. Value with and without special assumption.

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8
Q

What do you measure in IPMS 1?

A

Area of building including external walls on floor by floor basis

State Seperately:
- Covered galleries
- Balconies
- Generally accessible roof terraces

Exclude:
- Upper atrium void levels
- open external stairwells
- Patios
- Refuse areas
- External parking

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9
Q

What do you measure in IPMS 2?

A

IPMS 2 measures the interior of office, including all areas available for direct use.

Measurements are taken to the IDF of the wall on a floor by floor basis in component areas.

State Separately:
- Galleries
- Balconies
- Roof terrace

Exclude:
- Open Light wall / upper atrium void levels
- Patio & decks at ground floor
- External parking and equipment yards
- Refuse areas and cooling equipment

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10
Q

What do you measure in IPMS 3?

A

IPMS 3 measures the occupation of floor areas in exclusive use, using same assumptions as IPMS2

Measured to IDF on floor by floor basis

Represents floor available on an exclusive basis to an occupier.

State Separately:
- Covered galleries and balconies
- Generally accessible roof terraces

Exclude:
- Standard facilities providing shared or common facilities.
- Lifts
-Stairs
-Motor Rooms
- WC’s
- Cleaners cipboards
- Plant Rooms

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11
Q

What are the main differences between IPMS3 and NIA?

A
  1. Perimeter measurements taken to IDF
  2. No exclusions for restricted height of less than 1.5m
  3. Columns included
  4. If multiple occupiers - area is taken to midpoint of partition wall.
  5. Galleries / balconies included and stated seperately.
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12
Q

How do you measure GIA?

A

INCLUDE:
- Columns
- Lift wells
- Mezzanines with permanent access
- Loading bays

Exclude:
- Canopies
- Fire escapes
- Covered ways

Measure Ancillary offices with GIA.

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13
Q

Which RICS document refers to measurement of land?

A

RICS Professional Standard: Land Measurement for Planning and Development Purposes Global Guidance Note (2021)

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14
Q

Can you please provide a summary of what RICS documents relates to Measurement?

A

RICS Professional Standard: Land Measurement for Planning and Development Purposes Global Guidance Note (2021)

RICS Code of Measuring Practice (2015) (GIA / GEA / NIA)

RICS Professional Statement: RICS Property Measurement (2018)
- Not mandatory yet
- Covers IPMS
- Aimed at establishing consistencies
- Report on dual basis
- advise clients about benefits of IPMS

IPMS ALL BUILDINGS (2023)
- Yet to be adopted
- Harmonises all building classes into a single set of standards

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15
Q

What tolerances are there for measurement?

A

+/- 5mm-50mm depending on use.

+/- 25mm for Agency / Valuation

+/- 50mm for planning / building footprint

(on an X-Y basis)

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16
Q

What estate agency legislation are you aware of:

A
  1. Misrepresentation Act (1967)
    - Applies to false statements etc
    - Civil offence (can be limited by exclusion clause)
    - Sued for damages / contract rescinded.
  2. Estate Agents Act (1979)
    - Relates to terms of business and declaration of interests
    - Can’t act dishonesty
    - Must tell client about offers recieved
    - Must disclose personal interest
    - Must provide clear ToE
    - Warning order / fine / prohibition order
  3. Consumer Protection Regulations (2008)
    - Must treat customers fairly
    - Can’t provide misleading marketing information
    - Unlimited fine / prison / prohibition order
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17
Q

Advantages / Disadvantages of Auctioneering?

A

Advantages:
- Relatively short timetable
- Certainty of sale
- Good for unsual property or property with strong interest

Disadvantages
- Cost of promotion / publicity
- Lack of confidentiality
- Vendor cannot choose purchaser
- Short marketing period

18
Q

Advantages / Disadvantages of Private treaty

A

Advantages:
- Flexibility
- Parties control process
- vendor not under obligation to sell
- Confidential

Disadvantages:
- Gazumping / Gazundering
- Late decisions not to buy
- Associated abortive costs

19
Q

What can you tell me about the land registration act 2002?

A
  1. Freeholds + leases over 7 years must be registered with a compliant lease plan.
  2. 10 years for AP claim
  3. Freehold transactions must have a compliant plan
20
Q

What is a Land Registry compliant plan?

A
  1. Drawn to a metric scale
  2. Have scale measurement bar
  3. Have scale noted
  4. Include 1:1250 scale location map
  5. Full address including post code
  6. North point
  7. Demise in red outline on the inside edge of the property
21
Q

Difference between formal and informal tender?

A

Formal:
1. Single chance to bid
2. High level of accountability
3. Detailed terms / conditions prepared / published in advance.
4. No opportunity for further bid
5. Highest figure usually accepted
6. Possibly lead directly for sale

Formal Tender -> Sale

Informal Tender:
Private treaty -> Informal tender -> Negotiations? -> Sale

Informal Tender:
- Can be used to obtain a best offer from applicants
- Further negotiations can happen
- Usually less onerous
- Doesn’t lead direct to sale.
- Negotiating mechanism

22
Q

What legislation is there for marketing signage?

A

Town and Country Planning (Control of Advertisements) Regulations 2007

Planning consent required for:
1. Commercial boards over 2sqm
2. Illuminated / Remote boards
3. Listed building / conservation area boards.

Must:
1. Be removed 14 days after transactions
2. Have owners approval

Must Not:
1. Project more than 1m from face of building
2. Be above 4.6m from ground

23
Q

What RICS document relates to purchase and sale?

A

RICS Professional Statement: UK Commercial Estate Agency (2016)

24
Q

What are some of the key points of the Estates Agent Act 1979?

A
  1. Specify costs / fees in advance
  2. Itemise all payments
  3. Specify nature of agency and selling rights
  4. Advise clients of services available
  5. Disclose personal interests on HoT’s
  6. Handling Client’s money
  7. Misrepresentation of interests / offers
25
Q

What are the four usual assumptions?

A
  1. Property available to let on open market by willing tenant to a willing landlord for a term of years as stated
  2. Property fit and available for immediate occupation and use
  3. All covenants observed by landlord and tenant
  4. Property may be used for purpose set out in lease
26
Q

What are the three usual disregards for a rent review?

A
  1. Affect of goodwill on tenants occupation
  2. Ignore goodwill attached to the property
  3. Tenants improvements if LL consent granted.
27
Q

What is the hierarchy of evidence for rent reviews?

A
  1. Open market lettings
  2. Lease renewals
  3. Rent reviews
  4. Independent expert determinations
  5. Arbitrator awards
  6. Court determinations under L&T Act 1954
  7. Hearsay evidence
  8. Sale & Leasebacks
  9. Surrender & renewals
  10. Inter-company arrangements
28
Q

What is the hierarchy of evidence for valuation?

A

Found in RICS Professional Standard: Comparable Evidence in Real Estate Valuation (2019)

CAT A: Direct comparables of contemporary
- Completed transactions of near-identical with full and accurate information
- Completed transactions of similar with full and accurate information
- Completed transactions of similar with which full data may not be available
- Similar being marketed without binding agreement
- Asking prices

Category B: General market data
- Information from published sources / commercial databases
- Indirect evidence
- Historic evidence
- Demand / supply data

Category C: Other sources
- Transactional evidence from other
- Other background data

29
Q

What is the conventional investment method?

A
  1. Market Value = Rent x YP

Examples include term and reversion and layer and hardcore methods

30
Q

Which PS are mandatory for valuations?

A

PS 1 - Covers Red Book Valuation Exemptions
PS 2 - Covers ethics,
competency, objectivity and disclosers

31
Q

What can you tell me about PS2?

A
  1. Members must undertake valuations in accordance with Rules of Conduct
  2. Valuers must act objectively & independently
  3. Provides advice on dealing with conflicts of interest
  4. Members must comply with the minimum terms of engagement and display competence.
32
Q

What can you tell me about VPS1?

A

VPS1 covers minimum requirements for terms of engagement.

33
Q

What are the minimum requirements for terms of engagement as set out in VPS1

A
  1. Identification and status of valuer
  2. Identification of client and any other intended users
  3. The asset to be valued
  4. Currency
  5. Purpose
  6. Basis
  7. Valuation date
  8. Extent of investigation
  9. Nature and source of info to be relied upon
  10. Assumptions & Special assumptions to be made
  11. Format of report
  12. Restrictions for use, distribution and publication
  13. Confirmation of Red Book Global compliance
  14. Fee basis
  15. CHP to be made available
  16. Statement that valuation may be subject to compliance by RICS
  17. Limitation on liability agreed.
34
Q

What does VPS 2 Cover?

A

Inspections, Investigations and Records

Inspections - Valuers must make steps to verify information

Desktop valuation:
1. Nature of restriction to be agreed in ToE
2. Valuation implications of restriction
3. If restriction is reasonable
4. Restriction to be referred to in report

35
Q

What does VPS 3 cover?

A

Valuation reports

Minimum requirements are:
1. Identification and status of valuer
2. Client and any other intended users
3. Purpose of valuation
4. Identification of the asset to be valued
5. Basis of value
6. Valuation date
7. Extent of investigation
8. Nature & source of information relied upon
9. Assumptions and special assumptions
10. Restrictions on use, distribution and publications
11. Instructions undertaken in accordance with Redbook standards
12. Valuation approach and reasoning
13. Valuation figure
14. Date of valuation report
15. Comment on market uncertainty
16. Statement setting out liability limitations

36
Q

What does VPS 4 cover?

A

Bases of value
1. Market value
2. Market rent
3. Fair value
4. Investment value
5. Equitable value
6. Liquidation value

37
Q

What does VPS5 Cover?

A

Valuations Approaches and Methods

  • Must choose and justify approach
  • In some cases more than one approach may be appropriate
38
Q

What do VPS 1-5 cover?

A

VPS 1. ToE
VPS 2. Inspection / Investigations / Records
VPS 3. Valuation Reports
VPS 4. Bases of value
VPS 5. Valuation approaches and methods

39
Q

What does part 5 of the red book cover?

A

Valuation Applications (Valuation Practice Guidance Applications)

VPGA 1 - Valuation for inclusion in financial accounts

VPGA 2 - Valuations for secured lending

40
Q

Walk me through your inspection at Loughborough Junction?

A
  1. Checked competence and COI
  2. Checked property management file - existing plans
  3. Undertook due diligence
  4. Inspected property
  5. Undertook measurement on GIA basis
  6. Included loading bay, areas under 1.5m and service accommodation
  7. Measured loading bay to closest point and included toilets and area under 1.5m.
  8. Excluded perimeter wall thickness

APC (21 decks)

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