Questions from Alex Snip Flashcards
The Full title of the Red Book
RICS Valuation: Global Standards
5 conventional methods of valuation
Profits method
Comparative Method
Costs Method
Depreciated Cost
Residual Method
What valuations does the red book apply?
Applies to all valuations unless it is specifically stated
What valuations are exempt from the red book? ( 5)
For internal valuation purposes
Agency Works prior to instruction (to gauge interest before a sale)
For Statutory function
If acting as an expert witness
If in Negotiation or litigation
What is the difference between VPS and VPGA
Complying with VPS is mandatory, VPGA is not.
Why might you agree a departure from the red book?
Can only depart if there is good reason to depart. For example, if the building was unsafe and therefore you didn’t inspect the inside.
Whats the purpose of the terms of engagement?
Good terms of engagement can help to avoid later misunderstandings with your client. They ensure that both the client and firm are clear about:
the scope and nature of the service being commissioned and
the framework within which it has been agreed to be carried out.
What is market Value?
answer must include, willing buyer and seller, arms length transaction proper marketing.
Broad outline of Residual Vals Technique
Gross Development Value, minus costs and developers profit.
How do you know the building costs for residual?
BCIS
Hierarchy of evidence for comparative (in order)
- Open market lettings
- Lease renewals
- Rent Review
- Independent expert Determination
- Arbitrator award
What is Gross Yield?
Rent expressed as a percentage of the purchase price
What is the net yield?
The rent expressed as a percentage of the gross acquisition price (IE purchase price plus purchaser’s costs which include agents fees, legal fees, VAT on fees, and stamp duty)
What is an arms length transaction?
Where there is no relationship between the parties.
In a residual Valuation, what are gross acquisition costs? (4)
SDLT, agent fees, legal fees and non recoverable VAT
