Red Book Terms Flashcards
Define an ‘Assumption?’
A supposition taken to be true. An assumption is made where specific investigation is not required by the valuer.
Define the basis of value?
It is a measurement of the Assumptions of a Valuation
What options can be used for the ‘valuation date?’
Valuation date could either be the date of the initial inspection or the date of the final report.
What does DRC stand for and what does it mean?
Depreciated Replacement Cost.
It is one of the 5 methods of Valuation. It measures the cost of replacing an asset with its modern equivalent less deductions for physical deterioration.
What is the ‘Equitable Value?’
The estimated price for the transfer of an asset/liability between
knowledgeable and willing parties.
What is an ‘external Valuer?’
A Valuer who has no material links to the subject/client/agent they have been assigned to.
What is an ESG Framework?
E - Environmental
S - Social
G - Governance
The 3 criteria are used to assess the ethical and sustainable nature of a business. ESG can impact the financial performance of a business.
Define ‘Fair Value?’
‘The price that would be received to sell an asset, or paid to transfer a
liability, in a transaction between market participants at the
measurement date’
What is the ‘Income approach?’
An approach which provides an indication of value by converting future cash flow into a single capital value.
What is an Internal Valuer?
A valuer who is directly employed by the owner of the asset or a firm responsible for the owners accounts/finance.
Define the ‘Market Approach?’
‘An approach that provides an indication of value by comparing the
subject asset with identical or similar assets for which price information is
available’
Define Market Rent (MR)?
‘The estimated amount for which an interest in property should
be leased on the valuation date between a willing lessor and willing
lessee on appropriate lease terms in an arm’s length transaction, after
proper marketing and where the parties had each acted knowledgeably,
prudently and without compulsion.’
Define Market Value (MV)?
The estimated amount an asset or liability should exchange on
the valuation date, between a willing buyer and a willing seller in an arm’s
length transaction, after proper marketing and where the parties had
each acted knowledgeably, prudently and without compulsion’
What is ‘Marriage Value?’
‘The additional element of value created when combining two or more assets, where the combined value outweighs the sum of the separate values’
What are the 3 different types of RICS member?
- Associate Member
- Professional Member
- Fellow Member