RICS & Red Book Flashcards
What is an Assumption
- A supposition taken to be true.
It involves
-facts, - conditions
- situations affecting the subject
- or approach to a valuation that,
by agreement do not need to be varicose by the valuer as part of the valuation process.
Basis of Value
A statement of the fundamental measurement assumptions of a valuation.
Cost Approach
An approach that provides an indication of value using the economic principle that a buyer will pay no more for an asset than the cost to obtain an asset utility
What is Departure is red book
- Special Circumstances where the mandatory application of RB standards become
- inappropriate or impractical.
Equitable Value
The estimated price for the transfer of an asset or liability between knowledge and willing parties
-that reflects the respective interests of those parties.
What is Environment and Social Governance
- criteria to establish the framework for
-assessing the impact of the sustainability ethical practices
Define Fair Value
The price that would be received
to sell an asset, or paid to transfer a liability,
in an orderly transaction
between market participants
at the measured date.
Income Approach
An income that provides an indication of value by converting future cash flows to a single capital value.
Investment Value, or worth
The value of an asset to the owner
- or a prospective owner
- for individual investment or operational objectives.
Market Approach
An approach that provides an indication of value by comparing the subject asset with identical or similar asset for which price information is available.
Market Value
The estimated amount for which an asset or liability should be exchanged on the valuation date between a willing buyer and a willing seller in an arms length transaction, after proper marketing and where the parties had each acted knowledgeably, Prudently and without compulsion.
Marriage Value
An additional element of value created by the combination of two or more assets where the combined value is more than the sum of the separate values.
Worth
See investment Value
Why was the Red Book updated ?
The International Valuation Standards are updated on a rolling program every 2 years & the 2020 needed minor updates to remain aligned with IVS 2022 and to increase sustainability and ESG focus.
Why are RICS aligned with IVS
RICS is a key member of IVS council along with many other Valuation Professional Organizations and the IVS council is a coalition of them. The VPO produce IVS and RICS produces more detail standards for its members.
What are Valuation Practice Global Applications
They are 10 of them in the Red Book
- VPGA 8 which I used for real estate valuation inspection.
What are the circumstances where the valuer does not need to follow the Red Book
ALIES
Agency - marketing appraisal
Litigation- rent review
Internal
Expert witness
Statutory
What needs to be included in the ToE?
- Identification of the valuer
- Identification of the client
- Identification of any intended users
- Identification of assets being valued
- Currency
6.Purpose of the valuation
7.Basis of value being adopted
8.Valuation date
9.Nature and Extent of work
10.Nature of the sources - All assumptions
12.Format of the report
13.Restrictions of use & Publication
14.Confirmation the valuation will be taken in accordance with IVS - Basis on which the fee will be calculated
- Where the firm is registered and Reference to the firm’s complaints handling procedure
Explain the purpose of the Royal Charter
The Charter was last updated Feb 2020.
Determining the value of land, house and property.
Managing and developing estates
Securing building social and economic needs.
For RICS to regulate, maintain standards, members subject to bye laws
Explain the structure of the RICS
What are some of the changes IVS to the RB
- IVS 101 Scope of Work internal valuers are referred to as “employed” valuers & External as “Engaged”
- IVS 105 - Market, Income and Cost Approach is identified as the 3 approaches and are not exclusive and can be used in combination
What is the full title of the Red Book/
RICS Red Book Global Standards
What are the three main updated feature roughly about?
- Incorporate IVS
- Clearer and unambiguous ToE
- Definition on ESG
Other than the Red Book are they any other standards for UK practitioners
2017 UK National Supplement
