Undertaking a Valuation and The Red Book Flashcards
What is an internal valuer?
An internal valuer is a valuer who is employed by the company to value the asserts of the party.
The valuation is intended for internal use only
No 3rd party reliance
What is an external valuer?
A valuer who has no material links to the client or with the asset to be valued
Why is statutory due diligence required when undertaking a valuation?
To check that there are no material matter which could impact upon the valuation.
What could statutory due diligence include?
Asbestos Register Fire safety compliance H&S compliance EPC if applicable Flooding Contamination Business Rates / Council Tax Environmental matters Equality Act Highways - adopted / private Legal title / tenure Public rights of way Planning history / compliance - is the property in a conservation area
Briefly run me through the timeline of a valuation instruction.
Receive instructions from client
C(SUK)IT
Receive a signed copy of ToE
Gather information - leases, title docs, planning info.
Undertake due diligence - factors which could impact value
Inspect and measure
Market research, gather, verify, analyse and adjust comparables
Undertake valuation
Produce draft valuation report
Valuation and report checked by another surveyor
Finalise report and sign
Report to client
Issue invoice
Ensure valuation file in good order for archiving
What is the full name of the Red Book?
RICS Valuation - Global Standards (2017)
What was the reasons for the new 2017 version of the Red Book?
To reflect significant changes to the IVS, introduced in 2017
To provide consistent language
To make it clear that PS and VPS are mandatory and VPGAs are advisory on a global basis
Is the Red Book a valuation text book?
No it is a procedural manual
Please tell me some of the changes included in the Red Book (2017).
The terms valuer and valuation have been defined. Internal and external valuer definitions retained.
The exemptions and now exceptions
Includes new requirements on conflicts of interest
Includes reference to IPMS
Clear advice is given on valuation uncertainty
VPS 1 has been updated so the currency, limit on liability and identity of the asset have to be included in TOE
What is the structure of the Red Book?
Part 1 - Introduction
Part 2 - Glossary
Part 3 - Professional Standards (PS) - mandatory
Part 4 - Valuation Technical Performance Standards (VPS) - mandatory
Part 5 - Valuation Practice Guidance Applications (VPGAs) - advisory
Part 6 - International Valuation Standards (IVS) - mandatory
What does Part 3 of the Red Book cover?
Professional Standards 1 and 2
PS 1 - exceptions
PS 2 - ethics, competency, objectivity and disclosures
When is compliance with the Red Book not required (PS 1)?
Providing valuation advice in anticipation of giving evidence as an expert witness
Providing valuation advice as part of negotiations or litigation
Agency and brokerage except when a written valuation is included in a purchase report
Internal purposes only, without liability and not disclosed to 3rd parties
Valuer performing a statutory function (rating) but not valuations for tax returns.
Is a replacement cost valuation a Red Book valuation? What is it provided for?
No, it is not a written opinion of value
It is provided for insurance purposes
Where could you look to find out if a valuation needed to be Red Book compliant?
Professional Standards 1
What does PS 2 ethics, competency, objectivity and disclosures cover?
Valuers must act in accordance with the 5 RICS Professional and Ethical Standards and the Rules of Conduct
Must act objectively, independently and not be influenced
Must understand clients requirements and comply with the minimum ToE
Members must demonstrate professional competence
