Val - L2 STJOHN Flashcards
What is Market Value?
The RICS Valuation – Global Standard 2025 (the ‘Red Book’) defined Market values as: ‘ The estimated amount for 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 knowledgeable, prudently and without compulsion’
This Definition aligns with International Valuation Standards (IVS) and is used for property valuation to ensure consistency and transparency in the market.
What challenges did you face when valuing this property, and how did you overcome them?
(St Johns Wood)
The main challenge was the lack of directly comparable new-build houses in St John’s Wood. To overcome this, I:
Expanded the search area to include new builds in similar prime locations.
Considered newly refurbished period houses in the immediate area, adjusting for differences in age and specification.
Applied the hierarchy of evidence, prioritising the most relevant sales and making justified adjustments.
Spoke with local agents to gain insights into current demand and market trends.
How did you ensure the comparables you used were reliable?
I followed the RICS Comparable Evidence in Real Estate Valuation (2023) guidance by:
Verifying sources such as Land Registry, and local agents.
Prioritising recent transactions over asking prices or historic deals.
Applying adjustments for differences in specification, tenure, and size.
Cross-checking different sources to confirm consistency and reliability.
What adjustments did you make to the comparables, and why?
I made adjustments for:
Location – Adjusting for differences in desirability between St John’s Wood and wider comparable areas.
Specification – New build homes tend to command a premium over refurbished period properties, so an upward adjustment was applied to refurbished houses.
Size – Larger properties often have lower £/sq ft values, so I adjusted accordingly.
Tenure – Any differences in leasehold vs freehold were factored in.
I ensured adjustments were based on market evidence and discussions with local agents.
How did you confirm your valuation was suitable for loan security purposes?
I ensured compliance with RICS Valuation – Global Standards (2025) ‘The Red Book’, by:
Providing a clear and justified opinion of Market Value based on a robust methodology
Ensuring the report included all necessary risk factors, such as liquidity, reliance on limited comparables, and any assumptions made.
Using conservative and well supported valuation assumptions to align with lender requirements
Following a structured and reasoned approach, which would withstand third-party scrutiny
What due diligence did you undertake before reporting your valuation?
I carried out:
Property inspection – measured the property and assessed condition and specification.
Market research – Verified comparables through multiple sources.
Legal review – checked title, tenue and planning permissions to ensure no restrictions impacted value
Cross-checking with local agents – to confirm market sentiment and sales demand.
All findings were clearly stated in the valuation report, ensuring transparency and reliability.
What assumptions did you make, and how did you justify them?
I made standard valuation assumptions in line with Red Book requirements, including:
The property was vacant and available for sale.No material legal or planning restrictions affected the saleability.
Market conditions remained stable at the time of valuation.
Where assumptions were made, they were disclosed in the report, and I considered market risks when forming my opinion.
How would a change in market conditions impact your valuation?
A market downturn would likely:
Reduce demand for high-value new build properties, increasing marketing time.
Put downward pressure on values, especially if mortgage rates rise and affordability decreases.
Shift buyer preferences, making period properties more attractive due to perceived value.
If market conditions changed significantly, I would recommend a reassessment of the valuation.