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Valuation > Valuation 1 > Flashcards

Valuation 1 Flashcards

1
Q

When did the current edition of the Reds Book come into force?

A

31st Jan 2022

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2
Q

What were the changes to the Red Book

A
  • emphasises needs and clear terms of engagement
  • the terms partial on non-red book should not be used in terms of engagement.
  • include sections on how sustainability should impact valuations
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3
Q

What is the name of the red book?

A

RICS Valuation Global Standards 2022
UK National Supplement 2023

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4
Q

Who are the International Valuation Standards Council?

A

A Non-For-Profit organisation the uphold the valuation standards globally in the public interest.

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5
Q

What editions of the Red Book have been in effect during your APC training

A

31st Jan 2022
November 2019

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6
Q

What is the purpose of the red book

A

To provide transparency, objectivity and consistency to valuations globally and ensure all valuation are conducted to the highest professional standard

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7
Q

what is the purpose of the UK National Supplement

A

The UK national supplement extends the Global Red Book for valuations that are subject to UK jurisdiction

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8
Q

To what valuations does the Red Book apply

A

To all valuations unless expressed as an exception or deviation from the red book.

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9
Q

What valuations are exceptions to the Red Book?

A
  • Agency advice
  • Internal purposes
  • Statutory function
  • Litigation/Negotiation
  • Expert witness
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10
Q

Name some valuations that are carried out for statutory function

A
  • Ratings
  • compulsory purchase order
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11
Q

what is the difference between Valuation Technical and performance Standards (VPS) and Valuation Practice guidance - applications (VPGA)

A

VPS - compliance is mandatory
VPGA - is best practise / guidance

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12
Q

What are the possible consequences if a valuer does not comply with a VPS

A
  • Fine
  • RICS May take Disciplinary action
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13
Q

What are the possible consequences if a valuer does not comply with a VPGA

A
  • Could be a contributory factor to a professional negligence case
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14
Q

What information would you require from a telephone enquirer who asked: can you do me a valuation

A
  • Who is the valuation for (conflict of interest)
  • What type of property (competence)
  • Where is the property (competence)
  • what is the purpose/base of the valuation
  • When will the property need to be valued
  • Are you ok with the professional fees
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15
Q

Describe how departure from the red book mandatory requirements may be possible

A
  • agreed with the client
  • expressed in the terms of engagement

You should ask why would you want to deviate from the valuation.

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16
Q

what do your valuation files contain

A
  • conflicts of interest check
  • Terms of engagement
  • Planning, rating and environmental searches
  • comparables
  • inspection Notes
  • valuation calcs
  • valuation report
  • invoice
17
Q

What are the main contents of the Terms of Engagement for a Valuation

A
  • Identification of the Valuer, property and client
  • date of valuation
  • extent of inspection
  • The basis and purpose of the valuation
  • Any deviations / exceptions from the red book
  • Any Assumptions / special Assumptions
  • Fee agreement
  • Complaints procedure
18
Q

Please name the Red book global bases of value

A
  • Market Rent
  • Market Value
  • Investment Value
  • Fair Value
19
Q

How would you respond to a request to value a property by a drive-by only?

A

Why is only drive-by site visit required?

If this were to impact the standard of the valuation, the valuer would need to determine if to proceed.

Include in the terms of engagement

20
Q

What is the difference between a basis of Value and a Method of Valuation?

A
  • A bases of valuation is the fundamental measurement of a valuation.
  • A method of valuation is the technique employed and calculations to get to the valuation figure
21
Q

Please name the UK Specific Bases of Value

A
  • Existing Use Value,
  • Existing Use Value for Social Housing,
  • Projected market value of residential
22
Q

Describe three Assumptions that are usually made in producing a valuation?

A
  • good title
  • Free of contamination
  • full planning permission for existing use
23
Q

What is a special assumption

A

Including something as fact in an valuation, which is not true on the valuation date.

24
Q

Give three situations when it would be appropriate to make a Special Assumption?

A
  • Planning permission
  • vacant / let
  • development complete
  • free from contamination
25
Q

Define market value?

A
  • The price and asset or liability
  • would exchange on the valuation date
  • between willing buyer and willing seller in an arm’s length transaction
  • after proper marketing
  • with the parties acting knowledgeably and without compulsion.
26
Q

What do consider Proper Marketing to be in the Market Value definition?

A
  • exposed to potential buyers in the most appropriate manner.
  • selling it by the most appropriate method of sale
27
Q

What is an Arm’s length Transaction?

A

Where there is no prior relationship between the two parties

28
Q

What is synergic value

A

Where the combined value of two properties is greater than the individual values.

29
Q

What is marriage value

A

Is the additional value created as a result of synergetic value

30
Q

What is a special purchaser

A

A person who by owning a particular asset has a special value as owning it would give them advantages in the market over regular users

31
Q

when is market rent not appropriate as a basis of value in providing a report on the rental value of a property and why not?

A

When undertaking a rent review.

Why? – Because the rent review clause determines how the rent should be reviewed

32
Q

When is Fair Value the appropriate valuation basis

A

For inclusion in company accounts

33
Q

What is a regulated purpose valuation?

A

Valuations where third parties may rely (public may have interest) = takeovers/mergers

34
Q

What is an asset valuation?

A

A valuation undertaken for financial reporting

35
Q

When is Existing use Value the valuations basis?

A

When valuing owner occupied assets for government or council

36
Q

What is the fundamental difference between market Value and Existing use Value

A

existing Use Value does not take into account any additional value that could be created through additional use

37
Q

when is DRC (contractors method) used in asset valuations?

A

Used to value specialized assets that rarely sell on the market except through the sale of the business itself. = Football stadium

Specialised property - when you would only sell a property as part of business

38
Q

Name three situations that can adversely affect the certainty of valuations

A
  • Limited information
  • Disrupted markets
  • unusual/unique characteristics
39
Q

Name the three types of property exchange

A
  • Private treaty
  • Tender
  • Auction

Valuation (3 decks)

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