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APC > Valuation > Flashcards

Valuation Flashcards

1
Q

Tell me what the 5 methods of valuation are

A
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2
Q

Tell me about how you would value a building using the profits/contractors/investment/comparable/residual method of valuation

A
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3
Q

How do you decide which valuation method to apply?

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4
Q

When and why would you use one of these methods?

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5
Q

What is a years purchase multiplier?

A
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6
Q

Give me an example of a good covenant and how this might impact a
valuation.

A
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7
Q

What is PI Insurance (PII)?

A
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8
Q

Why do surveyors need PII?

A
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9
Q

Tell me about the RICS requirements in relation to PII.

A
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10
Q

How did the decision in Hart v Large affect PII?

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11
Q

What level of PII cover does your firm have?

A
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12
Q

How would you distinguish limitations on liability in your valuations?

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13
Q

Where in your valuation report do you state any limitations on liability?

A
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14
Q

What relevance does Hart v Large have on your valuation practice?

A
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15
Q

What aspect of Hart v Large allowed the judge to award damages without
applying the SAAMCO cap?

A
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16
Q

What is the SAAMCO cap?

A
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17
Q

Under the SAAMCO cap, is a valuer liable for losses due to a downturn in
the market?

A
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18
Q

Under the SAAMCO cap, is a valuer’s liability usually limited to the
overvaluation on the valuation date?

A
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19
Q

What would you do if you received a notice of a PII claim from a client or
their solicitor?

A
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20
Q

Is there a difference between being negligent when undertaking a
survey/valuation and providing negligent advice?

A
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21
Q

What is run off cover?

A
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22
Q

What is the Red Book?

A
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23
Q

Why does the Red Book exist?

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24
Q

Tell me about a factor which may impact value

A
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25
Q

What is your duty of care as a surveyor when undertaking a valuation?

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26
Q

To whom do you owe a duty of care to when undertaking a valuation?

A

Why is independence and objectivity important when valuing?

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27
Q

Is there a separate UK Red Book?

A
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28
Q

What is the UK valuation guidance called?

A
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29
Q

Why does the UK guidance exist?

A
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30
Q

When was the Red Book last updated? Does this differ from when IVS were last updated? What changes were made?

A
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31
Q

Which do you follow - the latest IVS or the Red Book Global?

A
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32
Q

Which sections of the Red Book are mandatory and which are advisory?

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33
Q

What does PS1-2/VPS1-5/VPGAs relate to?

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34
Q

What type of advice does the Red Book cover?

A
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35
Q

If you provide preliminary advice / draft valuation report, what should
you state in writing to your client?

A
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36
Q

What type of valuations might be relied upon by a third party?

A
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37
Q

Tell me what the definition of MR/MV/investment value/fair value?

A
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38
Q

What is the difference between an assumption and a special assumption?

A

What sources of information would you consider when preparing a
valuation report?

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39
Q

If you have previously valued an asset, do you need to make any
additional disclosures and what might they be?

A
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40
Q

If your firm is too small to have a rotation policy or valuation panel, what
else can you do to ensure objectivity?

A
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41
Q

When might a conflict of interest exist in relation to a valuation
instruction?

A
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42
Q

What must be included in your terms of engagement / valuation report?

A
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43
Q

Where is this covered in the Red Book?

A
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44
Q

What is a restricted valuation service and can you provide one?

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45
Q

How do you deal with limitations on inspection or analysis?

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46
Q

Can you revalue a property without inspecting?

A
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47
Q

What RICS guidance relates to the use of comparable evidence?

A
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48
Q

What is an internal valuer?

A
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49
Q

Can an external valuer provide an internal purposes valuation?

A
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50
Q

What happens if market conditions change between the valuation date
and report date?

A
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51
Q

Is special value from a special purchaser reflected in MV?

A
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52
Q

Where does the definition of fair value come from? Does this differ from MV?

A
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53
Q

When is fair value used?

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54
Q

What are the 3 approaches under VPS5?

A
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55
Q

What is the Valuer Registration Scheme?

A
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56
Q

Are there any instances where certain sections of the Red Book may not
apply? What are these and which sections don’t apply?

A
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57
Q

What is the basis of value under UK GAAP FRS 102?

A
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58
Q

What is a SORP?

A
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59
Q

When would you use EUV?

A
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60
Q

What is the definition of EUV?

A
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61
Q

What additional criteria apply to secured lending valuations?

A
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62
Q

What information should you specifically request for a secured lending
valuation?

A
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63
Q

What is a regulated purpose valuation?

A
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64
Q

What additional disclosures must be made for a regulated purpose
valuation?

A
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65
Q

What is the basis of value for a statutory valuation?

A
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66
Q

What might a statutory valuation relate to?

A
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67
Q

What is the definition of the statutory basis of valuation? Is this the same for all statutory valuations?

A
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68
Q

What is a yield?

A
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69
Q

What is a Net Initial Yield?

A
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70
Q

What is a reversionary yield?

A
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71
Q

What is an equated yield?

A
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72
Q

What is an equivalent yield?

A
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73
Q

How would a yield reported from auction differ from a Net Initial Yield?

A
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74
Q

What purchaser’s costs do you deduct from a valuation?

A
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75
Q

When do you deduct purchaser’s costs from a valuation?

A
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76
Q

How would you value a property in uncertain market conditions - does
the Red Book give any guidance?

A
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77
Q

How could you value a long leasehold interest?

A
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78
Q

How does a term and reversion differ to a DCF?

A
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79
Q

What is the difference between a growth explicit and a growth implicit
yield? Give examples of each of these types of yield.

A
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80
Q

How would you value an under/over rented investment property?

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81
Q

When would you use a dual rate investment calculation?

A
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82
Q

Where can you find yield evidence from?

A
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83
Q

What is the hierarchy of evidence?

A
84
Q

What would you do if comparable evidence was limited?

A
85
Q

What is NPV?

A

What is IRR?

86
Q

What is a term and reversion?

A
87
Q

What is a term and reversion?

A

What is a hardcore and topslice?

88
Q

What is a Discounted Cash Flow (DCF)?

A
89
Q

What is a short-cut DCF?

A
90
Q

When would you use a DCF?

A
91
Q

What are the advantages of a DCF?

A
92
Q

What are the disadvantages of a DCF?

A
93
Q

What is a YP/PV/YP in perpetuity?

A
94
Q

What is marriage value?

A

When would you include an element of hope value in a valuation?

95
Q

Can you include hope value in a secured lending / mortgage valuation?

A
96
Q

How would you value a ransom strip?

A
97
Q

How does market value differ to investment value/fair value?

A
98
Q

What is a dual capitalisation rate and when would you use one?

A
99
Q

Is the profits/DRC method used for specialised or specialist property?

A
100
Q

What type of properties would you use the profits method for?

A
101
Q

What type of properties would you use the DRC method for?

A
102
Q

When would you use the profits method?

A
103
Q

What is intangible goodwill?

A
104
Q

What is turnover / gross profit / net profit?

A
105
Q

What are the steps to providing a profits valuation?

A
106
Q

What is Fair Maintainable Turnover?

A
107
Q

What is a Reasonably Efficient Operator?

A
108
Q

Does the assessment of the REO include personal goodwill and trading
potential?

A
109
Q

What is personal goodwill?

A
110
Q

What is trading potential?

A
111
Q

How do you calculate the tenant’s proportion of rent in a profits valuation?

A
112
Q

What is EBITDA?

A
113
Q

What is Fair Maintainable Operating Profit?

A
114
Q

How do you calculate the divisible balance?

A
115
Q

What accounts information would you want to review for a profits valuation?

A
116
Q

Do RICS provide any guidance on RLVs or valuing development property?

A
117
Q

What is an RLV?

A
118
Q

What is a development appraisal?

Level 1

A
119
Q

How do RLVs and development appraisals differ?

Level 1

A
120
Q

How else can you value development land?

Level 1

A
121
Q

What is the basic process of undertaking a RLV/development appraisal?

Level 1

A
122
Q

What does a development appraisal show?

Level 1

A
123
Q

What are the key things you need to consider when appraising / inspecting a development site? What else should you consider?

Level 1

A
124
Q

Tell me about your due diligence when undertaking a development appraisal.

Level 1

A
125
Q

What sources of information do you use when undertaking a development appraisal?

Level 1

A
126
Q

How can you assess development potential?

Level 1

A
127
Q

What is GDV/NDV?

Level 1

A
128
Q

How do you calculate GDV?

Level 1

A
129
Q

What do development costs include?

Level 1

A
130
Q

When do you apply VAT when assessing development costs?

Level 1

A
131
Q

Where can you source build costs from?

Level 1

A
132
Q

What are typical finance costs?

Level 1

A
133
Q

What would you apply finance costs to and on what basis?

Level 1

A
134
Q

What is an S curve?

Level 1

A
135
Q

What factors influence the decision to use an S curve when applying finance costs?

Level 1

A
136
Q

Is there a quick rule of thumb which can be used when applying finance costs?

Level 1

A
137
Q

What do holding costs typically include?

Level 1

A
138
Q

How do you typically calculate developer’s profit?

Level 1

A
139
Q

What are some typical inputs (and %/£) in a RLV?

Level 1

A
140
Q

What other criteria might be assessed in terms of performance measurement for a RLV?

Level 1

A
141
Q

What are the advantages/disadvantages of a RLV?

Level 1

A
142
Q

What is included in the development programme?

Level 1

A
143
Q

What is CIL?

Level 1

A
144
Q

What is S106?

Level 1

A
145
Q

What are the differences between CIL and S106?

Level 1

A
146
Q

What is CIL charged on?

Level 1

A
147
Q

What is a Monte Carlo simulation?

Level 1

A
148
Q

What is a sensitivity analysis?

Level 1

A
149
Q

How do you carry out a sensitivity analysis?

Level 1

A
150
Q

What variables might you change and why?

Level 1

A
151
Q

What factors affect sensitivity of a development appraisal?

Level 1

A
152
Q

Tell me about your understanding of incorporating affordable housing into development appraisals

Level 1

A
153
Q

Tell me about software you have used to provide a RLV. Give me a limitation of this software.

Level 1

A
154
Q

What RICS guidance relates to the valuation of development property?

Level 1

A
155
Q

What is viability?

Level 1

A
156
Q

When would a cost approach be used?

Level 1

A
157
Q

What type of buildings would a cost approach be used for?

Level 1

A
158
Q

What is the supposition that a DRC is based upon?

Level 1

A
159
Q

What are the 3 components of the cost approach?

Level 1

A
160
Q

How do you assess the value of the land?

Level 1

A
161
Q

How do you assess Gross Replacement Cost?

Level 1

A
162
Q

What costs would you consider within GRC?

Level 1

A
163
Q

What would you do if the building could be replaced with a modern equivalent?

Level 1

A
164
Q

How would you deal with depreciation/obsolescence?

Level 1

A
165
Q

What types of obsolescence are there?

Level 1

A
166
Q

What are the three ways to deal with depreciation?

Level 1

A
167
Q

Is the cost approach a market valuation?

Level 1

A
168
Q

How might onerous lease terms, e.g. restrictive user, break clause, impact
upon capital or rental value?

Level 1

A
169
Q

What liabilities may be created through valuation?

Level 1

A
170
Q

What is a liability cap and when would one be used?

Level 1

A
171
Q

Explain why the RICS are carrying out an Independent Valuation Review. Who is leading this?

Level 1

A
172
Q

Explain what you understand by the term, margin of error

Level 1

A
173
Q

What caselaw relates to margins of error?

Level 1

A
174
Q

Explain your understanding of K/S Lincoln v CBRE Hotels (2010)

Level 1

A
175
Q

Explain the precent set in Hyde and another v Nygate and another (2021)
in relation to the valuation of high-profile development sites.

Level 1

A
176
Q

How can a NIY of zero be achieved?

Level 1

A
177
Q

In a scenario where rents are static and the capital value increases, would
you expect yields to increase or decrease?

Level 1

A
178
Q

What does heterogenous mean in terms of comparable evidence?

A
179
Q

What does the term ‘tone of value’ mean to you?

Level 1

A
180
Q

Tell me why terms of engagement are important.

Level 2

A
181
Q

What checks do you undertake before accepting a valuation instruction?

A
182
Q

How do you ensure you know who your client is when undertaking a
valuation instruction?

A
183
Q

Are there any additional requirements when undertaking a valuation in
which the public has an interest or third parties may rely?

A
184
Q

Are there any additional requirements for loan security valuations?

A
185
Q

Talk me through an example of when you have agreed terms of
engagement with a client.

A
186
Q

What are the key elements included within terms of engagement?

A
187
Q

What does the Red Book say about terms of engagement?

A
188
Q

What does the Red Book say about inspections?

A
189
Q

What does the Red Book say about reporting requirements?

A
190
Q

What are the differences between a desktop and a full valuation report?

A
191
Q

Tell me about how you ensure that information relied upon in your
valuation is appropriate and reliable?

A
192
Q

How did you record your special assumption at John Saxby Place, Hassocks?

A
193
Q

What RICS guidance covers special assumptions such as the one you have made at John Saxby Place, Hassocks?

A
194
Q

Why did you use an all risks yield at Brighton?

A
195
Q

Why was a ARY more appropriate than a discounted cash flow on your Brighton valuation?

A
196
Q

What did the RICS review of retail valuations say about All Risks Yields?

A
197
Q

What deduction did you make in your valuation in Brighton for purchasers costs and why?

A
198
Q

What are some Issues with comprable data from sources such as Rightmove such as you used at John Saxby Place, Hassocks?

A
199
Q

At Hassocks did you adjust the per sq. ft rate, If so, what were they and why did you make them?

Level 2

A
200
Q

As the property at Lewes was under-rented did you consider a term and reversion valuation?

Level 3

A
201
Q

Did you adjust you comprable evidence at Lewes and what adjustments did you make?

A
202
Q

Tell me about the Investment comprables you had at Lewes, what were the NIYs and how did they relate to the subject property?

A
203
Q

What was the purpose of zoning at Littlehampton and in general?

A
204
Q

The range of yields at Littlehampton was quite wide, can you explain why you chose 9% for the hardcore and 10% for the top slice?

A
205
Q

Did you consider the covenant of the tenant at Littlehampton and what effect this may have on value, particularly given that the property was overrented?

A
206
Q

Can you tell me about the retail market and its ongoing trends in the Littlehampton area?

A

APC (18 decks)

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