Valuation

Question 1

5 methods of valuation?

Answer 1

• Comparable
• investment
• Profits
• Residual
• DRC

Question 2

RICS Guidance?

Answer 2

• RICS Valuation - Global Standards, 2021 (PS)
• RICS Valuation - Global Standards 2017: UK National supplement (PS)
• RICS Comparable evidence in real estate valuation, 2019 (GN)
• RICS Valuation of development property, 2019

Question 3

Red Book Professional Standards 1-2?

Answer 3

PS1- compliance with standards like IVS and IPMS

PS2 - Ethics, competency, objectivity and disclosures

Question 4

Red Book Valuation Technical and Performance Standards 1-5?

Answer 4

VPS1 - Terms of Engagement
VPS2 - Inspection & investigations
VPS3 - Valuation Reports
VPS4 - Bases of value & assumptions
VPS5 - Valuation approaches & method

Question 5

Red Book Valuation Practice Guidance Applications?

Answer 5

VGPA1 - Inclusion in financial statements
VGPA2 - Secured lending
VGPA3 - Business & Business interest
VGPA4 - Trade related properties

Question 6

VPS1 - Requirements for TOEs?

Answer 6

• identification of the valuer
• identification of the clients
• identification of any other intended users
• identification of the asset to be valued
• currency
• purpose of the valuation
• basis of value
• valuation date
• all investigations and limitations
• nature and sources of info relied on
• all assumptions & special assumptions
• format of the report
• restrictions on use and distribution
• confirmation of accordance with IVS
• basis of fee calculations
• complaint handling policy
• compliance with RICS
• any limitations on liability

Question 7

VPS3 - Requirements for Reports?

Answer 7

• same as TOEs minus the obvious
• valuation approach and reasoning
• amount of valuation (words & numbers)
• date of the valuation report
• any material uncertainty

Question 8

Caselaw- margin for error

Answer 8

Singer and Friedlander v John D Wood [1977] - 10% either side is permitted