Valuation Flashcards
What types of valuations are excluded from Red Book valuations?
Market appraisal, expert witness report, internal reporting
What are the bases of value?
A basis of value is a statement of the fundamental measurement assumptions of a
valuation also known as the ‘standard of value’.
Define Market Value.
The estimated amount for which 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 knowledgeably, prudently and without compulsion
Define Market Rent.
The estimated amount for which an interest in real property should
be leased on the valuation date between a willing lessor and willing
lessee on appropriate lease terms in an arm’s length transaction, after
proper marketing and where the parties had each acted knowledgeably,
prudently and without compulsion
Why do we need Red Book?
provide consistency, objectivity and transparency in valuations
build public confidence and trust in RICS members’ valuations
ensure valuers are working to the latest international standards
provide an essential quality control check without the need for legislation.
Where do you source your comparable evidence?
Our firm’s internal comparable data base and other agents
How do you use comparable evidence?
For all these reasons, comparable evidence will probably never perfectly match the asset subject to valuation. The valuer will, therefore, need to analyse and interpret the available evidence and use it as guidance rather than as direct evidence of value
What are the methods of valuation?
Comparable, Investment, Profit, Residual, Contractor’s Method
What are the recent amendments to the Red Book?
Implementation of Valuation Review recommendations
Alignment with development in other relevant global standards and regulations
Adaption to evolving practices and processes for issues including ESG and technological advancements
When did the current RICS Red Book come in to effect?
31st January 2022
How do you value the tenants fixture improvements?
Value to an incoming tenant
What are PS, VPS and VPGs?
PS = Professional Standards
VPS = Valuation Professional Standards
VPG = Valuation Practice Guidance
What factors do you consider when carrying out a residential valuation?
Location, access, transport links, development, nearest amenities, size of property, condition
Explain marriage value?
An additional element of value created by the combination of two or more
assets or interests where the combined value is more than the sum of the
separate values
Explain the valuation process?
Instruction, TOB and TOE, Inspection, Report writing and valuation, verification, issuing the report to the client
