Valuation

Question 1

What is the definition of market value?

Answer 1

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 where the parties had each acted
knowledgeably, prudently and without compulsion

Question 2

What are the five methods of valuation?

Answer 2

1. Comparable method
2. Investment method
3. Profits method
4. Depreciated replacement cost / Contractor’s method
5. Residual method

Question 3

When would a Red Book Valuation be required and when would it not be required?

Question 4

What is a conflict of interest? Why is a COI check important? How would a COI impact on valuation?

Question 5

What action would you take if a COI was identified?

Question 6

What is the RICS Valuation - Global Standards (Red Book)? What standards have been set?

Question 7

What are the RICS Rules of Conduct? Why is it important to follow these rules?

Question 8

What would you include in your Terms of Engagement?

Question 9

How do you determine the valuation date?

Question 10

What is an assumption and a special assumption? How do these impact a a valuation / values?

Question 11

What are the bases of value?

Question 12

What are the valuation purposes?

Question 13

What is your firm’s PII limit? Why is it important to have PII?

Question 14

What factors impact values?

Question 15

What desktop research did you undertake when valuing Armston Farm?

Question 16

What is the hierarchy of evidence in relation to comparables?

Question 17

What makes good comparable evidence?

Question 18

Market appraisal - why was a Red Book valuation not required? How did you analyse the comparables to determine guide price? How many comps analysed?

Question 19

Why did you use the comparable method of valuation for Armston Farm?

Question 20

Dinglewell Farm - why did you use comparable & investment methods?

Question 21

Haven Nurseries - how did you calculate building reinstatement cost?

Question 22

Dinglewell Farm - what reasoned advice did you give to assess the market value?

Question 23

How does a tenancy impact on property values?

Question 24

What is the base date for CGT valuations?

Question 26

What is the definition of market rent?

Question 27

Haven Nurseries - What did you include in your SWOT analysis? How did this assist? What advice did you give the lender?

Question 28

Give me an example of when a conflict of interest might occur when you are carrying out a valuation?

Question 29

What makes a good comparable property?

Question 30

What do you understand by the term Registered Valuer? Is it the firm or the individual that is credited?

Question 31

What would you do when researching a property for secured lending and you find that some part of it is untidy and you suspect that some contamination exists?

Question 32

Talk me through when you might use a residual valuation?

Question 33

Talk me through an example of a residual valuation? What would be included within the costs?

Question 34

When might you use the investment method to value a property?