Valuation 2 Flashcards
Tell me why terms of engagement are important.
The terms of engagement convey a clear understanding of the valuation
requirements and process,
and should be provided in terms that can be read and understood by someone with no prior knowledge of the subject asset, nor of the valuation process.
What checks do you undertake before accepting a valuation instruction?
Conflict Of Interest Checks
Personal Indemnity Insurance
How do you ensure you know who your client is when undertaking a valuation instruction?
Confirmation of those for whom the valuation assignment is being produced is important when determining the form and content of the report to ensure that it contains information relevant to their needs.
VPS1- VPS3: ID of Client/Borrower
Any restriction on those who may rely upon the valuation assignment must be agreed with the client and recorded.
Are there any additional requirements when undertaking a valuation in which the public has an interest or third parties may rely?
Disclosures must be made in the terms of engagement (VPS 1), in the report (VPS 3), and in any published reference to the valuation, as the case may be, as set out later below:
* the relationship with the client and any previous involvement
* rotation policy
* time as signatory
* proportion of fees.
Are there any additional requirements for loan security valuations?
a Identification and status of the valuer
b Identification of the client(s)
c Identification of any other intended users
d Identification of the asset(s) or liability(ies) being valued
e Valuation (financial) currency
f Purpose of the valuation
g Basis(es) of value adopted
h Valuation date
i Nature and extent of the valuer’s work – including investigations – and any limitations thereon
j Nature and source(s) of information upon which the valuer will rely
k All assumptions and special assumptions to be made
l Format of the report
m Restrictions on use, distribution and publication of the report
n Confirmation that the valuation will be undertaken in accordance with the IVS
o The basis on which the fee will be calculated
p Where the firm is registered for regulation by RICS, reference to the firm’s complaints
handling procedure, with a copy available on request
q A statement that compliance with these standards may be subject to monitoring
under RICS’ conduct and disciplinary regulations
r A statement setting out any limitations on liability that have been agreed.
Talk me through an example of when you have agreed terms of engagement with a client.
Denham Drive
Received enquiry and spoke to the client who wanted a Help To buy Valuation under Target Requirements
A letter was sent to the client with the companies terms of engagement, fees and complaints handling procedure as well as a copy of our companies PII cover. Also a statement that compliance with these standards may be subject to monitoring
under RICS’ conduct and disciplinary regulations and also a statement setting out any limitations on liability that have been agreed.
Admin called the client to talk through the instruction and terms of engagement and clarified any questions they or we had to ensure that we both fully understood the scope of works, limitations and assumptions.
My admin team helped answer and record all terms of engagement and client signatures before I could then proceed with the instruction.
What are the key elements included within terms of engagement?
a Identification and status of the valuer
b Identification of the client(s)
c Identification of any other intended users
d Identification of the asset(s) or liability(ies) being valued
e Valuation (financial) currency
f Purpose of the valuation
g Basis(es) of value adopted
h Valuation date
i Nature and extent of the valuer’s work – including investigations – and any limitations thereon
j Nature and source(s) of information upon which the valuer will rely
k All assumptions and special assumptions to be made
l Format of the report
m Restrictions on use, distribution and publication of the report
n Confirmation that the valuation will be undertaken in accordance with the IVS
o The basis on which the fee will be calculated
p Where the firm is registered for regulation by RICS, reference to the firm’s complaints
handling procedure, with a copy available on request
q A statement that compliance with these standards may be subject to monitoring
under RICS’ conduct and disciplinary regulations
r A statement setting out any limitations on liability that have been agreed.
What does the Red Book say about terms of engagement?
The terms of engagement convey a clear understanding of the valuation
requirements and process and should be provided in terms that can be read and understood by someone with no prior knowledge of the subject asset, nor of the valuation process.
What does the Red Book say about inspections?
VPS 2 - Inspections, investigations
and records
Inspections and investigations must always be carried out to the extent necessary to
produce a valuation that is professionally adequate for its purpose.
The valuer must take reasonable steps to verify the information relied on in the preparation of the valuation and, if not already agreed, clarify with the client any necessary assumptions that will be relied on.
What does the Red Book say about reporting requirements?
VPS 3- Valuation Reports
The report must:
* clearly and accurately set out the conclusions of the valuation in a manner that is neither ambiguous nor misleading, and which does not create a false impression.
If appropriate, the valuer should draw attention to, and comment on, any issues
affecting the degree of certainty, or uncertainty, of the valuation under item (o) below.
* deal with all the matters agreed between the client and the valuer in the terms of
engagement (scope of work)
What are the differences between a desktop and a full valuation report?
A Desktop Valuation is where the valuer does not inspect the interior of the property and is normally the case of a re-valuation. This should only be carried out if the valuer is sure that there has been no material change to the property or location since previous inspection.
Whereas a Full valuation report is where the valuer inspects the property and surrounding areas and looks for any issues of material uncertainty that may affect the value.
Tell me about how you ensure that information relied upon in your
valuation is appropriate and reliable?
Verify the information relied on in the preparation of the valuation and, if
not already agreed, clarify with the client any necessary assumptions that will be made.
This could be through:
Desktop Research
Speaking to local agents
Seeking further information from solicitors
Askern lodge, Doncaster, why did the location require wider search parameters?
This was a 1850’s former lodge to a large estate and there were no similar properties nearby, therefore I increased the search parameters to find similar sold properties that did match.
How did the characteristics of the comparables differ from the subject
property?
Not as old as the subject,
Different postcode
Part of small estate
Gardens
Decor
Denham Drive, Bradford, tell me about the comparable evidence that you used.
This was a 3 bed, semi-deatched with no garage but driveway parking and rear garden.
I found 3 houses within a 2 mile radius of the subject. One of which was on the same estate and had completed within the last 6 months.
I found a end terrace and a semi-detached with a garage.
