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APC > Valuation - Comparable Method > Flashcards

Valuation - Comparable Method Flashcards

1
Q

Name the 5 methods of Valuation ?

A
  1. Comparative Method
  2. Investment Method
  3. Profits Method
  4. Residual Method
  5. Depreciated Replacement Cost Method
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2
Q

What’s the difference between and internal and external valuer ?

A

An internal valuer is employed by a company to value assets of a company for internal purposes.

An external valuer has no material links with the asset being valued.

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3
Q

Name the 3 important steps needed when commencing a valuation instruction ?

A
  1. Competence (Correct SUK)
  2. Independence (no conflicts)
  3. Terms of Engagement (confirmation of instructions)
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4
Q

Give examples of ‘Statutory due diligence’ needed for valuations ?

A

Asbestos Reports
Business Rates
EPC rating
Flooding map (SEPA)
Fire safety compliance
Legal title
Planning History

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5
Q

What is the Comparative Method of Valuation ?

A

The comparative method of valuation is the most widespread valuation method and is typically used to assess market value and market rent for both commercial and residential properties.

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6
Q

When can the Comparative Method of Valuation be used?

A

When there is a good amount of comparable evidence in the form of rents, yields or sales.

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7
Q

What is the Hierarchy of evidence ?

A
  1. Open market transactions
  2. Lease renewals
  3. Rent reviews
  4. 3rd party determinations
  5. Sale and leasebacks
  6. Inter company transactions
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8
Q

How can a valuer find relevant comparable evidence ?

A
  1. Inspect the area for marketing boards
  2. Speak to local agents
  3. Online/In house data bases
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9
Q

Challenges surveyors may face when using the comparative method of valuation ?

A

Limited transactions
Lack of up to date evidence
Existence of a special purchaser

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10
Q

Are there any RICS Guidance Notes on Comparable Evidence ?

A

Yes - Comparable Evidence in Real Estate (October 2019)

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11
Q

Define ‘Comparable evidence’

A

‘Comparable evidence can be defined as ‘an item of information used during the valuation process as evidence to support the value of a similar property’.

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12
Q

Comparable Evidence should be…(5 things)

A
  1. Comprehensive (multiple)
  2. Relevant
  3. Recent
  4. Verifiable
  5. Consistent
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13
Q

What are the RICS Guidance notes of Valuation ?

A

RICS Valuation –Global Standards
Effective from 31 January 2022

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14
Q

Straight line method

A

Assume 3 months rent free

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15
Q

When would you don’t recommend a bank loan to the bank

A

The building of land cannot be insured or it’s not inline with planning

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16
Q

What is years purchased?

A

How many years it would take to recover funds that you paid for the property

17
Q

How does ESG affect the value?

A

That’s

APC (25 decks)

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