Valuation General 2

Question 1

What is the suggested SIXTEEN step process for a Valuation Instruction?

Answer 1

1. Receive instructions from the client
2. Check competence (SUK)
3. Check independence so that there are no conflicts of interest or personal interests
4. Issue terms of engagement to the client (CIT)
5. Receive terms of engagement signed by the client
6. Gather information - leases/lease packet, title documents, planning information, OS plans etc.
7. Undertake due diligence - to check there are no matters which could adversely impact upon value
8. Inspect and measure
9. Research market and assemble, verify and analyse comparables
10. Undertake valuation
11. Draft report
12. Have valuation and report considered by another surveyor for checking purposes
13. Finalise and sign report
14. Report to client
15. Issue invoice
16. Ensure valuation file in good order for archiving

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Question 2

What are the FIVE main methods of valuation?

Answer 2

1. Comparative method
2. Investment method
3. Profits method
4. Residual method
5. Contractor’s method (Depreciated replacement cost)

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Question 3

What are the three valuation approaches outlined in IVS 105 Valuation Approaches and Methods?

Answer 3

1. Income approach - converting current and future cash flows into a capital value (i.e. Investment, Residual and Profits methods)
2. Cost approach - reference to the cost of the asset whether by purchase or construction (i.e. DRC method)
3. Market approach - using comparable evidence available (i.e. Comparative method)

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