Valuation Level 2

Question 1

What is a loan security valuation?

Answer 1

A loan security valuation is a detailed report which allows banks (and other money lenders) to make a better informed decision about whether a loan should be issued and how much they could lend you safely.

Question 2

What is VPGA?

Answer 2

Valuation practice guidance – application

Question 3

What section of the Red Book relates to loan security valuations?

Answer 3

VPGA 2 Valuation of interests for
secured lending

Question 4

How does Loan Security differ from other valuations?

Answer 4

• Further conflict checks - no previous involvement with borrower for 24 months. Disclose ALL previous involvement
• Special Assumptions must be agreed with lender e,g planning, market conditions
• must report with and without special assumption
• comment on the suitability of the property as security for mortgage purposes

Question 5

What are VPS?

Answer 5

Valuation Practice Standards

Question 6

What part of the Redbook relates to Terms of Engagement?

Answer 6

VPS1

Question 7

What is involved in Terms of Engagement for Sydenham and Holland Park?

Answer 7

VPS1

• Client / Bank Name and address
• Accordance with RICS Red Book 2021
• Purpose of Valuation
• Valuation Date
• Fees
• Complaints handling procedure
• Liability = 33% of value
• Indemnity insurance
• Special Assumptions

Question 8

What are the important points on an inspection?

Answer 8

• Measure in line with RICS Property Measurement 2018 (OR IPMS where possible?
• Make detailed commentary in line with VPGA 8
• Take photos

Question 9

In your level 2 example (Sydenham or Holland Park), what did you include within the report that related specifically to loan security, rather than any other valuation purpose?

Question 10

What is an assumption?

Answer 10

Assumption is made where it is reasonable for the valuer to accept that something is true without the need for specific investigation or verification.

Question 11

What is a special Assumption?

Answer 11

As special assumption is made when you make something this is different from the facts

Question 12

What did you measure in accordance to?

Answer 12

RICS Property measurement 2022

Question 13

When did IPMS come into place

Answer 13

2018

Question 14

If you didnt use IPMS what do you do?

Answer 14

Have to inform client of the benefits of using it?

Question 15

What IPMS relates to residential?

Question 16

What is the difference between the measuring practise and IMPS?

Question 17

Why was IPMS introduced?

Answer 17

Avoid inconsistencies, create more transparency

Question 18

What are the limitations of a distometre?

Answer 18

Bad in bright light, hard to use in tight spaces.

Question 19

how do you calibrate a distometre?

Answer 19

Use tape measure and measure

Question 20

Why do we have greater COI checks on secured lending?

Answer 20

3rd party involved
Requirement for lending institutions (2 years of activity)

Question 21

How did you obtain the comparables and did you verify them?

Answer 21

Obtained using online sources, verified by agents

Question 22

What part of the Redbook relates to inspection?

Answer 22

VPS2

Question 23

How would the valuation be different if property was tenanted?

Answer 23

You would have done MR and taken into account rental income. And lease length

Question 24

You said you applied a premium, what was the premium you applied?

Answer 24

8-10% premium