Valuation - Level 3 Flashcards
What 3 things should you consider before undertaking a valuation?
Your professional competence
Your independence
3.Terms of engagement
What are the minimum information points for Terms of Engagement?
There are 18 matters listed alphabetically set out in IVS 101 (Scope of Work) which should be included in terms of engagement as sub headings.
Why might a valuation need to be carried out?
Valuations may be carried out for the following purposes:
- Loan security
- Accounts
- Tax (CGT/IHT)
What is the Red Book?
The Red Book is a set of global standards which set out procedural rules and guidance for written valuations.
What is the purpose of the Red Book?
Consistency
Objectivity
Transparency
When might a valuation not be Red Book?
Agency - Market Appraisal
Litigation - Rent Review
Internal
Expert witness - duty to court
Statutory
What are the five valuation methods?
Comparable
Investment
Profits
Depreciated Replacement Cost
Residual
How many report headings must be included as per VPS 3 and can you name a few?
16 minimum headings
- Identification and status of valuer
- Identification of client and other intended users
- Purpose
- Identification of asset/liability
-Basis of Value
- Valuation date
What is the definition of Market Rent?
The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee
On appropriate market terms, in an arms length transaction, after proper marketing
Where parties acted knowledgeably, prudently and without compulsion
What is the definition of Market Value?
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 arms length transaction, after proper marketing
Where parties acted knowledgeably, prudently and without compulsion.
How many minimum terms must be included in the TOE and can you name a few?
18 minimum terms
- Identification and status of valuer
- Identification of client
- Identification of any other intended users
- Identification of the asset/liability being valued
- Purpose
- Basis of value
What is investment value?
The value of an asset to the owner or a prospective owner for individual investment or operational objectives.
What is the process to become a registered valuer?
Valuation to L3 at APC
Valuer Registration Application Form
Renewed annually by firm
Alternative route requires an assessment, 100 days valuation experience signed off by registered valuer, case study submission and CPD.
What is Fair Value?
The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. IFRS 13
used for accounts purposes
IVS advises FV is generally consistent with MV.
Which parts of the Red Book apply specifically to loan security?
VPS 1-5
VPGA 2 - Valuation of interests for secured lending
VPGA 8 - The Valuation of Real Estate
VPGA 10 - Material Uncertainty
Are you aware of a recent piece of valuation negligence case law?
What does the Hart V Large case highlight for surveyors?
What is the RICS Red Book called?
RICS Valuation - Global Standards
When was the RICS Red Book (global) published?
published December 2024 and effective 31 January 2025
What is the purpose of the Red Book?
Consistency, objectivity, transparency
What is the Red Book?
Set of global standards which set out procedural rules and guidance for written valuations
What is a VPS?
Valuation Technical and Performance Standards and they are mandatory
VPS 1
Terms of Engagement
VPS 2
Inspections, investigations & records
