Valuation - Level 3 Flashcards
Valuation - Bayswater: Example in Bayswater, you said you adjusted the premiums to account for aspect views, roof terrace, what % did you base these premiums on?
15% for the roof terrace and views across Hyde Park
Valuation - Bayswater: For Bayswater, loan security purpose, what section of the red book is regarding loan sec?
VPGA 2
Valuation - Bayswater: What does stucco fronted mean?
Exterior finish for masonry walls, white/render plaster for decorative look for upmarket buildings
Valuation - Bayswater: Where did you record your conversations with agents?
I logged it on my firm’s database in the comparable evidence file
Valuation - Bayswater: How long did you store all this information on file for?
6 years – Limitations Act 1980’s
Valuation - Bayswater: What is are the common defects for a Victorian property?
- Penetrating Damp (solid wall construction) therefore prone to water penetration
- Neglected chimney stacks, poor flashing cause leeks
- Subsidence
- Rotting windows, as wooden sash
Valuation - Bayswater: What varies in TOBs for a loan security vs tax?
COI
Valuation - Bayswater: Why do you use comparable evidence
Liquid asset therefore should have lots of comparable. Single resi unit therefore this is how a buyer would view it in the market. Not income producing
Valuation - Bayswater: What is listed?
Buildings that are of special architectural or historic interest can be listed, which gives them legal protection
Valuation - Bayswater: What do you write about flood risk in report?
high, medium, and low risk. Look at surface water flooding
Valuation - Bayswater: How do you make it know of flooding in your vals report?
Highlighted in risk section. My comps have been affected in the same way therefore haven’t adjusted. I assume insurance was available on standard commercial terms
Valuation - Bayswater: You said you undertook statutory enquiries, including details of listed buildings, where of you find this information?
Where do you find information on:
Listed buildings – Historic England
Flooding – UK Govt. Website
Conservation – Westminster City Council website
Planning History – Westminster City council Planning portal
Valuation - Bayswater: What did you inspect and why did you take photos?
Inspected the surrounding area, layout, condition, roof terrace, looked at the views.
Look photos – provide evidence of state of property and something to refer back to
Valuation - Bayswater:
Valuation - Bayswater: What is a SWOT analysis?
Strengths, weaknesses, opportunities and threats.
Strengths: close proximity to Hyde Park, large roof terrace
Weaknesses: tired external parts, no porter/concierge
Opportunities: request to initiate works on common parts
Threats: Ukraine/Russia, economic impacts of Covid.
Valuation - Bayswater: Define Market Value?
The estimated amount for which an asset or liability should exchange:
- On valuation date
- Between willing buyer and a willing seller
- In an arm’s length transaction
- After property marketing
Where parties had acted knowledgably, prudently and without compulsion
Valuation – Queensway: What is a ‘Residual Valuation’ Red Book Valuation?
Valuation in accordance with the Red Book, to assess the market value of a development site as the date of valuation.
Normally using market inputs.
Valuation – Queensway: What is valuing for financial accounting purposes?
This is done for internal financial reporting purposes for internal financial planning, and strategic planning therefore I was valuing for market value.
VPGA 1 – Inclusion in financial accounts
- Fair value will be adopted for IFRS adopted accounts
Valuation – Queensway: When would you value for financial accounts/use fair value?
I am aware that if it was to be reported inclusion of financial account you would value under:
The Red Book for VPGA 1 – for inclusion in financial accounts
- Fair value under FRS 13
New Introduction:
National Supplement 2023
- VPS 3: Regulated Purpose Valuations: valuation relied on for third parties who have not commissioned the valuation and subject to valuation monitoring.
Purpose:
- For financial accounts
- stock exchange
- takeovers and mergers
Valuation – Queensway: IFRS 13
IFRS 13 also sets out certain valuation concepts to assist in the determination of fair value.
Valuation – Queensway: Difference between fair value and market value?
Fair Value is used to gauge the true worth of an asset whereas market value is observing the actual value for an asset for which it will be exchanged at
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:
- basis of valuation is now required if IFRS have been adopted by Client.
Adopted by International Accounting Standards have been adopted by Client
Valuation – Queensway: Why were you adopting market value not fair value?
I am aware that valuing for financial accounts you would normally adopt Fair value under VPGA 1, but market value is what my Client has requested because this is for internal finical reporting for financial planning
Valuation – Queensway: In Queens Way, within your appraisal, how did you account for the site having planning permission in your inputs?
As it had planning permission it was a lower risk than if it didn’t have planning permission, therefore I reflected this in the developer’s profit, time scales and initial planning costs
Valuation – Queensway: Is CIL adopted?
No because it is a conversion from office to residential but therefore there is no relief area to add or CIL (existing – proposed areas). It is staying the same GIA.
Based on additional floorspace based on GIA in sq m
Valuation – Queensway: You mention Class E and C3, what you name other class types and what they refer to?
C2 – Care
B8 - industrial warehouse
Valuation – Queensway: What is a special assumption?
Assumption: reasonable to accept that something is true without the need for specific investigation
Special Assumption: something that is taken to be true and accepted as a fact, even though its not true
e.g a property without planning permission could be valued on the special assumption that it has planning permission.
Valuation – Queensway: Did you report both with and without SA?
Report on both, to make the client aware of Market Value without as a special assumption is know to be not true.
Valuation – Queensway: What is difference between GDV and aggregate GDV?
GDV is for an induvial flat and aggregate GDV is for the total of all 4 developed flats
Valuation – Queensway: Built costs – established and modelled?
Used BCIS and verified with firms team
Valuation – Queensway: Is the office more valuable then resi?
My Firm’s office team valued it as existing but proposed development of resi proved more valuable.
Valuation – Queensway: Does change of planning come in when planning is granted for when the conversion happens?
When the conversion happens
Valuation – Queensway: What other inputs did you use?
Professional fees: 10-15% plus VAT on total construction costs
Marketing costs: 1-2% of normal GDV
Cost of finance: BoE base Rate plus risk premium
Developers profit: 17.5% as already has planning.
Timescales: 3 months lead in, 12 months conversion, 6 months sale
Valuation – Queensway: What types of sensitivity can you have?
Simple (change key variables), scenario (change timing or phasing) and Monte Carlo (probability)
Valuation – Queensway: Why did you use a sensitivity analysis?
Required to assess different values if key inputs and variables change slightly
Valuation – Queensway: What change did the sensitivity have?
I changed Sales rate and build costs to reflect to our Client the difference in value
Valuation – Queensway: What is a bridging loan?
The second loan. Higher interest than standard loan from bank as more risky. Have to pay first loan back before second
