Valuation practice and methodology Flashcards
What is the effective date of the RICS Valuation – Global Standards (Red Book Global Standards)?
31 January 2025
Published in December 2024
What document accompanies the Red Book Global Standards?
Basis for conclusions document
Provides additional context and reasoning behind the standards
What international standards does the Red Book Global Standards comply with?
International Valuation Standards (IVS)
Ensures consistency and global applicability
What is the purpose of the national standards and guidance published by RICS?
To cover specific statutory or regulatory requirements in local jurisdictions
While remaining consistent with relevant international standards
When did the UK national supplement 2024 take effect?
1 May 2024
What do the valuation standards set out for valuers?
Procedural rules and guidance
For the conduct of most types of valuation instructions
Do the valuation standards instruct valuers on how to value in individual cases?
No
Where can valuers find best practice advice on how to value in individual cases?
isurv Valuation
Fill in the blank: RICS Valuation – Global Standards is also known as _______.
Red Book Global Standards
True or False: The Red Book Global Standards applies only to the UK.
False
What framework do the valuation standards provide?
Best practice in the execution and delivery of valuations
For different purposes
What are the three internationally defined valuation approaches?
Market approach, income approach, cost approach
These approaches are identified by their basic principles.
What method does the market approach use?
Comparable method and market transactions
This method focuses on comparing similar properties in the market.
What does the income approach generally refer to?
Investment method, either traditional (cap rate) or discounted cash flow (DCF)
It can also refer to the profits method.
What is the cost approach often associated with?
Depreciated cost methods of valuation
This includes depreciated replacement cost (DRC) and the contractor’s method.
What does the cost approach also include besides depreciated cost methods?
Residual appraisal method
This method is used for valuing properties with development potential.
True or False: The three valuation approaches are mutually exclusive.
False
Parts of a property may require different approaches.
Fill in the blank: It is increasingly a requirement that more than one approach or method should be used, and the results considered before reporting a _______.
value
This emphasizes the importance of a comprehensive valuation process.
What is the primary focus of IVS 2025 regarding valuation?
Valuation by comparison
IVS 2025 focuses on identifying identical or similar assets or liabilities that have been sold.
What are the key steps in the valuation by comparison process?
- Identifying identical or similar assets or liabilities sold
- Analyzing sale prices achieved
- Establishing value by comparison
This process involves both the analysis of past sales and relevant market data.
What role do listings and offerings play in valuation by comparison?
They can be used as secondary evidence, particularly in new markets
Listings and offerings provide additional context to the valuation process.
Which other assessment does the valuation by comparison process relate to?
MR assessment
This is referenced in VPS 2.5.
