Valuation Questions

Question 1

Tell me about the valuation you undertook at Walton

Answer 1

I undertook a valuation of a potential freehold site for Lidl to determine MV, here I used the comparable method to form an option of value

Question 2

Talk me through the steps you undertook when carrying out the valuation at Walton

Answer 2

1. Nimbus for comps looking at existing uses, plot sizes that had recently transacted
2. I used category A evidence only - direct comps/completed transactions in local area, similar/near identical
   -Aldi Rice land. 2.4 acres, 1.95m 2016

Question 3

What is MV

Answer 3

Estimated amount which an asset or liability should exchange at on a valuation date between a willing buyer and seller in an arms length transaction after proper marketing

Question 4

What is MR

Answer 4

The estimated amount which an asset or liability should be leased on a valuation date between willing buyer and seller in an arms length transaction after proper marketing

Question 5

What is capital value

Answer 5

Price that would’ve been paid for an asset if it had been purchased at the time of valuation

Question 6

Where would you go for guidance on the comparable method of valuation? And why

Answer 6

RICS Guidance Note ‘Comparable Evidence in Real Estate Valuation’ 1st Edition, 2019
Outlines principles of comparable method and provides advice when dealing with little comparable evidence

Question 7

Comparable method of valuation. You’ve mentioned the hierachy of evidence, what is it? Can you please expand

Answer 7

Category of evidence
A- direct comps
B-General market data- published sources e.g Savills market updates
C-Transactions from other real estate types and locations- e.g wider regional market

Question 8

Why did you use the comparable method, rather than the residual

Answer 8

Clients instructions were to provide MV.
Great recent transaction of Aldi

Question 9

What are the limitation of using comparable

Answer 9

Limited transactions
Lack of up to date
Existence of special purchaser - price paid above

Question 10

When would you use comparable

Answer 10

When you have good comps to support the valuation of a similar item

Question 11

When would you use Investment

Answer 11

When you have an income stream to value from an asset

Question 12

When would use use profits

Answer 12

Where value of property relates to its trading profitability and potential

Question 13

Residual

Answer 13

Purpose is to find MV of a development based on market inputs. Decuct TDC from GDV to establish MV

Question 14

DRC

Answer 14

Used for owner-occupied property for accounting and rating valuations

Question 15

What do you mean by the term redbook?

Answer 15

A Red Book Valuation is a type of survey undertaken by a qualified surveyor. This professional must be registered as a member.

Question 16

What are the contents of a redbook report?

Answer 16

It includes a rigorous set of criteria covering duty of care, ethics, the minimum content of a valuation report, the valuer’s qualifications, and so on.
-It also indicates which of the five valuation methods a valuer should adopt, depending on the type of property.
high standards of inspection, investigation, analysis, definitions, justification and presentation are met.

Question 17

Define the term “yield”

Answer 17

Reflects risk