Valuation Red Book Flashcards
What is the Red Book?
The Red Book contains mandatory rules, best practice guidance and related commentary for all members undertaking valuation work across the globe.
Who can carry out Red Book Valuations?
Registered valuers under the Valuer Registration Scheme.
Why was the Red Book created?
To improve consistency and transparency in valuation approach across the globe.
What is on the front cover of the RICS Valuation - Global Standards?
RICS Logo IVSC Logo Title of document Effective from date Red spherical globe
What are the different sections of the Red Book?
- Introduction
- Glossary
- PS - Professional Standards
- VPS - Valuation Technical and Performance Standards
- VPGA - Valuation Practice Guidance Applications
- International Valuation Standards
What are the Professional Standards?
PS 1 - Compliance with standards where a written valuation is provided.
PS 2 - Ethics, competency, objectivity and disclosures.
What is PS 1 of the Red Book?
PS 1 - Compliance with standards and practice statements where a written valuation is provided.
Looks at application - when a valuation needs to be Red Book Global compliant.
Details the 5 exemptions.
What is PS 2 of the Red Book?
PS 2 - Ethics, competency, objectivity and disclosures.
Members must act in accordance with 5 RICS Global and Ethical Standards and be bound by the RICS Rules of Conduct for Firms and Members.
Valuer must act objectively and independently - apply professional scepticism.
What types of valuations are excluded from the Red Book?
Statutory Agency Internal Negotiation/Litigation Expert Witness
Which sections of the Red Book are mandatory?
Professional Standards
Valuation Technical and Performance Standards
International Valuation Standards
Are the exemptions excluded from the mandatory sections?
They are excluded from the mandatory Valuation Technical and Performance Standards.
Still have to adhere to the Professional Standards.
Are you still liable for valuation advice that’s provided orally?
Professional Standards should still be adhered to.
Just because it’s oral, doesn’t mean its provided without liability.
What are the Valuation Technical and Performance Standards?
VPS 1 - Terms of Engagement (scope of work)
VPS 2 - Inspections, investigations and records
VPS 3 - Valuation reports
VPS 4 - Bases of value, assumptions and special assumptions
VPS 5 - Valuation approaches and methods.
VPS 1 - What is included with your standard Terms of Engagement?
In accordance with VPS 1:
- ID & Status of Valuer
- ID of Client
- ID of other users
- The property
- Currency
- Purpose of valuation
- Basis of Valuation
- Valuation date
- Nature and source of information to be relied upon
- All assumption and special assumptions
- Format of the report
- Restrictions on use
- Confirmation that it will be undertaken in accordance with IVS.
- Fee
- Firm registration and CHP
- Compliance
- PII Caps
VPS 2 - why must valuers inspect?
To verify the necessary information being relied upon for a valuation to ensure the information is professionally adequate for its purpose.
VPS 2 - are desktop reports Red Book compliant?
Yes - unless for one of the exemptions.
VPS 2 - What factors must a valuer consider when undertaking a desk-top valuation?
- Must be agreed in writing in the Terms of Engagement
- Must disclose possible valuation implications in writing
- Must consider whether it is reasonable with regard to the purpose of valuation
- Must refer to the restriction in the report.
VPS 2 - can you conduct a re-valuation of a property and not inspect?
Yes you can, only if you’re satisfied that there have been no material changes to the property or the nature of its location since the previous report.
Must confirm this in the terms of engagement.
What is VPS 3 of the Red Book?
This is relating to Valuation Reports and covers what should be included within a report.
i.e. what is included within VPS 1 - Terms of Engagement