Valuation Flashcards

Question

Is there any Rics guidance on comparable evidence?

Answer 1

The RICS professional standard comparable evidence in real estate evaluation of first edition

Answer 2

Set up principles for comparable evidence in real estate evaluation Sources of information Recording of Analysis of evidence Dealing with a shortage of evidence Key factors affecting comparability

Answer 3

there are a range of sources for comparable evidence available to values however some are more relevant than other Comparable evidence can be set into categories a b c A being direct comparables B general market data C other sources Specifically, you need to look at The date The type of transaction i.e. new letting renewal rent review How the rent has been determined such as arbitration or court decisions.

Answer 4

The method of last resort Established replacement cost of modern equivalent Depreciate for ages and obsolescence (functional, physical ,economic) Plus the site value For rental, you will need to depreciate at the statutory decapitalisation rate usually used in rating assessments

Answer 5

All risk yield - incorporates all the risk return and growth Gross initial yield - the rent divided by the value Net initial yield add purchase cost to price and then divide the rental value by the price Equivalent yield - the weighted average between terminal and reversion Equated yield - internal rate of return with explicit growth Nominal yield is the initial yield assuming annually in arrears payment pattern True equivalent yield is calculated on a actual payment pattern, e.g. quarterly in advance

Answer 6

Value registration is a risk monitoring and quality assurance program with checks compliant with the RICS red book You effectively agree to be audited by the team of regulatory surveyors who will check that you are complying with the mandatory professional standards and following best practice guidelines and that you have robust processes and procedures in place following the audit they will draft a report highlighting any risks or areas for improvement . Understand the fee is £140 per valuer if sole.

Answer 7

Check I’m competent Conflict check Confirm confirming instructions in writing Terms of engagement Asbestos register Business rates Contamination Equality act compliant Environmental matters Flooding Fire safety compliance Health and safety compliance Highways is the road adopted Title in tenure boundaries land registry easement restrictive covenant Planning, i.e. is the property listed or any conservation area .

Answer 8

Receiving instructions Conflicts and competence Issue terms of engagement signed and returned Due diligence and pre-inspection checks Inspect and measure Decide appropriate method Research market for comps Analyse evidence Weight compré Value the property Draft the report Check by RICS value and sign off Issue report and invoice Keep secure records for six years

Answer 9

Along with the RCS own requirements, RCS professional standards and practic information incorporate the global concepts defined in the international valuation standards together these provide an effective regulatable framework for the delivery evaluation services to clients RCS sets and maintains professional evaluation standards that apply to RSS members and regulated firms globally. The main global valuation standards are published in the RICS evaluation. Global standards are either a read book which also fully incorporate the IVS. Where applicable the RICS red book refers values to the international valuation standards

Answer 10

The most recent IVF standards were published in January 2024 these include a revised structure and increased focused on ESG data and evaluation modelling.

Answer 11

This sets out specific requirements together with supporting guidance for members on the application of the RICS evaluation global standards Redbook evaluations undertaken subject to UK jurisdiction.

Answer 12

Similar to the red book, it is set out in a similar way, i.e. UK professional standards and UK technical and performance standards It also sets out VPGA applications. Specific evaluation practice garden application in the UK supplement include Valuation for financial reporting Evaluations for other regular regulated purposes Valuations for assessing adequacy of financial resources Valuations of local authority assets for accounting purposes Evaluation of central government developed administration and NHS assets for accounting purpose Local authority and central government accounting Evaluation of charity assets Relationship with auditor Valuation for commercial secured lending purposes Valuation of a UK residential property Evaluations for capital gains tax, inheritance tax stamp duty, land tax and annual tax

Answer 13

Financial reporting specifically for accounts. As per the company act 2006 account must be drafted as per UK GAAP or IFRS The basis adopted is the fair value which differs slightly in both UKGAAP and IFRS however in most cases the figure reported will be the same. The amount for which an asset could be exchanged a liability settled or an equity instrument granted could be exchanged between knowledgeable willing parties and an arm length transactions (UKGAAP)

Answer 14

Valuation of charity assets Various statutory provisions applied to charities Charities act 2022 Charities act 2011 Companies act 2006 In acquisitions the charity commission strongly recommends that charities obtain a report from a designated advisor acting solely for the trustees. Registered valuer. Set what should be included within the report. Disposals In disposals of properties charities are required to obtain advice Specifically in the report you will need to include Any steps that could be taken to enhance the value Whether if so how the relevant lunch will be marked Anything else that could be done to ensure that the terms on which the disposition is made are the best and can reasonably obtained for the charity No specified base of value presumption market value and market rent.

Answer 15

Valuation for commercial secured lending purposes. DRC method unsuitable. Limitation of reliance i.e. excluding third-party reliance. Statement on the suitability for loan security Extensions of validity and revaluations should be approached with caution . Sustainability and ESG requirements Importance of mitigating the risk Seen as the most risky type evaluation work .

Answer 16

All to do with evaluations for tax. Basis of value needs to be as per legislation They are written in similar terms and broadly define market The price which the property might reasonably expected to fetch if sold in the open market at a time, but that price might not be assumed to be reduced on the ground at the whole property is to be placed on the market at one time. There may also be a requirement under the capital gains regime that a historic valuation is required i.e. 31st of March 1982

Answer 17

Market value Market rent Investment value Equitable value Liquidation value Marriage value Fair value

Answer 18

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and willing seller in length transaction after proper marketing and where the parties have acted knowledgeably prudently and without compulsion

Answer 19

Value of an asset to a particular owner

Answer 20

The price that will be received to selling an assets or paid to transfer a liability in an orderly transaction between market participants at the measurement date

Valuation Flashcards

(44 cards)