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IH RICS P&D Lvl 1 - APC - 2024 > Valuation (lvl 1) > Flashcards

Valuation (lvl 1) Flashcards

1
Q

Tell me what the 5 methods of valuation are.

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2
Q

Tell me about how you would value a building using the
profits/contractors/investment/comparable/residual method of
valuation.

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3
Q

How do you decide which valuation method to apply? When and why would you use one of these methods?

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4
Q

What is a years purchase multiplier?

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5
Q

Give me an example of a good covenant and how this might impact a
valuation.

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6
Q

What is PI Insurance (PII)?

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7
Q

Why do surveyors need PII?

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8
Q

Tell me about the RICS requirements in relation to PII.

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9
Q

What level of PII cover does your firm have?

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10
Q

How would you distinguish limitations on liability in your valuations?

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11
Q

Where in your valuation report do you state any limitations on liability?

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12
Q

What is the SAAMCO cap?

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13
Q

What would you do if you received a notice of a PII claim from a client
or their solicitor?

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14
Q

What is run off cover?

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15
Q

What is the Red Book?

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16
Q

Why does the Red Book exist?

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17
Q

Tell me about a factor which may impact value.

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18
Q

What is your duty of care as a surveyor when undertaking a valuation? To whom do you owe this duty of care?

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19
Q

Why is independence and objectivity important when valuing?

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20
Q

Is there a separate UK Red Book?

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21
Q

What is the UK valuation guidance called?

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22
Q

Why does the UK guidance exist?

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23
Q

When was the Red Book last updated?

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24
Q

Does this differ from when IVS were last updated? What changes were made?

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25
Q

Which sections of the Red Book are mandatory and which are advisory?

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26
Q

What does PS1-2/VPS1-5/VPGAs relate to?

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27
Q

What type of advice does the Red Book cover?

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28
Q

What type of valuations might be relied upon by a third party?

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29
Q

Tell me what the definition of MR/MV/investment value/fair value?

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30
Q

What is the difference between an assumption and a special assumption?

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31
Q

What sources of information would you consider when preparing a
valuation report?

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32
Q

If you have previously valued an asset, do you need to make any
additional disclosures and what might they be?

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33
Q

If your firm is too small to have a rotation policy or valuation panel,
what else can you do to ensure objectivity?

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34
Q

When might a conflict of interest exist in relation to a valuation
instruction?

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35
Q

What must be included in your terms of engagement / valuation report?

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36
Q

Where is this covered in the Red Book?

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37
Q

How do you deal with limitations on inspection or analysis?

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38
Q

Can you revalue a property without inspecting?

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39
Q

What RICS guidance relates to the use of comparable evidence?

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40
Q

What is an internal valuer?

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41
Q

Can an external valuer provide an internal purposes valuation?

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42
Q

What happens if market conditions change between the valuation date
and report date?

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43
Q

Is special value from a special purchaser reflected in MV?

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44
Q

Where does the definition of fair value come from?

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45
Q

Does this differ from MV?

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46
Q

When is fair value used?

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47
Q

What are the 3 approaches under VPS5?

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48
Q

Are there any instances where certain sections of the Red Book may not apply? What are these and which sections don’t apply?

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49
Q

What is a SORP?

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50
Q

When would you use EUV?

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51
Q

What is the definition of EUV?

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52
Q

What additional criteria apply to secured lending valuations?

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53
Q

What information should you specifically request for a secured lending
valuation?

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54
Q

What is a yield?

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55
Q

What is a Net Initial Yield?

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56
Q

What is a reversionary yield?

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57
Q

What is an equated yield?

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58
Q

What is an equivalent yield?

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59
Q

How would a yield reported from auction differ from a Net Initial Yield?

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60
Q

What purchaser’s costs do you deduct from a valuation?

A
61
Q

When do you deduct purchaser”s costs from a valuation?

A
62
Q

How would you value a property in uncertain market conditions - does
the Red Book give any guidance?

A
63
Q

How could you value a long leasehold interest?

A
64
Q

How does a term and reversion differ to a DCF?

A
65
Q

What is the difference between a growth explicit and a growth implicit
yield?
Give examples of each of these types of yield.

A
66
Q

How would you value an under/over rented investment property?

A
67
Q

When would you use a dual rate investment calculation?

A
68
Q

Where can you find yield evidence from?

A
69
Q

What is the hierarchy of evidence?

A
70
Q

What would you do if comparable evidence was limited?

A
71
Q

What is NPV?

A
72
Q

What is IRR?

A
73
Q

What is a term and reversion?

A
74
Q

What is a hardcore and topslice?

A
75
Q

What is a Discounted Cash Flow (DCF)?

A
76
Q

What is a YP/PV/YP in perpetuity?

A
77
Q

What is marriage value?

A
78
Q

When would you include an element of hope value in a valuation?

A
79
Q

Can you include hope value in a secured lending / mortgage valuation?

A
80
Q

How would you value a ransom strip?

A
81
Q

How does market value differ to investment value/fair value?

A
82
Q

What is a dual capitalisation rate and when would you use one?

A
83
Q

What type of properties would you use the profits method for?

A
84
Q

What type of properties would you use the DRC method for?

A
85
Q

When would you use the profits method?

A
86
Q

What is turnover / gross profit / net profit?

A
87
Q

What are the steps to providing a profits valuation?

A
88
Q

What is EBITDA?

A
89
Q

What is Fair Maintainable Operating Profit?

A
90
Q

How do you calculate the divisible balance?

A
91
Q

What accounts information would you want to review for a profits
valuation?

A
92
Q

Do RICS provide any guidance on RLVs or valuing development
property?

A
93
Q

What is an RLV?

A
94
Q

What is a development appraisal? How do they differ?
How else can you value development land?

A
95
Q

What is the basic process of undertaking a RLV/development appraisal?

A
96
Q

What does a development appraisal show?

A
97
Q

What are the key things you need to consider when appraising /
inspecting a development site?
What else should you consider?

A
98
Q

Tell me about your due diligence when undertaking a development
appraisal.

A
99
Q

What sources of information do you use when undertaking a
development appraisal?

A
100
Q

How can you assess development potential?

A
101
Q

What is GDV/NDV?

A
102
Q

How do you calculate GDV?

A
103
Q

What do development costs include?

A
104
Q

When do you apply VAT when assessing development costs?

A
105
Q

Where can you source build costs from?

A
106
Q

What are typical finance costs?

A
107
Q

What would you apply finance costs to and on what basis?

A
108
Q

What is an S curve?

A
109
Q

What factors influence the decision to use an S curve when applying
finance costs?

A
110
Q

Is there a quick rule of thumb which can be used when applying finance
costs?

A
111
Q

What do holding costs typically include?

A
112
Q

How do you typically calculate developer’s profit?

A
113
Q

What are some typical inputs (and %/£) in a RLV?

A
114
Q

What other criteria might be assessed in terms of performance
measurement for a RLV?

A
115
Q

What are the advantages/disadvantages of a RLV?

A
116
Q

What is included in the development programme?

A
117
Q

What is CIL?

A
118
Q

What is S106?

A
119
Q

What are the differences between CIL and S106?

A
120
Q

What is CIL charged on?

A
121
Q

What is a Monte Carlo simulation?

A
122
Q

What is a sensitivity analysis?

A
123
Q

How do you carry out a sensitivity analysis?

A
124
Q

What variables might you change and why?

A
125
Q

What factors affect sensitivity of a development appraisal?

A
126
Q

Tell me about your understanding of incorporating affordable housing
into development appraisals.

A
127
Q

Tell me about software you have used to provide a RLV.

A
128
Q

What RICS guidance relates to the valuation of development property?

A
129
Q

Give me a limitation of this software.

A
130
Q

What is viability?

A
131
Q

When would a cost approach be used?

A
132
Q

What type of buildings would a cost approach be used for?

A
133
Q

What is the supposition that a DRC is based upon?

A
134
Q

What are the 3 components of the cost approach?

A
135
Q

How do you assess the value of the land?

A
136
Q

How do you assess Gross Replacement Cost?

A
137
Q

What costs would you consider within GRC?

A
138
Q

What would you do if the building could be replaced with a modern equivalent?

A
139
Q

How would you deal with depreciation/obsolescence?

A
140
Q

What types of obsolescence are there?

A
141
Q

What are the three ways to deal with depreciation?

A
142
Q

Is the cost approach a market valuation?

A
143
Q

How might onerous lease terms, e.g. restrictive user, break clause,
impact upon capital or rental value?

A
144
Q

What liabilities may be created through valuation?

A
145
Q

What is a liability cap and when would one be used?

A
146
Q

Explain what you understand by the term, margin of error.

A

IH RICS P&D Lvl 1 - APC - 2024 (20 decks)

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