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Market Appraisals Flashcards

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1
Q

Please describe the residential property at Hodgetts Lane

A

4 bedroom detached house
Constructed in 2000s
Cavity brick wall construction, part rendered, under pitch tiled roof

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2
Q

What was the size and layout of the four-bedroom detached residential property at Hodgetts Lane?

A

Fairly small - 4 bedrooms, lounge, dining room, kitchen, family bathroom, WC, study, driveway, single integral garage

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3
Q

What was the purpose of your instruction for the residential property at Hodgetts Lane?

A

I assisted in providing the estimated market rental value for the property following its previous refurbishment works

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4
Q

What kind of refurbishment works were carried out at Hodgetts Lane?

A

Full internal refurbishment - new carpets, decoration of walls, cleaning of bathrooms + regrouting tiles, cleaning

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5
Q

What was your process in selecting comparable lettings for your appraisal at Hodgetts Lane?

A

Searched for recent lettings of similar 4 bedroom detached houses that had also been recently refurbished
Limited search radius to 5 miles

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6
Q

What details did you consider from the comparables when estimating the market rental value at Hodgetts Lane?

A

Size / layout
Condition
Number of bedrooms
Whether had a garage
Garden + driveway space

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7
Q

What increments did you use to adjust the value of the property based on the comparables at Hodgetts Lane?

A

Based analysis on factors affecting value, e.g. location, size, no. of bedrooms, condition

Placed most emphasis on comp located on same road, therefore made no adjustment regarding location
Had an additional bedroom - made 5% adjustment to reduce value
Was larger in terms of overall sq ft - made 5% adjustment to reduce value

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8
Q

How did the size and benefits of the recently refurbished property on the same road impact your market appraisal for the property at Hodgetts Lane?

A

Comparable larger in size + benefited from an additional bedroom. Considered this would increase the value compared to subject

Made adjustments for these factors - 5% for additional bedroom + 5% for larger size

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9
Q

What was your suggested asking rent based on your market appraisal at Hodgetts Lane?

A

£2,000 pcm / £24,000 pa

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10
Q

What appraisal methods and techniques did you use to ascertain the market rental value at Hodgetts Lane?

A

Relied on the comparable method of valuation

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11
Q

How did you ensure that your appraisal meets the relevant standards and guidance at Hodgetts Lane?

A

Analysed comparable evidence in line with hierarchy of evidence

Also adhered to PS 1 + PS 2 of the Red Book - e.g. ensured there were no conflicts

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12
Q

As part of the market appraisal at Hodgetts lane, what information did you request from the vendor?

A
  • Property details
  • When they bought the property + how much for
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13
Q

How long did you anticipate the property at Hodgetts Lane would be on the market for?

A

3-6 months
Very desirable location + strong demand for similar properties
Client has similar properties in the area that have let in a similar time frame

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14
Q

Who did you identify as the potential tenants for the property at Hodgetts Lane?

A

Small families

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15
Q

What do tenants look for in a property in this location (Hodgetts Lane)?

A

Proximity to schools, shops + other local amenities

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16
Q

What marketing strategy did you agree with the landlord for Hodgetts Lane?

A

Advertised on right move and zoopla
To let boards

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17
Q

How did you set your fee for Hodgetts Lane?

A

I am not responsible for setting fees, however understand that fees should be proportionate to the work undertaken, including the type of property, complexity of the valuation + any specific requirements. Should also ensure fees are in line with market rates to ensure competitivity. Should communicate fees to client transparently

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18
Q

What are common fee structures for market appraisals?

A

Fixed fee - fixed amount charged, regardless of property type or complexity

Hourly rate - based on time spent doing work

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19
Q

How did you review your performance for Hodgetts Lane?

A
  1. Conducted a self assessment - reflected on methodology + approach
  2. Asked client for feedback to understand satisfaction + outcomes
  3. Ensured report was peer reviewed - reflected on any comments + improvements
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20
Q

Please describe the Stoneleigh property

A

3 bedroom semi-detached property
Traditional brick construction under pitch tiled roof
Entrance hall, dining room, sitting room, kitchen, landing, 3 bedrooms, bathroom, detached double garage

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21
Q

What was the purpose of appraising the residential property in Stoneleigh?

A

To identify a guidable guide price + method of sale (as property had recently been identified for disposal)

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22
Q

Who instructed you to carry out a market appraisal for the Stoneleigh property?

A

Client (developing national infrastucture scheme)

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23
Q

What steps did you take during your inspection of the property in Stoneleigh?

A

Conducted due diligence beforehand
Inspected surrounding area
Inspected external area
Inspected internal area
Used notes to help me form opinion of Market Value

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24
Q

How did you go about taking measurements and documenting the site for the property in Stoneleigh?

A

Took measurements on GIA (as per instruction) + IPMS (to comply with RICS) bases

Documented external + internal site notes electronically. Ensured to include a general condition of the property

Supported notes with photos

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25
Were photographs part of your documentation process during the property appraisal (Stoneleigh)?
Yes - took photos of every room to support notes made
26
How did you choose the comparable properties for your valuation of the property in Stoneleigh?
Limited search radius to 10 miles Searched for similar properties in terms of size, no. of bedrooms, plot size, condition Searched for recent transactions Ensured comparables were open market agreements + not influenced by special factors, e.g. special purchaser, seller needing to sell quickly
27
What did you base your recommendation on for selling the Stoneleigh property on the open market?
I recommended a sale by private treaty in line with my client's preference of having a confidential sale + greater flexibility for negotiations
28
How did you communicate your findings to your client for the property in Stoneleigh?
Via a written report
29
What was included in the market appraisal report you issued to your client for the Stoneleigh property?
Included property details + condition, brief market overview, comparable sales, marketing strategy + guide price
30
Other than price and method, what else did you recommend regarding a market strategy?
When to put property on market - early spring (to attract greatest interest) Recommended putting property on rightmove + zoopla, as well as having a sale board outside the property
31
You mention the property in Stoneleigh was sold on the open market - what are the alternatives?
Auction - used where property is unique or cannot be priced accurately (method of last resort). Not confidential Informal tender - sealed bids. Used where good market demand or where negotiations need to be bought to a close after private treaty. No obligation to accept highest bid. Not legally binding Formal tender - used where there is strong demand for property. Formal process. No opportunity to withdraw after bids are submitted. Offers are opened in front of expert witness. After bid is accepted, contracts are immediately exchanged. Legally binding
32
What are the methods of sale?
Private treaty Informal tender Formal tender Auction
33
How much does a market appraisal cost?
Depends but would say in the region of £200-£600
34
Are they legally binding?
No - they provide an estimate of the property's value based on current market conditions + comparable sales Do not carry any legal weight
35
How can market appraisals help inform a client’s decision on whether to buy, sell, or let out a property?
They offer an assessment of a property's current market value - can help clients' understand how much it is worth Helps client understand local market trends, e.g. supply + demand Can help identify potential risks, e.g. market volatility - allows clients to make more informed + cautious decisions
36
Explain your involvement with the preparation and presentation of client reports
Prepared numerous market appraisal reports for clients Include details of property, overview of market, comparable evidence, guide price + market strategy
37
What is a market appraisal?
An estimate of market price of rent based on market evidence + knowledge of the local market
38
What Is the point of a market appraisal?
Useful for setting asking prices for properties Can assist in developing market strategies based on property's estimated rental value Can assist in decisions about whether to sell or hold onto property
39
How have you demonstrated practical competence in undertaking both sale and rental market appraisals
Always ensure to keep records of comparable particulars, adjustments + reasons for adjustments, measurements + inspection notes Always make sure that any comparables relied on are open market transactions + are not influenced by any special factors Always verify information with agents
40
How have you applied the relevant appraisal standards and guidance?
Always adhere to PS 1 + PS 2 of RICS Valuation - Global Standards (Red Book) 2025 Also apply hierarchy of comparable evidence when analysing + interpreting comparable evidence
41
How have you demonstrated your ability to use appraisal methods and techniques?
Used comparable method to undertake market appraisals for both potential sales + lettings which have helped clients make informed decisions about what to do with their properties
42
How have you explained the terms of a lease and their impact on value?
Not carried out market appraisals relating to leases + impact on value However, am aware that duration of term, rent increases, tenant covenant, lease type + maintenance obligations will all impact on value
43
Explain your analysis and interpretation of comparable evidence
Analyse comparables in line with hierarchy of evidence
44
How have you gathered information relevant to market appraisal?
Through communication with my clients, carrying out inspections + undertaking thorough market research
45
How have you inspected as part of an appraisal?
Yes Would conduct due diligence before hand Carry out inspection of surrounding area, external area then internal area
46
How have you prepared terms and conditions of engagement?
Firm has an admin team that prepare terms of engagement, however I understand that both parties must sign it before can start instruction Must include: - Identity of client - Identity of person responsible for work - COI - Description of work - Scope of inspections + limitations - Assumptions - Basis of fee (typically fixed fee for market appraisals) - Limitations in liability to client + third parties - CHP
47
Explain your preparation of a market appraisal report from beginning to end
Carried out a market appraisal for a 3 bedroom vacant resi property in Stoneleigh that client was considering disposing of Purpose of instruction - identify suitable guide price + method of sale Inspected property, took accurate measurements + documented external + internal site notes with photos Found comparable evidence of similar properties (a few others in Stoneleigh) + made adjustments based on various factors Formed opinion of MV + wrote up findings in report Established that strong demand for similar properties in the area so recommended that my client sell the property via private treaty to maximise interest If get competitive offers then could close sale by informal tender
48
How are market appraisals composed around client requirements?
They can inform a client's decision on whether to buy or sell a property Can be used to see how much property could be rented out for + set an asking price
49
What are the reasons for carrying out a market appraisal?
Useful for setting asking prices for properties Can assist in developing market strategies based on property's estimated rental value Can assist in decisions about whether to sell or hold onto property
50
What are some limitations of a market appraisal?
Not a red book val No PII cover Cannot be relied upon for secured lending purposes Shouldn't be taken as a reliable valuation
51
Give me an advantage of carrying out a market appraisal
Provides a useful guide as to property's value
52
What is the difference between a Red Book valuation and market appraisal?
Market appraisal - informal, can be undertaken by anyone Red book val - formal, can only be undertaken by registered valuer
53
How do market appraisals relate to the Red Book?
Fall under excepted purposes where VPS 1-6 of the Red Book do not apply
54
How do you apply the RICS Professional Standard Comparable Evidence in Real Estate Valuation, 2019?
Place the most emphasis on direct recent transactional evidence Place less emphasis on asking prices (as could differ from agreed final transaction price) Place less emphasis on historic transactions + different property types/locations
55
What constitutes as good comparable evidence?
Comprehensive - should be several comps Identical if possible or very similar Recent Result of arm's length transaction in the market Verifiable Result of underlying demand, i.e. comparable transactions taken place with enough potential bidders to create active market
56
What do you mean by arm's length transactions?
Deal where buyers + sellers act independently, ensuring fair market value without any undue influence
57
Explain how you have prepared and provided properly researched market appraisal, enabling clients to make informed decisions regarding marketing their property(ies)
Carried out market appraisal for resi property in Stoneleigh As property had recently been identified for disposal, my instruction was to identify a suitable guide price + method of sale I identified that property could achieve a higher value than what my client bought it for. Due to high demand, also established it should be sold via private treaty which also aligned with my client's request of a flexible + confidential sale Price helped client set an asking price for the property
58
How have you demonstrated your knowledge and understanding of the purposes for which market appraisals are undertaken?
Undertaken market appraisals in order to help clients make informed decisions regarding selling or holding onto properties, setting asking prices for properties + developing market strategies
59
What relevant appraisal methods and techniques have you used?
Only based off the comparable method of valuation
60
What are the appropriate standards and guidance you must adhere to in appraisal work?
RICS Valuation - Global Standards (Red Book), 2024 Professional Standard Comparable evidence in real estate valuation, 2019
61
Explain the principles and application of open market appraisal for sale purposes, including relevant appraisal standards, methods and techniques
Open market appraisal = process used to determine the MV of a property based on current market conditions. Relies on comparing property to similar + recent transactions Application = Helps sellers set a realistic asking price, provides buyers with confidence that they are paying a fair price RICS Standards = Valuation - Global Standards (Red Book) 2025, Comparable Evidence in Real Estate Valuation 2019 Methods = market approach, income approach, cost approach, AVMs Techniques = accurate inspections, gathering market evidence + verifying information, making accurate adjustments to comps based on hierarchy of evidence, accurate reporting + record keeping
62
Explain your understanding of client requirements in the market appraisal process
Clients require market appraisals for different reasons: Can assist decision making about selling or holding onto a property Can set asking prices for property Can be used to see how much a property can be sold for/rented out for Can assist in developing market strategies based on property's estimated value
63
Can market appraisals be based off methods other than the comparable method?
Yes - can use the investment method for income generating properties
64
What do you include in a marketing strategy?
Price (asking + likely sale price) Method of sale with reasons for choice Marketing period Analysis of current market - national + local Approach to marketing + materials Approach to viewings Arrangements for holding keys
65
Tell me about sale by private treaty. Give me some advantages + disadvantages
Property is marketed openly, including use of marketing particulars Adv: - Flexible - Parties can negotiate in own time - Seller is not obliged until contracts have exchanged - Relatively inexpensive - Confidential Disadv: - No certainty over timings or pricing - Risk of late decision to withdraw
66
Tell me about sale by auction. Give me some advantages + disadvantages
Used where a property is unique as a 'last resort' Property sold by a bidding process Adv: - Provides certainty over timing - Allows best price to be achieved - Short timescales can be achieved Disadv: - Expensive advertising costs - Not confidential - Little control over purchaser's identity - Failure to sell could lead to property becoming 'blighted'
66
Tell me about sale by informal tender. Give me some advantages + disadvantages
Where interested buyers submit offers in writing by a specified deadline Used where good market demand or negotiations need to be closed after private treaty Returns opened in front of independent witness No obligation for client to accept highest bid Parties can withdraw at any time - not legally binding Adv: - Flexible - Quicker than formal tender - Cost-effective (but more expensive than private treaty) Disadv: - Less transparent - Potential inconsistencies in how bids are evaluated
67
- 3Tell me about sale by formal tender. Give me some advantages + disadvantages
Interested buyers submit sealed bids by a closing date Binding obligation to accept highest bidder Used where strong demand for property + where competitivity is required Adv: - Encourages competitive pricing - Fair process Disadv: - Fairly inflexible - Expensive - Time-consuming

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