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Flashcards in Red Book Deck (46)
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1

What is the Red Book Global?

- Red book is used to build consistency, transparency, confidence so that users of valuation services are confident with the valuation of an RICS member
- Red Book comprises of Global addition and UK National Supplement
- Includes the international valuation standards in the second part of the Red Book

2

Key changes to Red Book Global?

- Written valuation now includes electronic format and automated valuation models
- Professional scepticism must be applied when considering evidence
- Importance of discussing sustainability and environmental matters when valuing interests in real estate
- VPGA 8 sustainability should only be reflected in value where market evidence indicates

3

What is a registered Valuer:

A registered valuer is a regulated and qualified professional can conduct a Red Book valuation

4

What does the Red Book say constitutes a written valuation?

All forms of communication other than purely oral. This includes automated valuation models

5

What does the Red Book say about oral valuations?

Oral advice is still liable to negligence claims therefore it is stated that the Red Book should still be adhered to

6

What does the Red Book say about professional scepticism?

You should exercise scepticism. This is applying a questioning mind and critically assessing evidence relied upon

7

What is meant by valuation approach and by valuation method?

Valuation method refers to the procedure or technique used to calculate the value. Valuation approach is the overall manner in which a valuation task is undertaken

8

Material uncertainty?

Material change in circumstance causing uncertainty which means less weight is attached to evidence. VPGA 10. This must be excluded from the market commentary

9

Inherent material uncertainty?

This is general market risk which is assumed to always be present

10

Material uncertainty forum?

Meeting of members to discuss the need for material uncertainty in valuation. This is judgement and not mandatory for valuers

11

When is it appropriate to include material uncertainty?

Down to valuers discretion

12

What is a working group?

Panel of RICS expert who discuss valuation matters in certain subject e.g. development appraisal

13

What does Red Book state about sustainability?

Must reflect in valuation if evidence shows. If not must be recorded regardless. This is included in VPGA 8

14

What is sustainability?

Meeting the needs of today without compromising future generations

15

Natural environmental constraints?

Subsoils, rivers, radon

16

Non-natural environmental constraints?

Contamination

17

What does PS1 say about VPS 1-5?

That they are mandatory

18

What is basis of value?

Market value, market rent, existing use value, investment value, fair value

19

What is special value?

Value over and above what the market would pay to reflect a special purchaser

20

Marriage value?

Value which can be achieved by the combination of 2 or more assets or interests

21

What are assumptions?

Something reasonable to assume without the verification of facts

22

What are special assumptions?

Something that would not particularly be assumed by a market participant

23

What is a projected value?

Assumed value likely to be achieved in the future

24

What is investment value?

Worth to an individual person

25

Do you need a terms of engagement if there is an SLA?

There is still a requirement for terms of engagement even if there is an SLA e.g. DRRS

26

When must terms of engagement be issued?

Prior to taking on work, should not be sent on the same day as sending out the valuation report

27

What sections contain inspection in the Red Book?

VPS2 and VPGA8

28

What should be captured on inspection?

Age, construction, dimensions, locality, environment, state of repair, fixtures and fittings, environmental and sustainability conditions, date, weather, eligible notes

29

Does a Red Book valuation require an inspection?

Depends on the necessity and proportionality of your instruction

30

Should the client share the report with a third party?

Must be redacted by us to see if any information is confidential or might compromise a client