Flashcards in Red Book Deck (46)
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
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
What is a registered Valuer:
A registered valuer is a regulated and qualified professional can conduct a Red Book valuation
What does the Red Book say constitutes a written valuation?
All forms of communication other than purely oral. This includes automated valuation models
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
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
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
Material change in circumstance causing uncertainty which means less weight is attached to evidence. VPGA 10. This must be excluded from the market commentary
Inherent material uncertainty?
This is general market risk which is assumed to always be present
Material uncertainty forum?
Meeting of members to discuss the need for material uncertainty in valuation. This is judgement and not mandatory for valuers
When is it appropriate to include material uncertainty?
Down to valuers discretion
What is a working group?
Panel of RICS expert who discuss valuation matters in certain subject e.g. development appraisal
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
What is sustainability?
Meeting the needs of today without compromising future generations
Natural environmental constraints?
Subsoils, rivers, radon
Non-natural environmental constraints?
What does PS1 say about VPS 1-5?
That they are mandatory
What is basis of value?
Market value, market rent, existing use value, investment value, fair value
What is special value?
Value over and above what the market would pay to reflect a special purchaser
Value which can be achieved by the combination of 2 or more assets or interests
What are assumptions?
Something reasonable to assume without the verification of facts
What are special assumptions?
Something that would not particularly be assumed by a market participant
What is a projected value?
Assumed value likely to be achieved in the future
What is investment value?
Worth to an individual person
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
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
What sections contain inspection in the Red Book?
VPS2 and VPGA8
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
Does a Red Book valuation require an inspection?
Depends on the necessity and proportionality of your instruction