Topic 14 Valuations & Surveys Flashcards
(78 cards)
1
Q
The 4 types of valuations are what?
A
- Basic Valuation
- RICS Home Survey Level 1 Report
- RICS Home Survey Level 2 Report
- RICS Home Survey Level 3 Report
2
Q
What type of valuation is this?
- Contract between the lender & valuer
- Assess security & reinstatement value
A
Basic Valuation
3
Q
What type of valuation is this?
- Commissioned by borrower
- Limited in scope 1-3 rating system indicates condition of key elements of the property
- No valuation included
A
RICS Home Survey Level 1 Report
4
Q
What type of valuation is this?
- Commissioned by borrower
- Limited in scope but should highlight major problems
- Includes valuation & reinstatement value
A
RICS Home Survey Level 2 Report
5
Q
What type of valuation is this?
- Commissioned by borrower
- Detailed inspection should uncover most problems
A
RICS Home Survey Level 3 Report
6
Q
The Building Societies Act 1997 requires building societies to do what?
A
Make an assessment of the security offered for each mortgage secured on land
7
Q
A basic valuation is between a lender & valuer. Who pays for any fee charged for the valuation?
A
The applicant
8
Q
In relation to a basic valuation what are the below?
- Interior
- Exterior
- Comparison
A
What is covered in a Basic
Valuation
9
Q
What part of a basic valuation is this?
- Valuer inspects the property, noting room sizes & appearance of the property
- Obvious defects or potential problems are noted (carpets & furniture not moved)
A
Interior
10
Q
What part of a basic valuation is this?
- Valuer looks at the exterior of the property
A
Exterior
11
Q
What part of a basic valuation is this?
- Valuer completes valuation in the office
- Compares prices of similar properties
- Calculates reinstatement costs for insurance purposes
A
Comparison
12
Q
What is a “Desktop Valuation”
A
A valuation carried out at an office using a computer. Does not require inspection of property
13
Q
What are the limitations of a “Desktop Valuation”?
A
- Uses historical data
- Does not take into account of risks posed by properties condition
14
Q
What is “Retention” in relation to the valuation of a property?
A
A lender holds back a portion of a loan until the borrower makes repairs to the property
15
Q
For a court to decide whether a valuer has been negligent in their valuation of a property, how much does the valuation need to be above or below it’s true value?
A
5-10%
16
Q
The below are the only two examples that what can be made in relation to a properties value?
- Disclaimer was insufficiently prominent
- Borrowers were inexperienced
A
Claims for negligence can be made
17
Q
What are these in relation to a valuation of a property?
- Whether to lend at all
- Size of the advance
- Percentage advance (LTV ratio)
- Reinstatement value (usually less than the market value)
- Recommended conditions of advance
A
What a valuation report contains
18
Q
What will a valuer’s disclaimer state?
A
Limited nature of the valuation as superficial inspection for assessing the security for mortgage purposes
19
Q
This is what action a valuer can recommend to a lender?
The property is adequate security for the loan sought & there are no problems
A
Acceptance
20
Q
This is what action a valuer can recommend to a lender?
The property is not suitable security for a mortgage & should be declined
A
Rejection
21
Q
This is what action a valuer can recommend to a lender?
- Repairs or make alterations if recommended if the property is good security
- Retention of some of the loan funds until repairs are carried out
A
Conditional recommendations for acceptance
22
Q
This is what action a valuer can recommend to a lender that produces 3 outcomes?
- Purchaser makes a reduced offer to the vendor
- Purchaser continues on the basis of the agreed price but meets the shortfall themselves
- Purchase & sale fall through
A
Lower valuation
23
Q
What is the “Reinstatement value” of a property?
A
The valuer’s estimate of rebuilding the property from scratch in the event of it’s destruction
24
Q
Why is the “Reinstatement value” less than the market value of a property on a property of standard construction?
A
It does not need to factor in the cost of the land
25
What is an advisor not allow to do regarding specialist surveys on a property?
Not allowed to make a recommendation regarding a specialist survey
26
A RICS Home Survey Level 1 Report mainly focuses on what aspect of a property?
It's condition
27
A RICS Home Survey Level 1 Report is designed for buyers with what?
A limited budget
28
The below are what in relation to a RICS Home Survey Level 1 Report?
- Construction & condition of a property
- Issues that are serious or need urgent attention
- Issues that require further investigation to prevent further damage
Areas the report covers
29
The below are what in relation to a RICS Home Survey Level 1 Report?
- Issues that may prevent serious safety issues
- Advice for buyers solicitors
Areas the report covers
30
What is it important to remember with a RICS Home Survey Level 1 Report?
That it is a snapshot of the property's condition on that day and not a full survey
31
Which condition of a RICS Home Survey Level 1 Report is this?
Indicates serious defects or problems that need urgent repair, replacement or further investigation
Condition rating 3
32
Which condition of a RICS Home Survey Level 1 Report is this?
Indicates serious defects or problems that need to be repaired or replaced but are not considered serious & action is not urgent
Condition rating 2
33
Which condition of a RICS Home Survey Level 1 Report is this?
No defects are apparent & no repairs are required
Condition rating 1
34
What are the 2 versions of a RICS Home Survey Level 2 Report?
1. RICS Home Survey Level 2 (Survey & Valuation) Report
2. RICS Home Survey Level 2 Report (Survey Only)
35
What conducting a RICS Home Survey Level 2 (Survey & Valuation) Report would a surveyor move furniture or lift carpets?
No they would note issues that are visible to them
36
A RICS Home Survey Level 2 (Survey & Valuation) Report would contain a lot of elements of a RICS Home Survey Level 1 but what are the below?
- Professional market valuation
- Insurance reinstatement figure
- List of problems or defectives that may affect the properties value
Additional parts that a RICS Home Survey Level 2 (Survey & Valuation) Report would contain
37
A RICS Home Survey Level 2 (Survey & Valuation) Report would contain a lot of elements of a RICS Home Survey Level 1 but what are the below?
- Advice on repairs & ongoing maintenance
- Information about the location, local environment & property's energy efficiency
Additional parts that a RICS Home Survey Level 2 (Survey & Valuation) Report would contain
38
Will a valuer conducting a RICS Home Survey Level 2 (Survey & Valuation) Report carry out a energy efficiency assessment?
No
May include details from an Energy Performance Certificate (EPC) if one has been done on the property
39
What are the below in relation to a RICS Home Survey Level 2 (Survey & Valuation) Report?
- Dry & wet rot symptoms
- Problems relating to the condition & position of the damp-proof course
- Problems relating to the roof space
- Defects in the pointing
Typical defects in a RICS Home Survey Level 2 (Survey & Valuation) Report
40
What is the difference between a RICS Home Survey Level 2 (Survey & Valuation) Report & a RICS Home Survey Level 2 report (Survey only)
RICS Home Survey Level 2 report (Survey only) does not include valuation & reinstament costs
41
Who would carry out a RICS Home Survey Level 3 Report?
Qualified
- Surveyor
- Engineer
- Architect
42
A RICS Home Survey Level 3 Report is the most detailed that not only covers the structure but also the electrical system, drains & other services. If the survey was not carried out to certain standards what could happen to them?
Liable and could be sued for negligence
43
In Scotland buyers are required to arrange a home survey report on a property before they market the property?
True or False
True
44
These are the approximate cost for which type of valuation?
£175 - £1,100 (where charged)
Basic valuation
45
These are the approximate cost for which type of valuation?
£300 - £900
RICS Home Survey Level 1
46
These are the approximate cost for which type of valuation?
From £400 depending on property value increasing to £1,000
RICS Home Survey Level 2
47
These are the approximate cost for which type of valuation?
From £600 up to £1,500 or more depending on the size, structure & age of the property
RICS Home Survey Level 3
48
If a property has long standing & non-progressive movement is this likely to affect the decision to lend?
No
49
If movement on a property is progressive & recent what may happen & the movement cannot be rectified what may happen?
The lender may decline the mortgage
50
The 2 most common problems identified in a survey are what?
1. Subsidence
2. Heave
51
What is "Subsidence"?
Land below a property dropping unevenly
52
Subsidence normally occurs on properties built on what type of surface?
Clay soil
53
What is "Heave"?
Upward pressure on a building's foundations causing the property to rise unevenly
54
What causes "Heave"?
Removal of trees near to a building by clay soils expanding
55
- Untreated woodworm
- Severe Damp
- Previous removal of chimney breast
- Extensions that do not confirm to building regulations
Are another example of what?
Further defects that may affect a decision to lend
56
What is an "Undertaking"?
A formal agreement that a buyer will undertake remedial work with in a period after taking possession of a property
57
The lender has the right to inspect a property within 3 - 6 months to see if remedial work has been completed
True or False
True
58
If a valuer recommended a "Retention" of funds is it reasonable for them to check the remedial work before releasing the retained funds?
Yes
59
What do new build schemes such the "Buildmark" do?
Provide protection again defects in the early years for a new build property
60
What does the National House Building Council (NHBC) do?
Provides warranties & insurance protection for new homes in the UK
61
For home many years does the "Buildmark scheme" provide protection for on a new build property?
2 years
62
If a despite occurs between the builder & homeowner who does the arbitration go to for a complaint?
National House Building Council (NHBC)
63
The first 10 years of a claim the scheme provides insurance for the full cost of the damage over a specific amount which is called what?
Minimum Claim Value (MCV)
64
A "Premier Guarantee" is a UK home warranty provider on what type of buildings?
New building complexes & conversion
65
Where a "Premier Guarantee" is concerned the first 2 years are know as what?
Defects insurance period
66
Where a "Premier Guarantee" is concerned the years 3-10 are know as what?
Structural insurance period
67
What is the Local Authority Building Control (LABC) New Home Warranty?
Structural/latent defects warranty offered to builders of speculatively built properties
68
The LABC New Home Warranty is over what type of speculatively build properties?
- Residential homes
- Social housing
- Completed properties
69
What is the Local Authority Building Control (LABC)?
Building control department in England & Wales promoting the design & construction of safe, accessible environmentally efficient buildings
70
What does Consumer Code for Home Builders aim to do?
Ensure that homebuyers are better informed of about their rights (before & after exchange of contracts)
71
These are what in relation to the Consumer Code for Home Builders
- Are treated fairly
- What service levels to expect from their customers
- Are given reliable information
- Know how to make a complaint
What the code requires for customers
72
What is the purpose of the New Homes Quality Board (NHQB)?
Place greater responsibility on developers to deliver good quality homes
73
These are the aims of what?
- Protect vulnerable customers
- Ensure developers provide relevant information during the sales process
- Create fair reservations agreements
Aims of the the New Homes Quality Board (NHQB)
74
These are the aims of what?
- Allows customers to have a professional inspection before completion of a home
- Ensure homes are completed
- Ensure developers deal with any issues after completion & provide adequate aftercare
Aims of the the New Homes Quality Board (NHQB)
75
What is the New Homes Ombudsman Service (NHOS)?
Free & impartial service to help buyers resolve issues with developers
76
The New Homes Ombudsman Service (NHOS) can be used between when?
- Reservation through to completion of the property
- Issues & defects during the first 2 years after completion
77
Why is a claim for negligence by a Buy to Let investor likely to be rejected?
As they are likely to be deemed to experienced to understand the limited nature of a valuation report
78
A RICS level 3 will include valuation as standard?
It only will if a lender requests it
