The course is designed to provide the core knowledge and understanding of property valuation issues.
After studying the course you should be able to: inspect and measure a property; analyse rental evidence; apply an appropriate valuation method; and know how to find relevant and up-to-date resources required for professional valuation work. You will also gain an understanding of: the importance of professional valuation standards; the concepts of value, price and worth; the global application of codes of measuring practice; and the principles of valuation practice for both freehold and leasehold properties.
Subjects will include:
The Basis and Purpose of Valuation
Concepts of value
Explores different concepts of value including: market value; value in use; value in exchange; value to the owner; cost and value; the price of an item.
Purpose of valuation
Examines the differences in valuations conducted for non-statutory purposes (not required by legislation) and statutory purposes (regulated and required by law).
Investigation and Analysis
Establishing the tenure and terms of the lease
Considers how the tenure and terms may be arrived at; outlines the different types of rent; identifies the relationship between rent paid and rental value; explores the relationship between improvements and rental value; considers how rental value may be estimated.
Inspecting and measuring the property
Identifies the correct procedures for carrying out accurate and consistent measuring methods; utilises the RICS Code of Measuring Practice; examines the principles of zoning.
Collating and analysing market evidence
Identifies all suitable comparables; establishes the correct floor areas of the comparables; considers the lease details for identified comparables; reviews any rental trends; identifies the most suitable comparables; considers the rental value of the property to be valued.
The Five Methods of Valuation
The comparative method
Explains property price variation; selects relevant comparable transactions; analyses prices; identifies method limitations.
The investment method
Calculates yields; explains how the traditional investment approach is used to value freehold properties and leasehold interests; identifies the limitations of the traditional investment valuation approach and shows how discounted cash flows (DCFs) can overcome them; uses the DCF approach to establish net present values and calculate equated yields.
The residual method
Identifies situations that are appropriate for residual appraisal; examines the conduct of residual appraisals using given data; discusses the sensitivity of inputs into a residual appraisal; explains the importance of DCF techniques in site value calculations; discusses the use of software in producing residual appraisals.
The profits method
Considers the situations where the profits method should be applied; estimates profit for typical properties using known expenditure; discusses the limitations of this method
The cost-based method
Examines the circumstances in which depreciated replacement cost (DRC) is required; identifies the circumstances in which the contractor’s basis is required; evaluates the different characteristics of the DRC and contractor’s method; explores a single cost-based valuation of a property.