Valuation Report Writing
International Valuation Standards 101, 102, 103, 104, 105
International Valuation Standards (IVS)
“The objective of the IVS is to increase the confidence and trust of users of valuation services by establishing transparent and consistent valuation practices.”
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IVS 101 Scope of Work
• Identification of valuer
• Identification of client
• Purpose of valuation
• Identification of asset or liability
• Basis of value
• Valuation date
• Extent of investigation
• Nature and scope of information
• Assumptions and special assumptions
• Restrictions on use, distribution or publication
• Confirmation of conformity with IVS
• Description of report
IVS 102 Investigations and
Compliance
• “To be compliant with IVS, valuation assignments, including valuation reviews, must be conducted in accordance with all of the principles set out in IVS that are appropriate for the purpose and the terms and conditions set out in the scope of work.”
• Investigations
• Valuation approaches
• Valuation record
IVS 103 Reporting
• “It is essential that the valuation report communicates the information necessary for proper understanding of the valuation or valuation review. A report must provide the intended users with a clear understanding of the valuation”
• Items as recorded in Scope of work
• Valuation approach and reasoning
• Amount of valuation
• Date of valuation report
IVS 104 – Bases of Value
• Market Value (definition in report) • Market Rent
• Investment Value
• Premise of Value
– Highest and best use – Forced Sale
IVS 105 – Valuation Approaches and Methods
“Consideration must be given to the relevant and appropriate valuation approaches. The three approaches described and defined below are the main approaches used in valuation. They are all based on the economic principles of price equilibrium, anticipation of benefits or substitution”
• Three approaches – Market
– Income – Cost
IVS 105 cont
• Most appropriate method chosen
• Stipulates what to consider when choosing most appropriate method
• No one method suitable in every possible situation
• Number of methods valuers need to use
• Not required to use more than one but;
• Need to recognise when more than one approach is appropriate
Types of Report
• Comprehensive
• Short Form
– E.g. update
– May not conform to IVS
• Pro Forma – Insurance
– Compulsory acquisition under Public Works Act
Course requirements
• Comprehensive report (we may provide template)
• Workings
– Sales approach
– Cost (summation) approach
• Field Notes
– Subject property – Sales
NB: Field notes and workings may be presented in ‘original’ form (but legible)
Report Format
• Professional Practice Standards must be observed
– Codes of Ethics and Rules of Conduct
– Disclaimer Clauses and Qualification Statements ANZRPGN1
– Counter-signing reports NZVTIP 3
– Report Content BF2
– Valuers to use Guidance Notes and Standards where appropriate
– StandingInstructions
Attributes of a good report
• Methodical • Legible
• Well set out • Concise
• Clear and Simple
Report Preparation
• Even if verbal – always confirm valuation figure in writing
• Client may not see property and rely on report
– Informative
– Descriptive
– Complete but concise – Unbiased
i.e. comprehensive
Report Content
• Institute does not prescribe layout however report must contain certain information as detailed in IVS 103
• Standing Instructions (banks)
Report Layout/Content
• Summary – Valuation
– Recommendations • Client
• Property
– Legal Data
– Location
– Site Description – Improvements
• Market Data
– State of the market – Sales data
• Valuation
– Sales approach
– Summation approach
• General Comments • Signature
Third Party Disclaimer
• Principle where duty of care extends to third parties
• Professional indemnity insurer may require the valuer to include a disclaimer to limit their duty of care
• Does not include liability for negligence
Qualifying Statements
• Qualifying statements must be used in context and they must be relevant to the circumstances.
• May highlight an issue or factor which might affect the property and/or value.
• Use where appropriate i.e. Local Authority or Land
• This report has been prepared for valuation purposes only and is not intended to be a structural, geotechnical or environmental survey.
• The type of cladding has been known to have weathertightness issues. We recommend a weathertightness test be carried out. This valuation is based on there being no weathertightness issues.
More Examples
• In preparing this report and unless otherwise stated, services to the property have not been tested nor have we searched local authority records to ascertain requisitions affecting the property.
• The boundary pegs were not located at the time of inspection and we advise that we have not carried out a survey of the site. We assume all improvements lie within the title boundaries or as stated
• Would be beneficial to further state value would be revised if not correct. See ANZRPGN1
Local Authority Services
• In preparing this report and unless otherwise stated, services to the subject property have not been tested nor has a Land Information Memorandum been obtained from the Local Authority. This assessment of value has been undertaken on the basis that all necessary building consents have been obtained for all improvements and that there are no outstanding requisitions on the said property.
• Again record a right to review.
Signing Report
• Not Registered?
• NZVTIP 3 – Counter-signing of valuation reports prepared by unregistered valuer.
• Registered valuer carries the can
• Recommendation that the registered value inspects property
• Counter-signing registered valuer to include a statement specifying level of their involvement.
Workings Section
• Chart for sales approach
• Chart for land valuation
• Replacement cost calculations with data sources cited
• Allowance for depreciation with explanation
• Valuation conclusion
Field Notes Section
Subject Property
• Refer to Module 6
• A number of Valuers use a recording device in the field. This has it’s advantages / disadvantages.
• Photographs are essential and can be incorporated in your property data base
• Take a printout of your sales data you have from the office
• Write additional notes on your printout – Garaging
– Overall appearance/ street appeal • Dwelling
• Landscaping – Condition
• Include these with your field notes
Property Inspection
• Be prepared
• Gather sales information before going out
• Inspection sheet (subject and sales)
• Subject inspection sheet should contain space for all required information
– Dwelling interior/exterior inspection details
– Site inspection details
Property Inspection – Interior
• Dwelling interior – Layout
– Wall linings
– Floor coverings – Fixtures/fittings – Chattels/heating – Ceiling space
– Condition
Property Inspection – Exterior
• Dimensions • Cladding
• Guttering • Joinery
• Underfloor (foundations, insulation)
Property Inspection – Site
• Landscaping
• Other improvements • Appeal
Property Inspection Process
• Be on time, make sure at correct property
• Equipment to take: Tape measure, laser, ruler, protractor, torch, something to kneel on, gumboots, spare batteries (torch and laser)
• Systematic – measure exterior first
– Two storey dwellings
– Unusually shaped dwellings
– Check measurements before leaving the property
Property Inspection Process
• Dealing with obstacles
• Inspect underneath the dwelling – foundations, insulation
• Note condition (paintwork, cracks in plaster cladding, rust etc)
• Avoid having to return or call the home owner later
• Legible notes essential
Sales Inspection
• Be prepared
• Get sales info before you go out in the field
• Plan the route
• Be aware that people might think you look suspicious
• Make clear notes about sales
• Do report as soon as you get back to the office
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