defvas project in partnership with tegova and the irrv european valuation standard – 2 valuation...
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Defvas Project
In Partnership with TEGoVA and the IRRV
EUROPEAN VALUATION STANDARD – 2 VALUATION BASIS OTHER THAN MARKET VALUE
Defvas Project
In Partnership with TEGoVA and the IRRV
INTRODUCTION AND SCOPE
• Circumstances where an alternative basis of valuation
may be required
• Understanding the distinction between market value
and the alternative basis
• The impact of an alternative valuation basis
– Construction of the valuation
– Production of the valuation
Defvas Project
In Partnership with TEGoVA and the IRRV
BASIS OF VALUE
• The definition of the “Basis of Valuation”
• Distinguishing the basis from the methods or
techniques used
• The importance of transparency when applying the
basis of value
• Revealing the assumptions
• The basis of valuation in context
Defvas Project
In Partnership with TEGoVA and the IRRV
FAIR VALUE
• The definition of Fair Value
• Recognised as a permissible basis of valuation
• Special Value
– A special purchaser
– Going concern value
– Synergistic value or marriage value
Defvas Project
In Partnership with TEGoVA and the IRRV
INVESTMENT VALUE OR WORTH
• Definition of investment value or worth
• The individual buyer and the bid
• Not expected to be consistent with market value
– Such valuations are:
– To be determine the value for a specific individual,
and
– Do not assume an exchange of property
Defvas Project
In Partnership with TEGoVA and the IRRV
MORTGAGE LENDING VALUE
• Definition of mortgage lending value
• The Capital Requirements Directive
• The Basel II Accord
• The concept of Mortgage Value Lending (MVL)
• The “value-at-risk” approach
• The exposure risk
Defvas Project
In Partnership with TEGoVA and the IRRV
INSURABLE VALUE
• The definition of Insurable Value
• Mitigating the risk
• The relationship with the insurance contract
• The implication of the valuation and the unrecoverable loss
Defvas Project
In Partnership with TEGoVA and the IRRV
ALTERNATIVE USE VALUE
• Definition of the Alternative Use Valuation
• Considering alternative uses of the building which may
not involve continuing the present business
• The value would not reflect any costs of ceasing the
business
• This basis may be relevant where a depreciated
replacement
cost valuation has taken place
Defvas Project
In Partnership with TEGoVA and the IRRV
FORCED SALE VALUE
• Definition of the Forced Sale value
• The need for this valuation may arise where the seller
is under compulsion to sell
• Identification of the constraints
• Can only be the basis once the relevant constraints are
identified
• The value will reflect the specific circumstances
Defvas Project
In Partnership with TEGoVA and the IRRV
DEPRECIATED REPLACEMENT COST
• Definition of the Depreciated Replacement Cost
• Also known as the “Contractors Method”
• Used for properties with “non conforming”, unusual or
distinctive attributes
• A valuation of last resort
• Choice of depreciation rate is a valuation judgement