IVSL Valuer Exam flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Market Value (IVS)

The estimated amount for which an asset should exchange on the valuation date between a willing buyer and willing seller in an arm's length transaction after proper marketing, without compulsion.

Valuation Date vs Report Date

The valuation date is when the opinion of value applies; the report date is when the report is issued. Both must be stated, and they may differ.

Scope of Work (IVS 101)

The written terms identifying the client, intended use and users, asset, basis of value, valuation date, extent of investigation, and significant assumptions and limiting conditions.

Highest and Best Use

The use that is physically possible, legally permissible, financially feasible and produces the highest value; tested before applying the market approach.

Depreciated Replacement Cost

Current cost of replacing the improvements less physical deterioration, functional obsolescence and economic obsolescence, plus the value of the land.

Income Capitalisation Formula

Value equals net operating income divided by the capitalisation rate; the rate is derived from market comparables or built up from a risk-free rate plus risk premium.

Gross Rent Multiplier

Sale price divided by gross annual rent; value is the subject's gross rent multiplied by the market-derived multiplier, a quick market-approach check.

Replacement vs Reproduction Cost

Replacement cost builds a modern equivalent asset; reproduction cost rebuilds an identical asset. Use replacement cost where function, not form, drives value.

Adjustment Grid Direction

Adjustments are made to the comparable's price to reflect differences from the subject, for time, location, size, condition, tenure and transaction circumstances.

Discounted Cash Flow

Each period's net cash flow is discounted at a market-derived discount rate, and the present value of the reversion is added to reach the value.

Effective Age Depreciation

Physical deterioration percentage equals effective age divided by total economic life; functional and economic obsolescence are measured separately and deducted.

Leasehold Interest Valuation

Reflect passing rent versus market rent, rent review provisions, unexpired term, renewal rights and any premium or reverse premium when valuing leasehold interests.

Conflict of Interest Duty

A valuer must decline or withdraw from an engagement where a conflict cannot be managed, or disclosed and consented to by all affected parties.

Contingent Fee Prohibition

Fees tied to the valuation outcome, such as a percentage of achieved value or loan amount, are incompatible with an independent opinion and should be refused.

Competence Limitation

Valuers must not accept work outside their competence or experience without disclosing the limitation and, where appropriate, engaging a specialist.

Confidentiality Exceptions

Client data and reports may be disclosed only with consent, where required by law or court order, or where required by a professional body.

Core Ethical Duties

Integrity, objectivity, competence, confidentiality, professional behaviour and compliance with technical standards; independence underpins objectivity in every engagement.

Written Engagement Terms

Fees and engagement terms should be agreed in writing before work begins; acting for two parties in one transaction requires full written disclosure.

Institution of Valuers of Sri Lanka

The professional body for valuers in Sri Lanka; its constitution and by-laws govern membership grades and the code of ethics for members.

Valuation Department Sri Lanka

The government department responsible for statutory valuations, including acquisitions and government rating work, operating under the Ministry of Finance.

Land Acquisition Act

Governs compulsory acquisition in Sri Lanka and requires compensation based on market value at the date of acquisition, with allowances for injurious affection and severance.

Title Verification Duty

Before relying on property as security, the valuer must verify title, extent and encumbrances under the Title Registration Act and Registration of Documents Ordinance.

Condominium Property Act

Recognises strata and condominium titles and apportionment of common property, affecting valuation of apartment units and common elements.

Zoning and Rating Controls

The Urban Development Authority Act and municipal ordinances impose zoning, building and rating controls that constrain permitted use and therefore highest and best use.

Foreign Ownership Restrictions

Land transfer restrictions and exchange control rules affect marketability and the pool of purchasers for certain Sri Lankan properties and must be reflected in value.

Expert Witness Duty

A valuer giving evidence owes a duty to the tribunal, must be independent of the parties, and must state the facts and assumptions behind the opinion.

Equitable Value (IVS)

The estimated price for transfer of an asset between identified knowledgeable and willing parties reflecting the respective interests of each, rather than a typical market transaction.

Investment Value (IVS)

The value of an asset to a particular owner or prospective owner for individual investment or operational objectives, not necessarily the market value.

Material Uncertainty Disclosure

Where the valuer's opinion is affected by significant uncertainty, the report must state the nature and cause and the effect on the valuation.

Working Papers Retention

The valuer must retain records supporting the opinion, including data, analysis and assumptions, sufficient for another valuer to review the work.

Objectivity in Valuation

The valuer's opinion must be unbiased and independent of the client's interests, prior instructions, or any personal stake in the asset or transaction.

Misleading Credentials

Marketing and public statements must be truthful; valuers must not claim professional designations, qualifications or affiliations that they do not hold.