IVSL Valuer Exam key terms

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

The use of a property that is legally permissible, physically possible, financially feasible and most productive, producing the highest value on the valuation date.

A transaction between parties who are independent, unrelated and each acting in their own interest, without pressure or a special relationship that could distort the price.

The specific point in time at which the valuer's opinion of value applies, which may differ from the date the report is signed or issued.

The amount that could reasonably be received from a sale concluded within a shortened marketing period, where the seller is under constraint and cannot obtain the best price.

A price agreed between identified, informed and willing parties for a specific asset, reflecting the advantages or disadvantages each party gains from the transaction rather than general market levels.

The value of an asset to a particular owner or prospective owner for individual investment objectives, based on that party's own requirements and expectations rather than the open market.

A valuation approach for specialised assets where value is estimated as the current cost of replacing the asset less deductions for physical deterioration and functional and economic obsolescence.

The cost of rebuilding or replacing an insured property to its pre-loss condition, usually including demolition, professional fees and statutory charges, used for insurance cover assessments.

A valuation approach that estimates value by analysing recent sales or rental evidence of similar properties and adjusting for differences in location, size, condition and timing.

A tabular analysis in the comparable method that lists each comparable transaction and applies percentage or lump-sum adjustments for differences from the subject property.

A valuation approach that capitalises the net income a property is expected to produce, using a yield or multiplier derived from market evidence, to arrive at capital value.

The rate used to convert a property's net annual income into capital value, reflecting returns available from comparable investments and the risk attached to the income stream.

The relationship between a property's net income and its capital value or price, expressed as a percentage and used to compare investment returns across properties.

A development appraisal that deducts total development costs, including construction, fees, finance and developer's profit, from the completed value to estimate the value of the land.

The allowance in a development appraisal that rewards the developer for risk and effort, usually expressed as a percentage of either gross development value or total development cost.

A loss in value arising from factors other than physical wear, such as outdated design, changed market demand or external circumstances affecting the property's usefulness.

A property that rarely sells on the open market except as part of a business, and whose value depends on its continued use for a particular purpose.

A legal right enjoyed by one landowner over land belonging to another, such as a right of way or drainage, which may affect the value of either property.

Any charge, mortgage, lease, caveat or restriction registered against a property that limits the owner's freedom to deal with it and may reduce marketability.

The legal evidence of a person's right to own, possess and transfer a property, recorded in the land register or in deeds depending on the registration system.

A written instrument executed and attested in the required legal form by which ownership of immovable property passes from the seller to the buyer.

A legal practitioner authorised to attest, prepare and register deeds and other instruments affecting land, whose involvement is required for valid property transfers.

An identifier assigned by a local authority to a property for rating and assessment purposes, used to link the property to its assessed annual value and tax records.

The assessed yearly worth of a property for local taxation, generally based on the rent it could reasonably be expected to command, used to calculate rates.

A municipal council, urban council or pradeshiya sabha empowered under Sri Lankan law to assess properties, levy rates and administer local regulatory functions.

A person granted a licence under Sri Lankan law to practise property valuation, having met the prescribed qualifications, experience and examination requirements.

A formal written document setting out the purpose, scope, basis, assumptions, methods and conclusions of a valuation, prepared so that another party can understand and rely on it.

The date on which the valuer physically examined the property, which must be disclosed because the property's condition may change before the valuation date.

The documented extent of the valuation assignment, including the work performed, data gathered, analyses applied and any limitations agreed with the client.

The written agreement between valuer and client setting out the purpose, basis of value, valuation date, fee, assumptions, restrictions and responsibilities of each party before work begins.

A situation where a valuer's personal, financial or other interests, or a relationship with a party to the transaction, could improperly influence the valuation opinion.

The state of being free from influence, pressure or relationships that could compromise a valuer's objectivity, judgement or the credibility of the valuation opinion.

The duty not to disclose client information obtained during an assignment to third parties without proper authority, except where disclosure is required by law or regulation.

An attitude of questioning and critical assessment of information and evidence, rather than accepting assertions at face value when forming a valuation opinion.

The reasonable investigation and verification a valuer performs on title, planning, physical condition, market evidence and other relevant matters before concluding an opinion of value.

A fee arrangement where payment depends on the outcome or amount of the valuation, which is generally prohibited because it threatens the valuer's independence and objectivity.

Insurance that protects a valuer against claims for negligent advice or errors in valuation work, often required as a condition of practice or engagement.

A sale made under pressure, such as by a mortgagee exercising its power of sale, where limited marketing and time typically produce a price below open market value.