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IVSL Valuer Exam study materials
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IVSL Valuer Exam practice questions

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Question 1Professional Practice and Valuation Standards

Under the IVS framework, which document establishes mandatory requirements that a valuer must follow when performing a valuation for financial reporting?

  1. The IVS Definitions
  2. The IVS Valuation Applications
  3. The IVS General Standards Correct answer.
  4. The IVS Asset Standards

Explanation

The IVS General Standards set out the mandatory requirements governing the valuation process, including terms of engagement, bases of value, and reporting. The Asset Standards address specific asset types, while the Applications address particular purposes. Definitions provide terminology rather than procedural obligations.

Question 2Professional Practice and Valuation Standards

A valuer is engaged to value an office building for a proposed sale under IVS. The client requests the estimated exchange amount on the valuation date between a willing buyer and a willing seller at arm's length, after proper marketing, with both acting knowledgeably, prudently and without compulsion. Which basis of value is being described?

  1. Investment value
  2. Fair value under financial reporting
  3. Liquidation value
  4. Market value Correct answer.

Explanation

Market value under IVS is the estimated exchange amount on the valuation date between a willing buyer and willing seller, at arm's length, after proper marketing, with both acting knowledgeably, prudently and without compulsion. Those are the assumptions specified for this sale valuation.

Question 3Professional Practice and Valuation Standards

Before accepting a valuation engagement, a valuer should confirm competence and identify any threats to independence. Which engagement element most directly documents the scope and purpose of the work?

  1. The valuation report
  2. The data request list
  3. The terms of engagement Correct answer.
  4. The site inspection note

Explanation

The terms of engagement record the agreed scope, purpose, basis of value, and responsibilities of the parties. They are established before work begins and anchor the whole assignment. The report communicates results, while data lists and inspection notes are working documents.

Question 4Professional Practice and Valuation Standards

Which approach to valuation estimates value by comparing the subject with recent transactions or listings of similar assets?

  1. Income approach
  2. Market approach Correct answer.
  3. Depreciated replacement cost approach
  4. Cost approach

Explanation

The market approach derives value from observable prices of comparable assets in the market. The income approach capitalises expected future benefits, and the cost approach measures replacement or reproduction cost less depreciation. Depreciated replacement cost is a variant of the cost approach.

Question 5Professional Practice and Valuation Standards

A valuer signs a report but relied substantially on a specialist's equipment valuation without disclosing this. Which principle of professional practice is most directly breached?

  1. Transparency Correct answer.
  2. Competence
  3. Objectivity
  4. Confidentiality

Explanation

Transparency requires the valuer to disclose the nature and extent of reliance on others and any significant assumptions or limitations. Non-disclosure prevents the reader from understanding how the value was derived. Competence concerns skill, objectivity concerns bias, and confidentiality concerns handling of client information.

Question 6Professional Practice and Valuation Standards

In an IVS-compliant valuation report, why must the valuer state the currency and the effective date of valuation?

  1. To record the date the report was printed
  2. To allow the figure to be interpreted and relied upon at a defined point in time Correct answer.
  3. To satisfy tax registration formalities
  4. To confirm the valuer's professional indemnity cover

Explanation

Value is time-sensitive, so the effective date fixes the point at which market conditions are assessed. The currency makes the monetary amount unambiguous. Together they allow readers to interpret and rely on the conclusion correctly.

Question 7Professional Practice and Valuation Standards

A valuer is asked to value a property for a bank taking it as loan security. Which basis of value is normally most appropriate?

  1. Hope value
  2. Going concern value
  3. Market value Correct answer.
  4. Synergistic value

Explanation

For secured lending, market value is the standard basis because it reflects the price achievable in the open market on enforcement. Going concern value assumes continued operation, which may not survive default. Hope and synergistic values depend on special assumptions not appropriate for security.

Question 8Professional Practice and Valuation Standards

A valuer inspects a warehouse and finds the roof is failing, but the client instructs that no repair cost be reflected. How should the valuer proceed?

  1. Refuse the engagement outright
  2. Adjust the value upward to reflect improvement potential
  3. Disclose the assumption or limitation in the report and consider its effect on value Correct answer.
  4. Comply silently and ignore the defect

Explanation

The valuer must not mislead readers, so any instruction-driven assumption or departure must be disclosed and its effect considered. Silent compliance undermines transparency, and refusing outright is disproportionate. Upward adjustment for unperformed works is unsupported.

Question 9Professional Practice and Valuation Standards

Which statement best describes the role of professional scepticism in valuation practice?

  1. Questioning and corroborating information before relying on it Correct answer.
  2. Deferring all judgement to the instructing party
  3. Accepting client data because the client is responsible for it
  4. Rejecting all information not produced by the valuer

Explanation

Professional scepticism means questioning information and seeking corroboration rather than accepting it at face value. The valuer remains responsible for the reasonableness of inputs relied upon. Blind acceptance and blanket rejection are both inappropriate, and deferring judgement breaches independence.

Question 10Professional Practice and Valuation Standards

When using the income approach for a leased commercial property, which input most directly reflects the risk and return expectations of market participants?

  1. The gross building area
  2. The construction date
  3. The service charge budget
  4. The capitalisation rate Correct answer.

Explanation

The capitalisation rate converts net operating income into value and encapsulates market yield and risk expectations. Building area, construction date, and service charges are descriptive or operational inputs. They inform income and physical characteristics but do not directly express yield expectations.

Question 11Professional Practice and Valuation Standards

A valuer values a specialised chemical plant for which there is no active market. Which approach is generally most appropriate?

  1. Residual land value method
  2. Direct capitalisation of residential rents
  3. Depreciated replacement cost Correct answer.
  4. Market approach using residential comparables

Explanation

Specialised assets rarely trade, so market evidence is scarce; depreciated replacement cost estimates the cost to replace the asset's service capacity less depreciation. Residential comparables and rents are irrelevant to an industrial plant. Residual land value applies to development sites, not operating plant.

Question 12Professional Practice and Valuation Standards

A valuer is instructed to value a property but is also offered a success fee payable only if the valuation exceeds a target figure. What is the primary professional concern?

  1. The valuation date becomes uncertain
  2. The fee is too low to cover costs
  3. The basis of value must change to investment value
  4. The arrangement threatens the valuer's independence and objectivity Correct answer.

Explanation

A contingent fee tied to the outcome creates a self-interest threat to objectivity and independence. Professional standards require the valuer to avoid arrangements that compromise impartial judgement. Fee level, valuation date, and basis of value are separate matters unaffected by the contingency.

Question 13Professional Practice and Valuation Standards

Which of the following best explains why a valuer should reconcile the results of more than one valuation approach?

  1. To test the reasonableness of the conclusion and explain weighting Correct answer.
  2. To average the figures and remove all judgement
  3. To avoid disclosing the method actually adopted
  4. To satisfy a requirement that all approaches give identical results

Explanation

Reconciliation tests whether different approaches produce consistent indications and requires the valuer to explain the weighting applied. Approaches need not produce identical results because each reflects different evidence. Averaging mechanically removes judgement, and non-disclosure of method is contrary to transparency.

Question 14Professional Practice and Valuation Standards

A valuer's report states a value but omits the basis of value, the effective date, and the extent of inspection. Which conclusion is most accurate?

  1. The report is compliant because inspection details are optional in all cases
  2. The report is deficient because mandatory disclosures are missing Correct answer.
  3. The report is fully compliant because a figure is stated
  4. The report is compliant if the client verbally knows the details

Explanation

IVS reporting requires disclosure of the basis of value, effective date, and scope of work including inspection extent. A bare figure without these elements cannot be properly understood or relied upon. Verbal knowledge held by the client does not cure the written report's deficiency.

Question 15Professional Practice and Valuation Standards

What is the purpose of a valuation uncertainty disclosure in a report?

  1. To guarantee the value will not change
  2. To alert readers to the degree to which the valuation could change due to identified factors Correct answer.
  3. To reduce the valuer's fee
  4. To replace the need for a basis of value

Explanation

Uncertainty disclosure informs readers about material factors that could cause the value to differ, such as limited market evidence or unusual conditions. It does not guarantee stability of value, nor does it substitute for stating the basis of value. Fee matters are unrelated.

Question 16Professional Practice and Valuation Standards

A valuer relies on a desktop review without physical inspection. How should this be handled in the report?

  1. State clearly that no inspection was undertaken and describe resulting limitations Correct answer.
  2. Describe the property as if inspected to reassure the lender
  3. Omit mention because the client did not request inspection
  4. Reduce the stated value by a fixed percentage

Explanation

The scope of work, including the absence of inspection, must be disclosed so readers understand the evidential basis and its limitations. Presenting an uninspected valuation as inspected is misleading. A fixed arbitrary reduction is not a substitute for proper disclosure.

Question 17Professional Practice and Valuation Standards

Which item is normally part of the valuer's record-keeping obligations after a valuation is completed?

  1. Deleting working papers once the fee is paid
  2. Retaining engagement terms, key evidence, and the final report for a defined period Correct answer.
  3. Returning all source data to the client and keeping no copy
  4. Retaining only the final value figure

Explanation

Professional standards expect the valuer to retain engagement documentation, supporting evidence, and the report for an appropriate period to demonstrate the work performed. Deleting or returning all records removes the audit trail. Keeping only the final figure does not evidence the basis of the conclusion.

Question 18Professional Practice and Valuation Standards

A valuer is asked to value a property in a market with very few recent transactions. Which action best supports a credible market value conclusion?

  1. Rely on a single old transaction without adjustment
  2. Widen the evidence base and clearly explain adjustments and uncertainty Correct answer.
  3. Abandon the market approach entirely without explanation
  4. Adopt the client's asking price as market value

Explanation

Thin evidence requires the valuer to broaden the search, apply reasoned adjustments, and disclose the resulting uncertainty. Relying on one stale transaction without adjustment is unreliable. Adopting an asking price is not evidence of market value, and abandoning an approach requires justification.

Question 19Professional Practice and Valuation Standards

A valuer concludes market value but the client insists the report describe it as investment value to support a decision. How should the valuer respond?

  1. State the correct basis of value and decline to mislabel the conclusion Correct answer.
  2. Provide both labels without explanation
  3. Relabel the figure as investment value as instructed
  4. Withdraw the figure and state no value

Explanation

The basis of value determines the measurement assumptions, so mislabelling a market value conclusion as investment value would mislead readers. The valuer must state the correct basis and resist client pressure. Dual unlabelled labels or refusing to state any value are not appropriate remedies.

Question 20Professional Practice and Valuation Standards

A valuer uses a discounted cash flow model for an income-producing asset. Which practice best supports the credibility of the model?

  1. Keeping all assumptions confidential from the report reader
  2. Documenting and disclosing key assumptions such as growth and discount rates Correct answer.
  3. Using the highest discount rate available to be conservative
  4. Excluding sensitivity analysis to simplify the report

Explanation

A DCF is only as credible as its assumptions, so key inputs such as growth, discount rate, and cash flow projections must be documented and disclosed. Concealing assumptions prevents scrutiny. Arbitrarily high rates and omitted sensitivity analysis reduce rather than enhance reliability.

Question 21Professional Practice and Valuation Standards

Which statement best reflects the relationship between the valuer's duty to the client and the duty to third parties who may rely on the report?

  1. Only the paying client can ever rely on the report
  2. The valuer owes no duty to anyone once the fee is paid
  3. Third parties have unlimited reliance rights regardless of the report's terms
  4. The report may be relied upon by identified third parties where the engagement permits and disclosures are adequate Correct answer.

Explanation

Reliance by third parties depends on the engagement terms and the adequacy of disclosures, and valuers often identify permitted reliance in the report. Unlimited reliance by any third party is not implied. The duty does not end with payment, and reliance is not confined to the paying client.

Question 22Professional Practice and Valuation Standards

A valuer is valuing a leasehold interest with a short remaining term. Which factor most directly reduces the value compared with the freehold?

  1. The number of car parking spaces only
  2. The name of the managing agent
  3. The remaining lease term and the rights it confers Correct answer.
  4. The colour of the building facade

Explanation

A leasehold interest is limited by its remaining term and the rights granted, which constrain the income and benefit obtainable. Physical appearance, agent identity, and a single amenity do not define the interest's legal duration. The term is the defining constraint on leasehold value.

Question 23Professional Practice and Valuation Standards

Which of the following is the most appropriate way for a valuer to treat a material conflict of interest discovered after accepting an engagement?

  1. Increase the fee to compensate for the risk
  2. Continue quietly to avoid delaying the client
  3. Disclose the conflict promptly and take steps to manage or withdraw Correct answer.
  4. Delegate the work to an unqualified assistant without disclosure

Explanation

Material conflicts must be disclosed promptly and either managed with safeguards or resolved by withdrawal. Continuing quietly breaches transparency and objectivity. Raising the fee does not address the conflict, and undisclosed delegation to an unqualified person compounds the problem.

Question 24Professional Practice and Valuation Standards

A valuer values a portfolio of assets and reports a single aggregate figure without individual values or the method used. What is the main deficiency?

  1. The report is too long
  2. The report should use only the cost approach
  3. The report should not state any figure
  4. The report lacks sufficient granularity and method disclosure for readers to understand the conclusion Correct answer.

Explanation

Readers need to understand how an aggregate figure was built up, including individual values and the method applied. A single unexplained total provides insufficient transparency. Length is not the issue, stating a figure is expected, and no single approach is mandated for portfolios.

Question 25Professional Practice and Valuation Standards

Which of these best describes the purpose of a valuation standards-compliant scope of work?

  1. To record the client's credit rating
  2. To list the valuer's marketing activities
  3. To set the valuer's holiday entitlement
  4. To define the extent of investigation, data, and analysis to be performed Correct answer.

Explanation

The scope of work defines what investigation, data collection, and analysis the valuer will undertake, and it underpins the reliability of the conclusion. It is not a record of marketing, credit, or employment matters. Clear scope allows readers to judge the depth of the work.

Question 26Professional Practice and Valuation Standards

Under IVS, which body of principles governs the ethical conduct expected of a valuer, including integrity, objectivity, and confidentiality?

  1. The accounting standard governing the client's financial statements
  2. The local planning and zoning ordinance
  3. The valuation code of conduct adopted by the valuer's professional body or jurisdiction Correct answer.
  4. The national building code applicable to the asset

Explanation

IVS requires valuers to comply with an appropriate code of conduct, typically the ethical code of a recognised professional body or the applicable jurisdiction. That code addresses integrity, objectivity, competence, confidentiality, and professional behaviour. Building codes, accounting standards, and planning rules regulate the asset or the client, not the valuer's ethics.

Question 27Professional Practice and Valuation Standards

A valuer is engaged to value an office building. Which element of the scope of work identifies what interest in the asset is being valued?

  1. The client's intended use of the report
  2. The valuer's fee arrangement
  3. The currency of the stated value
  4. The interest to be valued, such as freehold or leasehold Correct answer.

Explanation

The scope of work must define the interest being valued, for example freehold, leasehold, or a specific lesser interest, because value depends on the rights held. Fee, currency, and intended use are separate scope items that do not identify the interest itself. Clarity on the interest prevents the report from being misread.

Question 28Professional Practice and Valuation Standards

Which basis of value reflects the price that would be agreed between a willing buyer and a willing seller in an arm's-length transaction after proper marketing?

  1. Liquidation value
  2. Investment value
  3. Market value Correct answer.
  4. Reinstatement cost

Explanation

Market value is 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. Investment value reflects the value to a particular owner, and liquidation value assumes a forced sale. Reinstatement cost measures replacement, not exchange price.

Question 29Professional Practice and Valuation Standards

A valuer is preparing a report and must state the valuation date. Why is this date critical in an IVS-compliant report?

  1. Because value is a point-in-time estimate and market conditions change Correct answer.
  2. Because it fixes the deadline for the valuer's invoice
  3. Because it records when the valuer first met the client
  4. Because it determines the applicable tax rate for the client

Explanation

Value reflects market conditions at a specific moment, so the valuation date anchors the estimate to the evidence available at that time. The date is not the report issue date and is unrelated to invoicing, tax, or engagement logistics. Without it, readers cannot interpret the figure reliably.

Question 30Professional Practice and Valuation Standards

Which term describes the valuer's obligation to identify and disclose any relationship that could impair impartial judgement on an engagement?

  1. Peer review
  2. Conflict of interest management Correct answer.
  3. Due diligence
  4. Scope limitation

Explanation

Conflict of interest management requires the valuer to identify relationships or interests that could bias the valuation and to disclose or avoid them. Due diligence is investigation of the asset, peer review is a quality check, and a scope limitation restricts the work. Managing conflicts protects objectivity.

Question 31Professional Practice and Valuation Standards

A valuer is asked to value a property for financial reporting. Which approach estimates value by capitalising expected future income?

  1. Residual approach
  2. Cost approach
  3. Sales comparison approach
  4. Income approach Correct answer.

Explanation

The income approach converts expected future income into a present value using capitalisation or discounting. The cost approach builds value from land plus depreciated improvements, and the sales comparison approach relies on comparable transactions. The residual approach is a development technique rather than a general income method.

Question 32Professional Practice and Valuation Standards

Which document should a valuer retain to support the assumptions and inputs used in a completed valuation?

  1. The previous owner's title deed only
  2. The working papers and supporting evidence for the assignment Correct answer.
  3. The valuer's personal correspondence unrelated to the file
  4. The client's marketing brochure

Explanation

Record-keeping requires the valuer to retain working papers and evidence that substantiate the valuation and its assumptions. A marketing brochure is promotional, a title deed is only one input, and unrelated correspondence is irrelevant. Adequate records allow the work to be reviewed or defended later.

Question 33Professional Practice and Valuation Standards

What does the term 'highest and best use' describe in valuation practice?

  1. The use the current owner prefers for personal reasons
  2. The use that is legally permissible, physically possible, financially feasible, and maximises value Correct answer.
  3. The use specified in the original planning permission only
  4. The use with the lowest construction cost

Explanation

Highest and best use is the use that is legally permissible, physically possible, financially feasible, and produces the highest value. It is an objective market test rather than the owner's preference. Neither cost minimisation nor the original permission alone defines it.

Question 34Professional Practice and Valuation Standards

A valuer is engaged to value a shopping centre but the client will not provide the current rent roll. How should the valuer proceed?

  1. Refuse to issue any report in all circumstances
  2. Estimate the rents from memory and present them as verified facts
  3. Disclose the missing information as a scope limitation and explain its effect on the valuation Correct answer.
  4. Silently use assumed rents without telling the client

Explanation

When material information is unavailable, the valuer should identify the limitation, disclose it in the report, and explain how it affects reliability. Presenting estimates as verified facts or concealing assumptions misleads the reader. Refusing outright is not required where the limitation can be properly disclosed.

Question 35Professional Practice and Valuation Standards

A valuer is instructed by a property company to value an asset it is about to sell. The company asks the valuer to describe the figure as market value even though the analysis supports a lower figure. What is the appropriate response?

  1. Report the figure the evidence supports and decline to mislabel the basis of value Correct answer.
  2. Withdraw the basis of value from the report entirely
  3. Comply because the client is paying for the report
  4. Report the higher figure and note the discrepancy only verbally

Explanation

The valuer must report the conclusion supported by evidence and apply the correct basis of value, regardless of client pressure. Complying with a mislabelling request compromises integrity and misleads readers. Omitting the basis of value would also breach reporting requirements.

Question 36Professional Practice and Valuation Standards

A valuer is asked to value a leasehold interest with 12 years remaining on the lease. Which factor most directly limits the value of that interest compared with the freehold?

  1. The colour of the building facade
  2. The valuer's professional indemnity premium
  3. The number of car parking spaces on site
  4. The finite remaining term and the obligations under the lease Correct answer.

Explanation

A leasehold interest is limited by its remaining term and the covenants and obligations in the lease, which constrain the income and rights transferred. Facade colour, insurance premiums, and parking counts do not define the duration of the interest. The shorter the term, the more the value diverges from freehold.

Question 37Professional Practice and Valuation Standards

A valuer is valuing a property in a thin market with few comparable transactions. Which action best strengthens the reliability of the conclusion?

  1. Widen the evidence base and clearly disclose the uncertainty in the report Correct answer.
  2. Shorten the report to avoid discussing the evidence
  3. Use a single comparable without adjustment
  4. Increase the stated value to reflect scarcity

Explanation

In thin markets the valuer should broaden the evidence, apply reasoned adjustments, and disclose the resulting valuation uncertainty. Relying on one unadjusted comparable weakens the analysis, and inflating value for scarcity is not evidence-based. Reducing disclosure undermines transparency.

Question 38Professional Practice and Valuation Standards

A valuer is instructed to value a contaminated industrial site. The client wants the report to ignore remediation costs. How should the valuer handle this instruction?

  1. Exclude the cost because the client requested it
  2. Value the site as if it were clean agricultural land
  3. Include the cost but remove any mention from the report
  4. Reflect the remediation liability in the valuation and explain the treatment Correct answer.

Explanation

Material factors affecting value, such as remediation obligations, must be reflected and explained so the report is not misleading. Following a client instruction to ignore a known liability breaches objectivity. Concealing the treatment or valuing on an unrelated use basis would also misstate value.

Question 39Professional Practice and Valuation Standards

Which statement best describes the role of the valuer's opinion in an IVS-compliant report?

  1. It is a warranty that the asset will sell for that amount
  2. It is a legal determination of title
  3. It is an audited statement of the client's accounts
  4. It is a professional judgement based on evidence, not a guarantee of price Correct answer.

Explanation

A valuation is an opinion of value supported by evidence and professional judgement, not a guarantee of a transaction price. It is not a warranty, an audit, or a legal ruling on ownership. Understanding this protects both valuer and reader.

Question 40Professional Practice and Valuation Standards

A valuer is asked to value a property for a lender but the borrower is a close relative. What is the most appropriate action?

  1. Proceed without disclosure because the valuation is objective
  2. Disclose the relationship and decline or manage the engagement to protect independence Correct answer.
  3. Increase the fee to compensate for the relationship
  4. Ask the borrower to sign a waiver and continue

Explanation

A close relationship with an interested party creates a conflict that must be disclosed and either avoided or managed so independence is preserved. Proceeding silently or relying on a waiver does not remove the risk to objectivity. Adjusting the fee does not address the conflict.

Question 41Professional Practice and Valuation Standards

Which practice best supports the credibility of a discounted cash flow valuation of an income-producing asset?

  1. Adopting the client's forecast without verification
  2. Using the highest growth rate available without justification
  3. Documenting the source and rationale for each key assumption Correct answer.
  4. Presenting only the final value without the model

Explanation

Credibility in a DCF depends on transparent, evidenced assumptions for rent, growth, discount rate, and costs. Documenting the source and rationale allows review and challenge. Unjustified optimistic growth, an opaque model, or unverified client forecasts weaken reliability.

Question 42Professional Practice and Valuation Standards

A valuer completes a valuation but later discovers a material error in the floor area used. What is the appropriate course of action?

  1. Notify the client promptly and issue a corrected report Correct answer.
  2. Delete the file and deny the error
  3. Wait until the next annual valuation to correct it
  4. Leave the report unchanged to protect the valuer's reputation

Explanation

Discovering a material error requires prompt notification and correction so readers are not misled. Delaying correction, concealing the error, or destroying records compounds the breach. Professional integrity demands transparency and remediation.

Question 43Professional Practice and Valuation Standards

Which of the following best describes the purpose of a valuation standards-compliant scope of work?

  1. To set the maximum fee the valuer may charge
  2. To define the asset, interest, basis, date, and extent of work so the report can be understood Correct answer.
  3. To replace the need for any written report
  4. To guarantee the asset will achieve the stated value

Explanation

The scope of work defines what is valued, on what basis, at what date, and how extensively, so the report is unambiguous. It does not set fees, guarantee outcomes, or remove the need for a report. A clear scope protects both valuer and reader.

Question 44Professional Practice and Valuation Standards

A valuer is asked to value a specialised manufacturing facility with no comparable sales. Which approach is generally most appropriate?

  1. Direct capitalisation of residential rents
  2. A speculative development residual
  3. Sales comparison using residential comparables
  4. Depreciated replacement cost Correct answer.

Explanation

For specialised assets with no active market, depreciated replacement cost is generally the most appropriate approach because it reflects the cost to replace the asset's service capacity less depreciation. Residential comparables or rents are irrelevant to an industrial facility. A speculative residual does not fit an existing specialised use.

Question 45Professional Practice and Valuation Standards

Which statement best explains why a valuer should reconcile the results of more than one valuation approach?

  1. Reconciliation tests the reasonableness of each result and supports the final conclusion Correct answer.
  2. It is required only to increase the valuer's fee
  3. It guarantees that all approaches will produce identical figures
  4. It removes the need to disclose assumptions

Explanation

Reconciling approaches tests consistency and helps the valuer judge which result best reflects the evidence and basis of value. It does not remove the need for disclosure, is not a fee device, and does not require identical outputs. Reconciliation strengthens the credibility of the final opinion.

Question 46Professional Practice and Valuation Standards

A valuer is instructed to value a hotel for a lender. The client asks that the report omit any mention of the trading performance decline. How should the valuer respond?

  1. Reduce the stated value without disclosing why
  2. Omit it because the lender did not request it
  3. Mention it only in a private email
  4. Include the decline and its effect because it is material to value Correct answer.

Explanation

A material decline in trading performance affects the income and risk of the hotel and must be reflected and disclosed. Omitting it, hiding it in private correspondence, or adjusting value without explanation misleads the lender. Transparency is required for a credible report.

Question 47Professional Practice and Valuation Standards

A valuer values a portfolio and reports a single aggregate figure without individual values or methodology. Which principle does this most directly breach?

  1. The rule that portfolios must be valued by a lender
  2. The requirement to use the cost approach
  3. The principle of highest and best use
  4. Transparency and adequate reporting of the valuation Correct answer.

Explanation

Reporting requires sufficient transparency for readers to understand what was valued and how, which an unexplained aggregate figure fails to provide. Highest and best use concerns the optimal use of an asset, not reporting format. There is no rule requiring the cost approach or lender involvement.

Question 48Professional Practice and Valuation Standards

A valuer is instructed to value an asset for a transaction expected to complete in six months, and the client wants the valuation date set in the future. What is the appropriate treatment?

  1. Set the valuation date in the future and treat the forecast as fact
  2. Refuse to value the asset under any circumstances
  3. Use the completion date without stating any assumptions
  4. Value as at the current valuation date and clearly disclose any forward-looking assumptions Correct answer.

Explanation

Value is estimated as at the valuation date using evidence available then, with any forward-looking assumptions clearly identified and disclosed. Treating forecasts as fact or using a future date without assumptions misrepresents the basis. Refusal is unnecessary where assumptions are transparent.

Question 49Professional Practice and Valuation Standards

A valuer discovers after issuing a report that a comparable sale used was not arm's-length. What is the most appropriate professional response?

  1. Ignore it because the report has already been issued
  2. Assess the impact, inform the client, and reissue or amend the report as needed Correct answer.
  3. Quietly change the figure in the file without notifying anyone
  4. Blame the client for providing the data

Explanation

A non-arm's-length comparable undermines the evidence base, so the valuer must assess its effect and inform the client, amending the report if the conclusion changes. Ignoring it or altering records silently leaves a misleading report in circulation. Blaming the client does not discharge the valuer's responsibility.

Question 50Professional Practice and Valuation Standards

A valuer is asked to value a property where the only recent sale was between related parties at an inflated price. Which action best supports a credible conclusion?

  1. Increase the value to match the related-party price
  2. Treat the sale with caution, seek corroborating evidence, and disclose the treatment Correct answer.
  3. Adopt the related-party price as the primary comparable without comment
  4. Reject all market evidence and use the cost approach only

Explanation

A related-party transaction may not reflect arm's-length market conditions, so the valuer should corroborate it with other evidence and disclose how it was treated. Adopting it uncritically or inflating value to match it distorts the conclusion. Rejecting all market evidence and defaulting to cost is not justified.