NZ Registered Valuer Exam cheat sheet

Market value: the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.

Highest and best use: the use that is legally permissible, physically possible, financially feasible and maximally productive; it may differ from current use and drives the choice of approach.

Value is a function of utility, scarcity, desire and effective purchasing power; price is a transaction fact, cost is an expenditure fact, and value is an opinion at a point in time.

Market rent is the best rent reasonably obtainable at the valuation date under a new lease on comparable terms; it is not the passing rent unless the two coincide.

Forced sale value / liquidation value reflects a constrained marketing period and is not market value; state the assumed marketing period and the discount applied.

Going concern value includes goodwill and assembled workforce; exclude goodwill unless the instruction expressly requires it, and disclose the treatment.

Depreciation splits into physical deterioration, functional obsolescence and external (economic) obsolescence; only curable items are deducted net of their cost.

Value is date-specific: a valuation is an opinion as at the valuation date, not the inspection date or report date; any material post-date change requires a new instruction.

IVS 101 sets scope-of-work matters: identify the asset, the valuation currency, the purpose, the valuation date, the basis of value, the extent of investigation and any assumptions or special assumptions.

IVS 102 requires that the approach chosen be appropriate to the purpose and that all three approaches be considered; disclose why an approach was not applied.

IVS 103 requires the report to state the basis of value, valuation date, scope, sources, significant assumptions, and any departure from standards.

IVS 104 defines bases of value (market value, market rent, investment value, fair value, liquidation value) and must not be mixed within one opinion without disclosure.

NZVPS/NZRVS professional standards require a valuer to act with integrity, objectivity, competence, confidentiality and professional behaviour, and to decline work outside competence.

Independence: disclose any fee contingent on the outcome, any prior involvement with the property, and any relationship with a party; contingent fees for valuation opinions are prohibited.

Conflicts of interest must be identified, disclosed and managed; if the conflict cannot be managed, decline or withdraw from the engagement.

Keep a contemporaneous work file: inspection notes, comparables, calculations, correspondence and the reasoning chain, retained for the period required by the professional body and the firm.

The Valuers Act 1948 provides for registration of valuers and the disciplinary regime; only registered valuers may describe themselves as registered valuers and undertake certain statutory valuations.

The New Zealand Institute of Valuers (NZIV) is the professional body; the Valuers Registration Board administers registration and handles complaints about registered valuers.

Complaints are investigated and may be heard by the Valuers Registration Board, which can censure, suspend or cancel registration and impose conditions or costs.

The rating valuation regime sits in the Local Government (Rating) Act 2002: district valuation rolls, general revaluations at intervals of no more than three years, and the objection and objection-to-valuation process.

Objections to a rating valuation go to the local authority in the first instance, then to the Land Valuation Tribunal; appeals on questions of law go to the High Court.

The Resource Management Act 1991 governs subdivision, land use and effects; valuation evidence must align with the operative and proposed district plan provisions.

The Overseas Investment Act 2005 and its regulations impose consent requirements for sensitive land and significant business assets; consent status affects marketability and value.

The Property Law Act 2007 and the Land Transfer Act 2017 govern estates, leases, mortgages and title; the Cadastral Survey Act and LINZ rules govern parcel definition.

Estates: fee simple (freehold) is the fullest estate; a stratum estate in freehold or leasehold under the Unit Titles Act 2010 is a separate estate with a principal unit and common property share.

Interests less than estates: leases, easements, profits à prendre, covenants, licences and mortgages; a licence is personal and does not bind successors, unlike an easement or covenant.

Torrens title: title is registered and indefeasible subject to statutory exceptions (fraud, prior registered interests, omitted easements, statutory overriding interests such as certain rates and reservations).

An easement requires a dominant and a servient tenement, must accommodate the dominant land, and must not be inconsistent with the servient owner's use; easements in gross are exceptional.

Restrictive covenants run with the land in equity if they touch and concern the land and are intended to bind successors; positive covenants generally do not run at law.

Leases: a lease for more than one year must be in writing; a periodic tenancy arises by payment of rent; the Property Law Act 2007 implies covenants to pay rent and to keep and yield up in repair subject to contract.

Cross leases and unit titles: cross lease titles comprise an undivided share plus a lease of the flat; unit titles are governed by the Unit Titles Act 2010 with body corporate operational and long-term maintenance funds.

Maori land is administered under Te Ture Whenua Maori Act 1993 by the Maori Land Court; alienation is restricted and valuation must reflect multiple ownership and access constraints.

Market approach: adjust comparable sales for differences in time, location, size, condition, tenure and terms; the adjustment grid must be transparent and reconcilable.

Income approach: capitalise net income using V = NOI / cap rate, or discount a cash-flow forecast at a market-derived discount rate; the cap rate embeds growth and risk expectations.

Direct capitalisation: value = net operating income divided by the capitalisation rate; the rate must be derived from comparable sales of similar risk and growth profile.

Discounted cash flow: PV = sum of CFt / (1+r)^t plus terminal value; the terminal value is usually a capitalised forward income and must be internally consistent with the forecast.

Cost approach: value = replacement or reproduction cost new less accrued depreciation plus land value; used for specialised, new or absent-market assets.

Residual approach: value = gross development value less development costs, professional fees, contingency, finance, marketing and developer's profit, discounted for time and risk.

Reconciliation: weigh the approaches by relevance and reliability of evidence, not by averaging; explain why the adopted figure best reflects the basis of value.

Units and conventions: state whether areas are gross, net lettable or usable, whether rent is gross or net, and whether GST is inclusive or exclusive; inconsistency is a common source of error.

Residential comparison: adjust for land area, floor area, bedroom and bathroom count, garaging, condition, outlook, school zones and sale date; weight the most recent and most similar sales.

Weathertightness: cladding type, cavity, monolithic cladding at certain dates and untreated timber are risk indicators; a weathertightness report may be required and value must reflect remediation cost and stigma.

Earthquake: assess ground class (e.g. TC1/TC2/TC3 under MBIE guidance), foundation type, EQC/NHC cover and any unrepaired damage; disclose any assumed remediation.

Rural: value land and improvements separately; consider soil type, contour, effective rainfall, access, water rights, contour and the balance of flat to hill country.

Rural improvements are often valued at depreciated replacement cost less obsolescence because markets for specialised farm buildings are thin; disclose the depreciation basis.

Rural sales analysis: use $/ha or $/stock unit and adjust for scale, contour, productivity and location; small holdings typically transact above the per-hectare rate of larger blocks.

Tenure and title: check whether the title is fee simple, leasehold, cross lease or unit title and whether there are covenants, easements or encumbrances affecting use and value.

Disclose any natural hazard, erosion, flood or coastal hazard information from LIM and district plan maps, and its effect on marketability and insurability.

Net operating income = gross rental income less vacancies, leasing costs and recoveries shortfall, less outgoings the landlord bears; be explicit about who pays which outgoings under the lease.

Capitalisation rates move inversely with value: a 25 bp cap-rate change on a $1,000,000 NOI changes value by about $1,000,000, so cap-rate selection must be evidenced.

Lease analysis: remaining term, rent review mechanism (CPI, fixed, market), ratchet clauses, tenant covenant strength, incentives and rent-free periods all affect value.

Industrial: clear-span, stud height, floor loading, truck access, canopy and yard ratio drive value; functional obsolescence arises from low stud or poor access.

Retail: turnover, frontage, passing trade, anchor tenancy and lease structure matter; secondary retail carries higher cap rates and greater vacancy risk.

Weighted average lease term (WALT) is a key risk metric; short WALT generally widens the cap rate and increases the discount rate.

Seismic: percentage of new building standard (%NBS) affects insurability, tenant demand and finance; buildings below about 34% NBS are earthquake-prone under the Building Act 2004.

For specialised assets, use the cost approach or a DCF with explicit cash flows; disclose the treatment of chattels, plant and equipment and any business value.

Rating valuations are prepared under the Local Government (Rating) Act 2002 and the Rating Valuations Act 1998; the values are capital value, land value and, for some properties, annual value.

Capital value = land value plus value of improvements; land value is the value of the land as if vacant and unimproved, ignoring improvements but reflecting site works that are integral to the land.

General revaluations occur at intervals of no more than three years; the values take effect from the roll date and are used to apportion rates across the district.

Rates are calculated by applying the local authority's rating differentials and rates to the rating values, not by the valuer; the valuer's role is the value, not the rate.

Objections must be lodged within the statutory timeframe after the roll is published; the local authority reviews the objection and may correct the roll, otherwise the objection goes to the Land Valuation Tribunal.

Statutory valuations include rating valuations, public works acquisitions under the Public Works Act 1981, and valuations for the Maori Land Court and other statutory purposes.

Public Works Act compensation follows the principle of full compensation for the land taken plus injurious affection, less betterment, measured at the date of taking.

Rating valuations are mass-appraisal opinions with limited inspection; they are not mortgage or market valuations and must not be presented as such.

The Resource Management Act 1991 governs land use, subdivision, discharge and coastal matters; the district plan sets zoning, objectives, policies, rules and standards.

Activity status matters: permitted, controlled, restricted discretionary, discretionary, non-complying and prohibited activities carry different consent risk and value implications.

Existing use rights protect activities lawfully established before a rule change, provided the effects remain the same or similar in character, intensity and scale.

Designations and heritage orders can restrict use and may give rise to compensation claims under the RMA in limited circumstances.

Subdivision: check minimum lot size, shape factor, services, access, esplanade reserves and development contributions; these costs feed into the residual land value.

Plan changes and proposed plans carry weight depending on their stage; a proposed plan may be relevant but the operative plan generally prevails until the change is decided.

Natural hazard and coastal provisions (including coastal hazard zones and the New Zealand Coastal Policy Statement) can limit intensification and affect marketability.

Valuation should reconcile the legally permissible use with the highest and best use and disclose any reliance on consents not yet granted.

Building Act 2004: earthquake-prone buildings are those below 34% of new building standard (%NBS); the threshold and remediation timeframes depend on the building's importance level and location.

Weathertightness: the leaky building syndrome arises from monolithic cladding without a drained cavity, untreated timber and poor detailing; remediation typically involves re-cladding with a cavity.

Site analysis: consider contour, aspect, drainage, soil, stability, flooding, coastal erosion, contamination and the presence of hazardous substances.

Construction cost estimates should state the basis: replacement cost new, reproduction cost, or depreciated replacement cost, and include preliminaries, consent and contingency.

Depreciation: physical deterioration is measured by effective age and condition; functional obsolescence by comparison with modern equivalents; external obsolescence by market evidence.

Contamination: check the National Environmental Standard for Assessing and Managing Contaminants in Soil; remediation cost and stigma reduce value and may require a special assumption.

Geotechnical: ground class affects foundation cost; TC3 land may require enhanced foundation systems, and liquefaction or lateral spread risk must be disclosed.

Asbestos and hazardous materials in pre-2000 buildings must be identified and removal costs allowed for in any remediation budget.

A valuation report must state the client, purpose, basis of value, valuation date, inspection date, scope, sources, assumptions, special assumptions and any limiting conditions.

The report must be signed by the registered valuer who takes responsibility, and must identify the valuer's qualifications and any assistance received.

Expert evidence must be independent and not an advocate for the party paying; the duty is to the court or tribunal, and the expert must state that the evidence is given in accordance with that duty.

Evidence should follow the Code of Conduct for expert witnesses: state qualifications, facts relied on, assumptions, and reasons for the opinion, and identify any matters outside expertise.

In cross-examination, distinguish clearly between fact, assumption and opinion; concede error promptly and explain any change of view.

Reports for litigation should address the alternative party's position, explain why it is not accepted, and quantify the difference in value.

Keep the work file and calculations; be prepared to produce them, and ensure the report's figures reconcile with the file.

Plain language, clear structure and a transparent reasoning chain make the report easier to defend and to understand by non-valuers.

This section is intentionally minimal; the exam's listed domains are covered in sections 1-11 above.

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