NZ Registered Valuer Exam flashcards

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

Market value definition

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, each acting knowledgeably, prudently and without compulsion.

Highest and best use

The use that is legally permissible, physically possible, financially feasible and maximally productive, which may differ from the current use and determines the approach adopted.

Forced sale value

An opinion of the amount realisable in a constrained marketing period, not market value; the assumed marketing period and discount must be disclosed.

Market rent

The best rent reasonably obtainable at the valuation date under a new lease on comparable terms between willing parties; it equals passing rent only coincidentally.

IVS 101 scope of work

Requires identification of the asset, currency, purpose, valuation date, basis of value, extent of investigation, and any assumptions or special assumptions.

Independence and contingent fees

A valuer must disclose prior involvement and relationships, and must not accept a fee contingent on the valuation outcome, as this compromises objectivity.

Conflicts of interest

Must be identified, disclosed and managed; if the conflict cannot be managed, the valuer should decline or withdraw from the engagement.

Valuers Act 1948

Statute providing for registration of valuers and the disciplinary regime; only registered valuers may use that description and undertake certain statutory valuations.

Valuers Registration Board

Body that administers registration and hears complaints against registered valuers, with powers to censure, suspend, cancel registration, impose conditions or award costs.

Rating revaluation cycle

Under the Local Government (Rating) Act 2002, general revaluations occur at intervals of no more than three years, with values applying from the roll date.

Objection to rating valuation

Lodged with the local authority within the statutory timeframe; if not resolved, the objection proceeds to the Land Valuation Tribunal, with appeals on law to the High Court.

Fee simple estate

The fullest estate in land, of potentially infinite duration, subject only to statutory reservations, encumbrances and the rights of the Crown.

Easement requirements

There must be a dominant and servient tenement, the easement must accommodate the dominant land, and it must not be inconsistent with the servient owner's use.

Restrictive covenants

Negative covenants that touch and concern the land and are intended to bind successors may run with the land in equity; positive covenants generally do not run at law.

Unit title estate

A stratum estate under the Unit Titles Act 2010 comprising a principal unit and a share of common property, with body corporate operational and long-term maintenance funds.

Direct capitalisation formula

Value equals 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

Present value equals the sum of forecast cash flows discounted at a market-derived rate, plus a terminal value capitalised from forward income on a consistent basis.

Residual land value

Gross development value less development costs, fees, contingency, finance, marketing and developer's profit, adjusted for time and risk to give land value.

Cost approach formula

Value equals replacement or reproduction cost new, less accrued depreciation, plus land value; used where market evidence is thin or the asset is specialised.

Weathertightness risk indicators

Monolithic cladding without a drained cavity, untreated timber framing and poor detailing at certain construction dates signal leaky-building risk requiring a report and value adjustment.

Earthquake-prone threshold

A building below 34% of new building standard is earthquake-prone under the Building Act 2004, affecting insurability, finance, tenant demand and value.

Rural sales analysis

Uses dollars per hectare or per stock unit adjusted for scale, contour, productivity and location; small holdings typically transact above the per-hectare rate of larger blocks.

Capitalisation rate sensitivity

Because value equals income divided by the rate, small cap-rate movements produce large value changes; a 25 basis point move on $1,000,000 income changes value by about $1,000,000.

Weighted average lease term

The income-weighted remaining lease term; a short WALT generally widens the capitalisation rate and raises the discount rate applied to the cash flows.

Industrial value drivers

Clear span, stud height, floor loading, truck access, canopy and yard ratio; low stud height or poor access causes functional obsolescence and reduces value.

Capital value

Under rating legislation, land value plus the value of improvements; land value is the value of the land as if vacant and unimproved, ignoring the improvements.

Public Works Act compensation

Full compensation for land taken plus injurious affection, less betterment, measured at the date of taking under the Public Works Act 1981.

Activity status under RMA

Permitted, controlled, restricted discretionary, discretionary, non-complying and prohibited activities carry different consent risk and therefore different value implications.

Existing use rights

Protection for activities lawfully established before a rule change, provided the effects remain the same or similar in character, intensity and scale.

Depreciated replacement cost

Replacement cost new less physical deterioration, functional obsolescence and external obsolescence; used for specialised assets with no direct market evidence.

Contaminated site assessment

The National Environmental Standard for Assessing and Managing Contaminants in Soil requires assessment; remediation cost and stigma reduce value and may need a special assumption.

Expert witness duty

The expert's paramount duty is to the court or tribunal, not the party paying; evidence must be independent, state assumptions, and give reasons for the opinion.