NZ Registered Valuer Exam key terms

The use of a property that is legally permissible, physically possible, financially feasible and maximally productive, and that produces the highest value. It underpins every market and income approach conclusion.

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, where each party acts knowledgeably, prudently and without compulsion.

The amount above market value that reflects attributes of an asset peculiar to a particular owner or prospective owner, such as synergies with adjoining land or operating synergies. It is not available to a general purchaser.

The amount that could reasonably be received from the sale of an asset within a restricted marketing period, where the seller is compelled to sell. It is a departure from market value and must be clearly defined in the report.

The date on which the valuer's opinion of value applies, which may differ from the date the report is signed. All market evidence, adjustments and conditions must be assessed as at that date.

The final analytical step in which the valuer weighs the indications produced by each approach, explains why one is given most weight, and arrives at a single value conclusion with supporting reasoning.

An income approach that converts a single year's net income into value by dividing it by a capitalisation rate derived from comparable sales or market evidence, assuming stable income and growth.

The rate, expressed as a percentage, that reflects the relationship between a property's net operating income and its capital value. It embodies risk, growth expectations, liquidity and financing conditions at the valuation date.

A valuation method that projects periodic cash flows over a holding period, discounts them to present value at a risk-adjusted rate, and adds the present value of the expected resale proceeds.

A cost approach used for specialised assets with no direct market evidence, combining the current replacement cost of improvements, adjusted for physical, functional and external obsolescence, with the value of the underlying land.

A loss in value from causes other than physical deterioration, being functional (outdated design or layout) or external (factors outside the property such as market or planning changes).

The value of land derived by deducting all development costs, including construction, professional fees, consents, finance and a developer's margin, from the gross realisable value of the completed project.

The profit allowance a developer requires to undertake a project, reflecting risk and time, usually expressed as a percentage of gross development value or total project cost. It is a cost in residual analysis, not a value.

A method that derives value by analysing recent arm's length transactions of similar properties and applying adjustments for differences in location, size, condition, time and terms of sale.

A tabular analysis comparing the subject property with each comparable sale, showing percentage or dollar adjustments for differences and the net adjusted value indication for each comparable.

The estate held by a lessee under a lease, comprising the right to occupy and use land or premises for a defined term subject to conditions, and having a value that depends on rent payable against market rent.

The most complete estate in land, of indefinite duration, giving the holder the right to use, occupy, lease and dispose of the land subject to law and registered interests.

A registered right attached to one parcel of land that allows its owner to use another parcel in a defined way, such as a right of way or services, without possessing it.

A promise in a deed or on a title that restricts or requires certain use of land, such as a height limit or a ban on particular activities. It may bind successive owners depending on its nature and registration.

Any registered interest, restriction or charge on a title that limits the owner's rights or may reduce value, including mortgages, easements, covenants and caveats.

The registered record of ownership of an estate in land, identifying the proprietor, the legal description and any registered interests affecting the land under the Torrens system.

A form of tenure in which several owners hold undivided shares in a single freehold title and each leases a defined flat or area from the others under a long-term lease, often with restrictions on alterations.

A stratum estate in which individual units are owned outright and common property is held through a body corporate, governed by unit titles legislation covering levies, maintenance and disclosure.

The legal entity of all unit owners in a unit title development, responsible for administering common property, setting levies and maintaining records, and a key due diligence source for valuers.

A statutory valuation of land and improvements prepared for a local authority to allocate rates, based on a defined basis such as land value, capital value or annual value, as at a specified date.

For rating purposes, the sum of the land value and the value of improvements, excluding chattels and certain other items, assessed as at the rating valuation date.

For rating purposes, the value of the land alone, assuming the improvements were absent but the land had the benefit of works and services, and excluding any value attributable to the improvements.

Charges levied by a local authority on rateable property to fund services, calculated by applying a rate in the dollar to the rating value or by fixed charges, with differentials set by policy.

The statutory document prepared under resource management legislation that sets objectives, policies, rules and zoning controlling land use and subdivision within a district, and which determines permitted activities.

The classification of land in a district plan into areas with specified permitted uses, development standards and activity status, which materially affects the highest and best use and value of a site.

A provision in a district plan identifying land required for a public work or project by a requiring authority, which restricts development and must be considered in any valuation of affected land.

A resource consent authorising an activity that the district plan does not permit as of right, potentially subject to conditions, and which may add value if it enables a higher and better use.

The performance of a building envelope in preventing moisture ingress. Failures in cladding, junctions and flashings can cause hidden decay and create significant remediation liabilities that reduce value.

A building affected by systemic moisture penetration and resulting timber decay or mould, typically from monolithic cladding and design detailing of a particular era, requiring remediation and disclosure in valuation.

The estimated cost to repair defects such as weathertightness failure or earthquake damage, including construction, professional fees, consents and contingency, which is deducted in arriving at value.

An engineering evaluation of a building's earthquake performance, commonly expressed as a percentage of new building standard, which affects insurability, tenant demand and value.

A valuation technique that assumes a completed development on the valuation date to derive land value, used where the subject is vacant or underdeveloped and the project is feasible.

The overriding obligation of a valuer giving evidence to assist the court impartially on matters within expertise, independent of the party retaining them, with reasoning transparent and opinions properly qualified.

The mandatory professional standards governing integrity, objectivity, confidentiality, competence and disclosure of conflicts, breach of which may lead to disciplinary proceedings by the regulator.

A circumstance where a valuer's personal, financial or other interest could compromise, or appear to compromise, independent judgement, requiring disclosure and often refusal or withdrawal from the engagement.