SACPVP Associated Valuer common mistakes
SACPVP Associated Valuer · Understand the traps and how to avoid them.
Applying a single overall capitalisation rate to a property's net income without adjusting for lease expiry profile, rent review timing, or covenant strength, treating all income streams as equally durable.
Candidates learn the simple Income = Capital Value x Rate formula early and default to it under time pressure, and because a single-rate calculation produces a clean number, they stop before testing whether the income is sustainable.
What to do instead
Before capitalising, split income into contract rent and market rent, note the weighted lease expiry, and apply explicit adjustments or a higher rate to short-covenant or reversionary components; state the rationale for the rate in the report rather than asserting it.
Computing a replacement cost or depreciated replacement cost figure and then failing to add the land value (or double-counting land already in the cost), or omitting entrepreneurial profit and finance costs from the cost build-up.
Candidates memorise the DRC formula as a single line and lose track of which components are already embedded, especially when the land is valued separately in the same report.
What to do instead
Write out the DRC build-up as an explicit column: land value at highest and best use, plus replacement cost of improvements, less physical/functional/economic depreciation, plus profit and finance where appropriate; reconcile the total against the cost approach narrative before finalising.
Presenting a valuation figure without stating the basis of value, the effective date, the extent of investigation, and the special assumptions and limiting conditions that the figure depends on.
Candidates concentrate on arriving at the number and treat report formalities as boilerplate, so they omit the very statements that tell the reader what the number means and what was assumed.
What to do instead
Use a fixed report skeleton with mandatory headers (basis of value, effective date, inspection date, property identification, assumptions, limiting conditions, valuer declaration) and check every header is populated before submission.
In an expert-witness or negotiation context, advocating for the client's desired figure, omitting adverse comparables, or answering only the questions that support the client's case.
Candidates carry over a client-service mindset from routine mortgage or sale valuations and do not switch to the overriding duty to the tribunal when the role changes to expert.
What to do instead
When instructed as an expert, identify the instructing party's interest, disclose all material comparables including adverse ones, address every question posed in the joint statement or letter of instruction, and state clearly in the report that the duty is to the court/tribunal.
Accepting a client's stated floor area, zoning, or rental figure as given and building the valuation on it without independent verification against title, cadastral, or planning records.
Candidates trust the instruction pack to save time, and verification steps feel like administrative overhead rather than part of the valuation evidence base.
What to do instead
Treat client-supplied data as unverified until checked: measure or confirm area from plans/site, obtain the zoning certificate or planning extract, and confirm the lease terms from the executed lease; record the source and date of each verified input.
Confusing a conflict-of-interest disclosure with a conflict waiver, or accepting an instruction where the valuer has a personal or financial interest and simply noting it in the report.
Candidates conflate the ethical duty to disclose with the separate question of whether the engagement can proceed at all, and disclosure is the easier step to perform.
What to do instead
Apply a two-step test: first identify whether a conflict exists (personal interest, prior involvement, fee contingent on outcome), then determine whether it can be managed or must be declined; if declined or managed, document the reasoning and obtain written acknowledgement.
Calculating net present value or internal rate of return using a discount rate that is not matched to the cash-flow periodicity, or mixing nominal cash flows with a real discount rate.
Candidates focus on the arithmetic and spreadsheet mechanics and do not check that the rate and the cash flows are expressed on the same basis (annual vs monthly, nominal vs real, pre-tax vs post-tax).
What to do instead
State the periodicity, the tax basis, and whether the rate is nominal or real at the top of every DCF; convert the rate to match the cash-flow interval, and sanity-check the IRR against the discount rate before interpreting the result.
Treating the highest and best use as the existing use without testing whether a legally permissible, physically possible, financially feasible, and maximally productive alternative exists.
Candidates equate current use with highest and best use because it requires no additional analysis, and they are reluctant to introduce a hypothetical development the client did not ask about.
What to do instead
Run the four-test sequence explicitly (legally permissible, physically possible, financially feasible, maximally productive) and record the conclusion and the alternatives rejected, even where the conclusion is that existing use is the highest and best use.
Describing a building defect by name (for example 'rising damp' or 'settlement') without identifying the observed symptoms, the likely cause, and the remedial implication for value.
Candidates pattern-match a label to a defect from textbook examples and stop at diagnosis, without linking the defect to cost of remediation or effect on marketability.
What to do instead
For each defect, record the observation, the differential diagnosis, the recommended further investigation, the indicative remediation cost, and the value impact; where the cause cannot be determined on inspection, say so and recommend a specialist.
Valuing a property for rating or statutory compensation purposes on ordinary market value principles without applying the statutory definition, prescribed assumptions, and any statutory disregards that override market value.
Candidates apply the general valuation framework they have practised and do not read the specific statutory provision that defines the value for that purpose.
What to do instead
For every statutory valuation, quote the governing statutory definition and list the assumptions and disregards it imposes before selecting comparables; test the figure against the statutory definition, not against the open-market figure.