METHODS
OF VALUATION - QUESTIONS
1 In
which circumstances should the "direct comparison" method
of valuation be used in valuation practice?
2
What are the advantages and disadvantages of using the summation
method of valuation?
3
Why is the summation method sometimes called the residual value
method?
4
Why does desirability as a component of value imply the summation
method of valuation?
5
When is the summation method used in preference to the direct
comparison method?
6
"Comparability is one of the most difficult and vexatious
valuation problems."
Discuss
the above quotation in relation to the use of the direct comparison
and summation methods of valuation. When should the valuer move from
the direct comparison to summation method?
7
Why should the valuer carry out both a primary and secondary method
of valuation?
Illustrate
your answer with 4 examples.
8
Give 3 examples that show the dangers of "averaging".
When
can averaging be used?
9
Why is the developer or owner prepared to give a discount for an in
Ilne sale of blocks of land or home units?
10
When is the architecture or "style" of a house an important
part of value?
11
What is the difference between an art nouveau and an art deco house?
12
What is meant by the finish of a house and when is it an important
component of value?
13.Determine
the replacement cost new of the following house:
Builder's
contract price: $120 000
Loss
of interest: 10% per annum
Holding
charges: $200 per month
Developer's
profit: 12% overall
Expected
period to build: 9 months.
14
How can scales of value be used to value a house for which there is
no direct sale evidence?
15
Discuss the advantages and disadvantages of statistical "methods"
of value such as multiple regression analysis.
16
Analyze the use of sales evidence in the Seatainers case
17
What is meant by the claim that valuation includes an "art"
component?
Give
examples of this component in valuation practice.
18
What is opportunity cost? How is the concept used in valuation?
19
Name 2 common ways of valuing a house situated in the inner city?
20
What unit of measurement is used to value a residential house with
the summation method?
21
What steps would you take to value a large residence (>350m2) in
an inner city suburb?
22
What does the valuer have to be careful about when called upon to a
value a small asbestos cement house in an expensive and exclusive
suburb?
23
What statutory laws does the valuer have to be aware of when valuing
a residential house?