Professional Valuations European Valuations 2016 Sebastiaan Roggeveen MSRE BBE, Valuation Expert

Agenda Market value Market rent Assumptions and special assumptions HABU European Valuers’ Code of Ethics and Conduct Sustainability

Practical Guidline 2015

EVS Market value

EVS Market Rent

EVS Market value Special Assumptions Forced Sale Alternative Use Hope Value Special Assumptions Forced Sale Alternative Use HABU Hope Value HABU

Assumptions EVS 2016 = EVS 2012 A fact or condition about the property assumed by the valuer (whether instructed or otherwise) which he or she does not or cannot know or reasonably ascertain

EVS 2016 EVS 2012 Special Assumptions An assumption made where instructions differ from the actual facts existing at the date of valuation. EVS 2012 A fact or circumstance about the property that the valuer has assumed or is instructed to assume that is different from those that are verifiable at the valuation date.  

zaterdag 13 april 2019 Differences IVS 2013 EVS 2016 HABU: comprises realistic changes that are deemed feasible HABU: strictly current status Hope Value: future opportunities In addition to Hope Value, the EVS distinguish HABU. The IVS only refer to HABU. For the purpose of measuring the market value in the Dutch valuation practice, we recommend not to use the EVS concept of hope value as part of the EVS HABU concept, but to base the valuation on the IVS HABU concept that comprises changes to the property that are deemed realistic and feasible. In other words: expectations that are deemed realistic and feasible in respect of the property are incorporated in the market value concept. Or: realistic expectations that translate into market prices if the transaction is effected are included in the value. The valuer is to explain a derogation from the existing opportunities. The EVS distinguish HABU and Hope Value. EVS-HABU is strictly based on the current (physical, legal, financial) status of the property. The EVS hope value is based on opportunities that may manifest themselves in the future. IVS-HABU immediately makes it clear that the valuer is to remain within the current physical, legal and financial opportunities of the valuation object. Changes deemed feasible may be involved. In order to determine what may be taken into account, the IVS recommend that the valuation be based on the purpose envisaged by possible bidders for the property. PTA recommendation 13 (PTA, 2014b, p. 35, see also par. 3.4). If the HABU valuation regards a different use than the current use, the assumptions taken into account, and the way they [have been taken into account] should be indicated. If the chance of changes is minimal, it is no use for the valuer to take this into account in his value measurement. The valuer is to explain in his report what has, and what has not, been taken into account. PTA recommendation 13 (PTA, 2014b, p. 35, see also par. 3.4). If the HABU valuation regards a different use than the current use, the assumptions taken into account, and the way they [have been taken into account] should be indicated.

Deviations IVS 2013 EVS 2016 Alternative Use Value zaterdag 13 april 2019 Deviations IVS 2013 EVS 2016 Alternative Use Value The market value of the property without presuming the continuation of its present use. In the EVS view this as a market value The EVS view this as a market value (EVS 1, 5.10.3.2). No definition has been given. We recommend to formulate this as a special assumption. Such a special assumption with a specific use does not necessarily lead to the highest value in the event of alternative use (HABU).

Reporting the Valuation EVS 5 EVS 5 distinguishes five different reports with separate reporting requirements: Full Valuation Reports Shorter Reporting Formats (for example: an update) Summary Report or Valuation Certificate Desktop Valuation Reports (not conform EVS 5, unless as a sequel to a valuation with inspection and unchanged circumstances) Draft Reports (not conform EVS 5) Length and degree of desired detail can differ from client to client, depending upon the objectives and the profile and needs of the client.

Code of Ethics and Conduct (EC 1) The standard states clearly and unambiguously: an extreme effort of the real estate valuer is required in following the rules of professional conduct. EC 1 refers to the professional valuation service (section 2.3): i.e. “the skills, knowledge and expertise of the valuer must match the type and scale of the valuation, where every aspect that might hamper objective valuation has to be disclosed. EC 1 assumes that besides the individual, there may also be other entity's with legal personality, such as a practice, a company, another business entity or partnership. EC 1 includes personal, corporate and professional responsibility.

EVIP 1 Sustainability EVIP 1 also focusses on sustainability Furthermore, the Information Paper:  Indicates that sustainability is a broad, vague and unstable concept (EVIP 1, par. 1.9);  Indicates that sustainable, energy-efficient or ‘green’ characteristics only effect the valuation if there is enough observable market evidence. Is no valuation standard, but outlines backgrounds of the concept of sustainability on real estate and valuation to raise awareness Gives no pracital, methodical clues about how sustainability can be incorporated into an estimate of the market value Indicates the sustainable buildings can be valued with standard valuation methods

New Practical Guidline will be publised in the Spring of 2017

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