Later in the week I head off to my least favourite hotel in the world – The Park Inn at Heathrow. I am assessing for the RICS – four candidates face their final hurdle to get into the Institution.
I spent much of Sunday reading their documentation.
It will be a nerve wracking day for them – they get quizzed for an hour about their competences. They have a 10 minute presentation – which then gets interrogated. We need to know they have done the job – so the questions probe the detail of their chosen subject. I tell our candidates that they need to be under the skin of the job they did – leaving no stone unturned.
I have one more set of assessments to do this year after Heathrow – in a couple of weeks time – regrettably these will be my last.
I have decided to handy up my boots on assessing. I have a number of reasons.
Firstly I am becoming increasingly concerned about the level of auditing of the assessors that goes on. I can accept that panels need to be audited to ensure that the questioning is consistent and fair – but I was chosen last week to be audited prior to the assessment to make sure the chairman of the panel had been in touch with me! This is administration gone mad in my view – and I have made my feelings known. I have refused to fill in the audit form.
There has also been an incident in which an auditor has resigned – I can’t reveal the detail – as it is subject to an internal RICS legal investigation. Suffice to say that I am disappointed in the way the matter has been dealt with to the extent that I am no longer prepared to support the process.
It’s sad really – I have enjoyed putting something back – and it has helped me with our own candidates, but I have other things I can do with my valuable time!
My professional Institution (the RICS) has commissioned an independent inquiry to consider the challenges facing the UK property valuation profession and look at solutions. The inquiry will take evidence from a range of organisations working across the property sector including banks, building societies, insurers, panel managers, property valuers and their clients.
Following the inquiry a report will be produced based on the evidence with recommendations for all parties to help address the balance of risk and reward and maintain high standards in valuation which is a vital professional service that underpins underpinning economic stability and consumer confidence.
And that is the official blurb.
So what is really happening?
Well, there are a number of firms who are now refusing to provide professional valuations. Some can’t as they haven’t applied for Registered Valuer status. But others are simply turning the work away. They consider that the risk reward profile is madness. Fees are incredibly low for the time needed to properly report with all of the due diligence ticked off. But then the cost of failure can be catastrophic.
we carry Professional Indemnity Insurance – the costs of which are rising as the Insurance market decides that we are too much of a risk!
We are coming to an interesting period where some valuations done in 2007/8 at the height of the market will be seeing some of the biggest falls in value. And the Banks are looking for someone to blame. Surveyors with a rich seam of PI Insurance are right in the line.
And this is the real reason why some valuers are turning their backs on this work. It simply isn’t worth doing …
Earlier in my career I recall a discussion about valuation – and the suggestion it is an art not a science. And part of that is a judgement – where we give an opinion. Sadly those days are gone – it is now closer to a science, it is an opinion with quite a lot of mechanical process – and certainly less and less of an art.
So Murray wins Wimbledon, the sun shines and I hear from more than one person that there is ‘more activity in the market‘. I’m not sure precisely what these words mean – more than what? activity is for burly blokes in the Army? But there’s some tails in the air. The agents are chipper.
The evidence doesn’t quite bear this out according to the Property Investor Bulletin for July. You can see from the graph that we are better than 2012, but still not as good as 2011.
But this is always the issue, valuers are always looking back – so, as the saying goes, we don’t make the market, we simply take the market. In fact, this situation is likely to start causing some issues over the next few months.
I have a situation where I have agreed to buy something but a third party firm have been asked to value for a Bank. They have down-valued by around 20% citing ‘evidence’ of past deals. The problem is that my client is prepared to pay a price and the vendor is willing to accept the same price – but no lower. In some ways that is the test of market value. But valuers have to watch their Professional Indemnity policies and there is no incentive to value up!
So this presents another issue – the threat of Insurance claims is holding the market down.
So, even if there is a green shoot (a horrible expression!) then it won’t necessarily be capable of being realised – as history still looks grim at this point!
The latest survey or surveyors makes interesting reading…
It seem we have more job security and observe business confidence and sentiment across the UK improving since last year.
In 2013, 28% of property professionals are anticipating an improvement in economic activity (up 11% from 2012), while negative business sentiment dropped to 13% (from 16% in 2012). Heady stuff indeed.
The results of the survey:
* The average UK property salary: £48,901 (+1.2% from 2012)
* RICS membership leads to higher remuneration, for example an FRICS earns £62,480 in comparison to a non RICS counterpart who earns on average £40,235 (or a 55.3% premium)
* 43% (versus 39% in 2012) of respondents received a base salary increase, while only 4% (down from 7% in 2012) received a base salary decrease.
* 39% (versus 32% in 2012) of respondents secured a bonus with an average bonus of £13,803 (versus 13,461 in 2012)
* 19% believe that their pay and benefits will be positively affected by market conditions in the next 12 months compared to only 13% last year.
* 62% (versus 57% in 2012) assess their job security as either strong or very strong.
It seems that there are improvements in sentiment – which must eventually translate into an improving property market.
The blog re-starts tomorrow proper. But I’m always interested in what you read the most on my blog.
Sidney – a role model if ever there was one….
If you drop by and hit the home page – that doesn’t give me much of a clue. After the ‘home page’ the ‘about me’ gets the second biggest hit. But then the top 5 blogs are:
Nottingham’s £3m house – the story back in August 2010 when a house hit the market for an asking price of £3.5m. This was thought to be the most expensive house put on the market. It actually sold in November 2010 for £2.5m. This post has had 2,471 unique hits.
2,334 hits to date for the anticipated opening of Jamie’s Italian. That was back in January 2011. That post also generated the most comments at the time as people searched for information. Interestingly I’m told that Jamie hasn’t been yet! I have, several times. Jamie also appears in the next two most hit blogs – the opening date and the big opening – a guest blog by my colleague Matthew Hannah.]
My blog about Sneinton Market – and proposals for it’s regeneration gathered 1,646 views since May 2010.
The next five most popular are an interesting reflection – they concern Nottingham, Punk Rock, This is England, the Nottingham Tram system and my RICS assessment work!
It’s also interesting to how people find me from Google – the top searches are:
The Sex Pistols (!)
So it seems you like Nottingham, Puck Rock and the RICS? I’m not sure that these three things are quite what I expected!
One of the questions we ask our candidates who apply for membership of the RICS is whether you should re-touch a photograph on a set of sales particulars.
It’s a tough question as we are so used to having photo-shopped images now that putting a bit of blue in the sky can’t do harm – can it? We have to tread carefully around the Property Misdescription Act 1991. The safe answer is to say you wouldn’t alter the sky – although I think there is some room to argue the point. Clearly you can’t remove telegraph poles and pylons – you are then in deep water!
But you do wonder when you look at magazine covers – especially at models – as to how far they are prepared to go. Removing blemishes is the norm – in fact you can buy specialist software to do it. It can even make you lose weight.
The photo in todays blog comes from a magazine – which looks pretty good. Sporty and active spring to mind. It’s a bit flat – the light must have been a bit grey – but this gives accurate colours. There is an issue with the picture though. I have shown a number of people and it takes a few seconds to spot the photo-shop error…
You can deny all you like that your picture has been tweaked – but sometimes you may have been caught red-handed!
Last week there was a deal reported in my property press – which just demonstrates the power of the Capital.
not available in foot asylum…
Valuation of shops is a bit of a black art – we zone shops on the principle that the front (window) is worth more than the back. Interestingly the technique is not actually written down in a code anywhere (RICS APC students please take note!).
Bond Street in London is generally regard as the most expensive retail address in the UK – last week a new tenant signed a lease for a shop – Boghossian are Swiss and sell luxury jewellery. They have agreed to pay £1,050 per square foot. This is the zone A rate – i.e. for the first 20ft depth …
Compare that with Clumber Street in Nottingham – where the latest deal reported is for Foot Asylum – who are paying a headline rent of £155 . But this is ignoring the incentives the landlord has offered, when you take account of these the rent drops on a comparable basis to £131.
So Bond Street is eight times more expensive to trade than Clumber Street. Wow.
Two weeks ago I sat as an RICS APC assessor. Unfortunately we had reason to refer candidates. The referred candidates will now have heard from the RICS – but won’t yet have had the full reports. That means I can’t comment on specifics…
But referred candidates shouldn’t give up. They have usually tripped up by not being able to demonstrate their declared competences. Most people sitting who have worked in a professional environment – so will have a basic grasp of what’s going on. But invariably referrals are at what we specify as ‘level 3′ – which is where you need to have more than knowledge – you have to demonstrate that you have given advice. This is a big step!
So what next if you are referred? Well you need to read the referral report. It does explain what level you have reached and what the shortcomings were.
But some practical advice?
Firstly, go back over the interview – try to remember the depth of the questions you felt unsure of; that is an indication of what you need to work on. Then think about how you are going to demonstrate those competences next time round. It’s about being able to prove to the panel that you’ve done the job! Don’t say you have if you haven’t! There are no trick questions – but some might not have a right or wrong answer. Sometimes it’s about seeing if you have an opinion or have thought through various scenarios.
If you can – do a mock interview. There are plenty of people who will help – you just need to ask. You need to do work that is allied to your competences – do as many of the jobs you can. Ask questions – spend time with experienced surveyors! Think about trying to get time in other firms or departments if you can. It’s not always easy, but moving around can help.
No certainly not. But, as the saying goes, we’re paid for our opinions not our doubts! So valuers do need to pin down that illusive magical number – the value.
Our Institution try to help by laying out what ‘Market Value’ is, essentially willing buyer, willing seller, arms-length transaction, after proper marketing and where the parties act knowledgable, prudently and without compulsion. In the APC interviews I do, we often get candidates to explain the constituent parts of the definition.
As you can see – this is a bit of a black art!
There was a time when it was all about location, location, location. But then we started to get a bit more sophisticated and grandly looked at covenant strength – or how likely was it that the tenant would go pop! Then buildings got a whole lot better – so we had to start thinking about differentials for the qualitative differences. Latterly we have been having a debate about whether green is best – and my joint paper is linked to on this site.
Life has got complicated.
But we are seeing another aspect which is impacting on value – and this is a relatively new phenomena. The relative bargaining powers of the parties is beginning to come to the fore. This is the ‘without compulsion’ bit of the argument. There is no doubt that some parties are acting with compulsion – maybe with their bank behind them. Some people are desperate. They are not necessarily willing sellers. So, whilst there have always been people who must sell or must buy this is now becoming a feature of the market.
And, of course, the difficulty is how do we weigh these things up. In some cases we are letting property where we are paying a tenant – usually as a Rate saving scheme. Does that mean the property has a negative value? Is it worth nothing?
As I said, it’s tricky placing a value on property at the moment!
It’s that time of year again when a new cohort of candidates fumble their way towards their professional qualification. The RICS have spring and autumn sittings. After a 2 year diary the candidates send a critical analysis and have a final one hour interview.
I have sat as an assessor for a few years now. I did it to help my own firms candidates initially, but it also is good for me – I have to keep up to date with my professional knowledge.
I try to help our candidates (we have two in this session) in the run up to their interviews. But this week they are due to hand in their critical analysis’. I read these for them – and try to make constructive comments. I use lots of red ink up (which, as an aside, I understand you can’t use in schools now – ‘too aggressive’?) – trying to point things out!
If you are doing your APC – my top 5 tips…
1. Treat it as a report. It should be clear, concise and without typos. Don’t rely on the Word dictionary – that won’t tell you that the Royal Institute of Chartered Surveyors is an issue for us!
2. Get your significant other to read it – and ask them if they understand it! Or at least understand the gist of what you did. They should be able to!
3. We are assessing you as an individual – so phrases like “My firm did the Conflict checks” might lead to a question as to whether you did it. Documents peppered with ‘we’ might lead to lots of questions. It’s you being tested – not your firm!
4. Use language which makes you sound like a surveyor! Leases tend not to start – they commence! They don’t finish either – they expire! Small things – but clues as to whether you have seen the language we are accustomed to!
5. Don’t bullshit. We can smell it.
I should make it clear that these are my own views!