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69-695: Hartbeespoort , informally known as "Harties", is a small resort town in the North West Province of South Africa, situated on slopes of the Magaliesberg mountain and the banks of the Hartbeespoort Dam . The name of the town means "gateway of the hartbees " (a species of antelope ) in Afrikaans . Schoemansville, named after General Hendrik Schoeman , a Boer General in the Anglo-Boer War , who owned

138-444: A gas engineer , a structural engineer or expert of another kind, depending on what they find during their inspection. They may also recommend work by the buyer's solicitor to confirm matters which might affect their valuation, such as (with leasehold properties), the unexpired term of the lease , who is responsible for the boundaries, and so forth. The Chartered Surveyor's inspection is typically non-intrusive. They do not have

207-448: A comparable substitute property. The approach recognizes that a typical buyer will compare asking prices and seek to purchase the property that meets his or her wants and needs for the lowest cost. In developing the sales comparison approach, the appraiser attempts to interpret and measure the actions of parties involved in the marketplace, including buyers, sellers, and investors. Data is collected on recent sales of properties similar to

276-461: A condition of obtaining a mortgage loan. The homebuyer may take the option to instruct the same surveyor to carry out a "RICS HomeBuyer Report" or a "RICS Building Survey" (sometimes called a "Structural Survey" ), usually at additional cost. When the surveyor is instructed in this combined role, the mortgage valuation is still produced for the lender, and the HomeBuyer Report or Building Survey

345-421: A consistent appearance over the range, with common typefaces and general format. The distinctions come in the detail that is subsequently provided. These are discussed below. This is short report that looks briefly at the property to report on the visual condition of nine external elements of construction, nine internal elements of construction, seven services supplied to the building, and three key components of

414-558: A given type of property. What appraisal method do most buyers use for the type of property being valued? This generally guides the appraiser's thinking on the best valuation method, in conjunction with the available data. For instance, appraisals of properties that are typically purchased by investors (e.g., skyscrapers , office buildings) may give greater weight to the Income Approach. Buyers interested in purchasing single family residential property would rather compare price, in this case,

483-507: A heavily industrialised city south of Johannesburg. Resort town A resort town , resort city or resort destination is an urban area where tourism or vacationing is the primary component of the local culture and economy . A typical resort town has one or more actual resorts in the surrounding area. Sometimes the term resort town is used simply for a locale popular among tourists. One task force in British Columbia used

552-493: A lump reversion from the eventual sale of the property) to arrive at a present value indication. In Canada, reversion values typically range from 16x-21x the NOI of year of sale. When homes are purchased for personal use the buyer can validate the asking price by using the income approach in the opposite direction. An expected rate of return can be estimated by comparing net expected costs to the asking price. This return can be compared to

621-432: A merger or acquisition happens at a price which is higher than the value represented by the price of the underlying stock. The usual explanation for these types of mergers and acquisitions is that "the sum is greater than its parts", since full ownership of a company provides full control of it. This is something that purchasers will sometimes pay a high price for. This situation can happen in real estate purchases too. But

690-403: A special relationship between the buyer and the seller where one party had control or significant influence over the other party. In other cases, the transaction may have been just one of several properties sold or traded between two parties. In such cases, the price paid for any particular piece is not its market "value" (with the idea usually being, though, that all the pieces and prices add up to

759-681: A value below their market values; this is known as fractional assessment. Fractional assessment can result in properties that are assessed at 10% or less of their given market values. In the United States, appraisals are for a certain type of value (e.g., foreclosure value, fair market value, distressed sale value, investment value). The most commonly used definition of value is market value . While Uniform Standards of Professional Appraisal Practice (USPAP) does not define Market Value, it provides general guidance for how Market Value should be defined: A type of value, stated as an opinion, that presumes

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828-437: A value indication. This can be done using revenue multipliers or capitalization rates applied to a Net Operating Income (NOI). Usually, an NOI has been stabilized so as not to place too much weight on a very recent event. An example of this is an unleased building which, technically, has no NOI. A stabilized NOI would assume that the building is leased at a normal rate, and to usual occupancy levels. The Net Operating Income (NOI)

897-500: Is a defect, not only will it be identified but its causes analyzed and methods of repair and elimination of the cause discussed in some detail. The report also includes commentary to advise the solicitor on issues that need addressing in the conveyance, and any risks that affect the building, grounds and people of a more general nature. There is also discussion on the means of escape in case of fire, which in older houses in particular can be compromised by poor design and alterations. There

966-421: Is additionally prepared for the borrower. This arrangement can avoid the potential conflict of interest where the surveyor has as client both the lender and the borrower in the transaction. Because of the ethics and professional liability aspect, borrowers should note that the lender's survey is produced solely for the lender and the surveyor will not be liable for loss or omission to the borrower. Since reform of

1035-457: Is also a choice (at extra commissioning cost) to add a market valuation and other services such as costing for repairs and project management / further investigation services by agreement as cited at the end of this description. In effect, is a fully bespoke report. The alternative is the practice note version (introduced to the market in November 2012). It is a similar traffic light signal format as

1104-493: Is an attempt by RICS to provide consumer confidence after the older valuation reports came into disrepute. There are a number of variations to a residential building survey which offers the home purchaser a choice of products. The two main variants are the RICS Guidance note version stemming from the earlier RICS guidance note 2004 (more recently updated by the "Surveys of residential property RICS guidance note 3rd edition" which

1173-543: Is confounded with the DCF method under the general classification of the income capitalization approach (see above). 3. Residual method . Used for properties ripe for development or redevelopment or for bare land only. The site or unimproved property value is based on the improved or developed value less costs of construction, professional fees, development finance costs and a developer's profit or return on risk. 4. Profit method . Used for trading properties where evidence of rates

1242-623: Is gross potential income (GPI), less vacancy and collection loss (= Effective Gross Income) less operating expenses (but excluding debt service, income taxes, and/or depreciation charges applied by accountants). Alternatively, multiple years of net operating income can be valued by a discounted cash flow analysis (DCF) model. The DCF model is widely used to value larger and more expensive income-producing properties, such as large office towers or major shopping centres. This technique applies market-supported yields (or discount rates) to projected future cash flows (such as annual income figures and typically

1311-562: Is home to the Om Die Dam (English: Around the dam ) ultra marathon of 50 km, which takes place annually in the first half of the year. Some of the main tourist attractions in or around the town are: Other leisure-oriented venues around the dam include Pecanwood Golf Estate, Hartbeespoort Boat Club (near Kosmos), Sandy Lane Golf Club (at Caribbean Beach Club), Kosmos Marina Club, Magalies Park (estate and golf club). A number of other leisure developments and resorts are in progress. In 2010

1380-405: Is much longer than the condition report but may not be much longer than the homebuyer report as its content depends on the condition observed in each individual case. The practice note version building survey looks in more detail at the property to report on the visual condition and maintenance needs of nine external elements of construction, with scope for sub-division into individual features, with

1449-419: Is needed for that factor. Likewise, if the comparable is inferior to the subject in an aspect, then an upward adjustment for that aspect is needed. The adjustment is somewhat subjective and relies on the appraiser's training and experience. From the analysis of the group of adjusted sales prices of the comparable sales, the appraiser selects an indicator of value that is representative of the subject property. It

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1518-493: Is no cause for concern at this time. This format is suitable for a wide range of properties, but is best suited to traditionally built houses that are not subject to very serious distress or previous major alterations or extensions. This report is much longer than the condition report and looks in more detail at the property to report on the visual condition and maintenance needs of nine external elements of construction, nine internal elements of construction, seven services supplied to

1587-457: Is no market because of their public service or heritage characteristics. Both the residual method and the cost method would be grouped in the United States under the cost approach (see above). Under the current RICS Valuation Standards, the following bases of value are recognized: The common public experience of chartered surveyors is in the process of obtaining a mortgage loan . A mortgage valuation will be required by any mortgage lender as

1656-406: Is no market valuation or an assessment of rebuilding costs for insurance purposes in the document. These can be added, along with cost estimates for the repairs by a separate agreement as discussed in the helpful RICS explanatory notes to clients. Collectively, a key feature of RICS building surveys are that they provide an opportunity for clients and surveyors to strike up a detailed dialogue about

1725-546: Is possible for various appraisers to choose a different indicator of value which ultimately will provide different property value. The cost approach was once called the summation approach. The theory is that the value of a property can be estimated by summing the land value and the depreciated value of any improvements. The value of the improvements is often referred to by the abbreviation RCNLD (for "reproduction/replacement cost new less depreciation"). Reproduction refers to reproducing an exact replica; replacement cost refers to

1794-451: Is producing future cash flows through the letting of the property. This method compares the estimated rental value (ERV), or "top slice" to the current ("passing") income, or "bottom slice", to give an indication of whether the future value of the property should rise or fall based on income. If a property's income is higher than the ERV this is sometimes known as "froth", which may be confused with

1863-428: Is rarely a condition of the loan. The borrower may prefer to select an independent surveyor to undertake the HomeBuyer Report or Building Survey. A mortgage valuation is for the benefit of the lender. Its purpose is merely to confirm the property is worth the price paid, in order to protect the lender's interests. Invariably there is a disclaimer on the report that confirms that the surveyor has no responsibility to

1932-574: Is slight, such as hotels, restaurants and old-age homes. A three-year average of operating income (derived from the profit and loss or income statement ) is capitalized using an appropriate yield. Note that since the variables used are inherent to the property and are not market-derived, therefore unless appropriate adjustments are made, the resulting value will be value-in-use or investment value, not market value . 5. Cost method . Used for land and buildings of special character for which profit figures cannot be obtained or land and buildings for which there

2001-532: The RICS Red Book of valuation practice in recent years, the definition of a mortgage valuation has been deleted. It is now a market valuation which is the same definition given to the valuation in the RICS HomeBuyer Report. The Council of Mortgage Lenders recommends that buyers should not rely only on the mortgage valuation, but obtain a fuller survey for their own purposes. However, a fuller survey

2070-432: The "income approach") is used to value commercial and investment properties. Because it is intended to directly reflect or model the expectations and behaviors of typical market participants, this approach is generally considered the most applicable valuation technique for income-producing properties, where sufficient market data exists. In a commercial income-producing property this approach capitalizes an income stream into

2139-844: The Hartbeespoort Aerial Cableway was completely revamped and modernised and officially reopened on 14 August 2010 by Minister of Tourism Marthinus van Schalkwyk . Hartbeespoort is part of the Madibeng Local Municipality , that also includes the nearby town of Brits . Despite the semi-rural setting of the Hartbeespoort environs, it is ranked by the World Health Organization as the most polluted town in South Africa in terms of airborne particulates, with air pollution levels roughly twice that of Vereeniging ,

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2208-538: The Sales Comparison Approach ( market analysis approach) would be more applicable. The third and final approach to value is the Cost Approach to value. The Cost Approach to value is most useful in determining insurable value, and cost to construct a new structure or building. For example, single apartment buildings of a given quality tend to sell at a particular price per apartment. In many of those cases,

2277-448: The US use of "froth" describing the period before a real estate bubble . The cash flows can be compared to the market-determined equivalent yield, and the property value can be determined by means of a simple model. Note that this method is really a comparison method, since the main variables are determined in the market. In standard U.S. practice, however, the closely related capitalizing of NOI

2346-413: The appraisal report. Since comparable sales are not identical to the subject property, adjustments may be made for date of sale, location, style, amenities, square footage, site size, etc. The main idea is to simulate the price that would have been paid if each comparable sale were identical to the subject property. If the comparable is superior to the subject in a factor or aspect, then a downward adjustment

2415-563: The borrower. This is a legally valid exclusion. Under the reforms undertaken by RICS in the early 21st century to better regulate the provision of professional products to the general public, a sector that is usually unable to fully appreciate the consequences of inadequate specification of the required items to be surveyed and how they are reported, RICS produced a new range of consumer products with RICS branding. Three consumer products are now available - 1. RICS Condition Report 2. RICS HomeBuyer Report 3. RICS Building Survey These products have

2484-404: The building, and three key components of the grounds in which the property is sited. The reports rates conditions from 1 - good, 2 - needing attention in the near future, 3 - needing attention now using a traffic light system to draw attention to things that matter. The report also includes commentary to advise the solicitor on issues that need addressing in the conveyance, and any risks that affect

2553-562: The building, grounds and people of a more general nature. There is also a market valuation of the property and an assessment of rebuilding costs for insurance purposes. Not all chartered surveyors are permitted to undertake providing the RICS HomeBuyer Report as it contains a market valuation. Under rules of the Royal Institution of Chartered Surveyors, any surveyor undertaking these surveys must also be an RICS Registered Valuer and carry professional indemnity insurance for this task. This

2622-489: The business tends to be toward the use of a scientific methodology of appraisal which relies on the foundation of quantitative-data, risk, and geographical based approaches. Pagourtzi et al. have provided a review on the methods used in the industry by comparison between conventional approaches and advanced ones. As mentioned before, an appraiser can generally choose from three approaches to determine value. One or two of these approaches will usually be most applicable, with

2691-404: The choice of comparable data for use in the analysis. It can also affect the method used to value the property. For example, tree value can contribute up to 27% of property value. There are three traditional groups of methodologies for determining value. These are usually referred to as the "three approaches to value" which are generally independent of each other: However, the recent trend of

2760-430: The cost of building a house or other improvement which has the same utility , but using modern design, workmanship and materials. In practice, appraisers almost always use replacement cost and then deduct a factor for any functional dis-utility associated with the age of the subject property. An exception to the general rule of using the replacement cost is for some insurance value appraisals. In those cases, reproduction of

2829-477: The country's overall economic growth and development. In addition, business generated by resort towns have been credited with supporting the local economy through times of national market failure and depression. In a study conducted by the Urban and Regional Planning Department of Istanbul Technical University , 401 local residents in the resort community of Antalya were interviewed and asked to give their opinion on

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2898-437: The definition of an incorporated or unincorporated contiguous area where the ratio of transient rooms, measured in bed units, is greater than 60% of the permanent population. Generally, tourism is the main export in a resort town economy, with most residents of the area working in the tourism or resort industry. Shops and luxury boutiques selling locally themed souvenirs , motels , and unique restaurants often proliferate

2967-438: The downtown areas of a resort town. In the case of the United States, resort towns were created around the late 1800s and early 1900s with the development of early town-making. Many resort towns feature ambitious architecture, romanticizing their location, and dependence on cheap labor. If the resorts or tourist attractions are seasonal in nature (such as a ski resort ), resort towns typically experience an on-season where

3036-432: The dwellings are rental units, then some variant of the income approach may be more useful. So the choice of valuation method can change depending upon the circumstances, even if the property being valued does not change much. The sales comparison approach is based primarily on the principle of substitution. This approach assumes a prudent (or rational) individual will pay no more for a property than it would cost to purchase

3105-491: The economic impacts of tourism. Among the participants, 67% had lived in Antalya for over ten years, 66% had at least a high school degree, and 30% reported jobs that were related to tourism. The results are as follows: Perceived impact on select economic impact items (Antalya) More recently, resort towns have come under greater scrutiny by local communities. Instances where resort towns are poorly managed have adverse effects on

3174-413: The exact asset after a destructive event like a fire is the goal. In most instances when the cost approach is involved, the overall methodology is a hybrid of the cost and sales comparison approaches (representing both the suppliers' costs and the prices that customers are seeking). For example, the replacement cost to construct a building can be determined by adding the labor, material, and other costs. On

3243-486: The farm that the Hartbeespoort Dam was built on, is the oldest neighbourhood of Hartbeespoort. Hartbeespoort is the collective name of a few smaller towns situated around the Hartbeespoort Dam, including the towns of Meerhof , Ifafi , Melodie , Schoemansville and Kosmos . The town consists of holiday homes and permanent residences around the dam as it is popular with visitors from nearby Gauteng Province . It

3312-428: The grounds in which the property is sited. The reports rates conditions from 1 - good, 2, - needing attention in the near future, 3 - needing attention now using a traffic light system to draw attention to things that matter. In practice this report is of little value to the buyer unless the surveyor attends at the same time as the buyer is carrying out a viewing and wants an early indication of general condition, making

3381-489: The home owner's other investing opportunities. In the United Kingdom, valuation methodology has traditionally been classified into five methods: 1. Comparative method . Used for most types of property where there is good evidence of previous sales. This is analogous to the sales comparison approach outlined above. 2. Investment method , also known as hardcore . Used for most commercial (and residential) property that

3450-969: The host country or the local communities. Income to local communities generated by tourism are all of the expenditures accrued after taxes, profits, and wages are paid out; however, around 80% of traveler's expenditures go to airlines, hotels, and international companies, not to local businesses. These funds are referred to as leakages . Tourism has also been blamed for other negative economic impacts to local communities. Although resort towns usually boast more improved infrastructure than surrounding areas, these developments usually present high costs to local governments and tax payers. Reallocating government funds to subsidize infrastructure and tax breaks to firms shift available funding to local education and health services. In addition, resort towns typically do not have dynamic economies, resulting in an over dependence on one industry. Economic dependence on tourism poses particular challenges to resort towns and its local residents given

3519-519: The local economy. One example is the uneven distribution of income and land ownership between local residents and businesses. During tourist season, increased demand for accommodation may raise the price of land, causing a simultaneous increase in rent for local residents whose income in invariably lower than foreign residents. This results in a preponderance of foreigners in the land market and an erosion of economic opportunities for local residents. The revenues amassed from tourism typically do not benefit

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3588-444: The main description. A traffic light system was introduced and surveyors have to rate each element of the inspection according to priority. In this way, serious impediments are identified easily, and less critical defects commented upon to give the reader advice on what will need attention in the near future. It does not comment on the maintenance requirements for items found to be in satisfactory condition, only confirming that there

3657-582: The market value of all the parts) but rather it's market "price". At other times, a buyer may willingly pay a premium price, above the generally accepted market value, if his subjective valuation of the property (its investment value for him) was higher than the market value. One specific example of this is an owner of a neighboring property who, by combining his property with the subject property (assemblage), could obtain economies-of-scale and added value ( plottage value). Similar situations sometimes happen in corporate finance . For example, this can occur when

3726-464: The most common reason for value differing from price is that either the buyer or the seller is uninformed as to what a property's market value is but nevertheless agrees on a contract at a certain price which is either too expensive or too cheap. This is unfortunate for one of the two parties. It is the obligation of a real property appraiser to estimate the true market value of a property and not its market price. Frequently, properties are assessed at

3795-473: The most of the surveyor's expert knowledge about how buildings can fail that are not obvious to the average buyer. Some surveyors agree to carry out these surveys as a precursor to then extending the service with a more detailed report in either of the other two types in the RICS Home Surveys suite. Usually, the fee for the first report is discounted in the fee for the detailed follow up report, since when

3864-472: The nine internal elements of construction and the seven services supplied to the building examined in a similar manner. Also the three key components of the grounds in which the property is sited can be subdivided as necessary. The practice note version of the report also rates conditions from 1 - good, 2 - needing attention in the near future, 3 - needing attention now using a traffic light system to draw attention to things that matter. In this format, if there

3933-753: The other RICS survey products such as the RICS condition report and the RICS homebuyer reports. Both report formats (guidance note and practice note versions) are appropriate for virtually all properties, including but not limited to listed buildings , thatched cottages , timber frame homes and so on,. The building survey is the most detailed survey available from most firms of Chartered Surveyors. Thorough though it is, it may still lead to recommendations for further investigation from other specialists; see below. However, A competent surveyor will always try to investigate causes of damp and building defects before recommending for further investigation. The building survey report

4002-408: The other approach or approaches usually being less useful. The appraiser has to think about the "scope of work", the type of value, the property itself, and the quality and quantity of data available for each approach. No overarching statement can be made that one approach or another is always better than one of the other approaches. The appraiser has to think about the way that most buyers usually buy

4071-446: The other hand, land values and depreciation must be derived from an analysis of comparable sales data. The cost approach is considered most reliable when used on newer structures, but the method tends to become less reliable for older properties. The cost approach is often the only reliable approach when dealing with special use properties (e.g., public assembly, marinas ). The income capitalization Approach (often referred to simply as

4140-461: The property they are intending to purchase. Purchasers find a building survey useful in allowing for further negotiations on price or for providing a clients briefing document for extensions or repairs. The building survey is a very interactive process. Chartered surveyors can also provide an energy performance certificate. Chartered Surveyors are not necessarily specialists in other fields, and may recommend further investigations by an electrician ,

4209-442: The quick development of retirement and vacation-based residences. However, most of the employment available in resort towns are typically low paying and it can be difficult for workers to afford to live the area in which they are employed. Many resort towns have spawned nearby bedroom communities where the majority of the resort workforce lives. Resorts towns sometimes struggle with problems regarding sustainable growth , due to

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4278-418: The sales comparison approach may be more applicable. On the other hand, a multiple-building apartment complex would usually be valued by the income approach, as that would follow how most buyers would value it. As another example, single-family houses are most commonly valued with the greatest weighting to the sales comparison approach. However, if a single-family dwelling is in a neighborhood where all or most of

4347-526: The seasonal nature of the economy, the dependence on a single industry, and the difficulties in retaining a stable workforce. Local residents are generally receptive of the economic impacts of tourism. Resort towns tend to enjoy lower unemployment rates, improved infrastructure, more advanced telecommunication and transportation capabilities, and higher standards of living and greater income in relation to those who live outside this area. Increased economic activity in resort towns can also have positive effects on

4416-564: The seasonal nature of the job market in some areas. Local residents of resort towns face job insecurity, difficulties in obtaining training, medical-benefits, and housing. Property value There are several types and definitions of value sought by a real estate appraisal. Some of the most common are: There can be differences between what the property is worth ( market value ) and what it cost to buy it ( price ). A price paid might not represent that property's market value. Sometimes, special considerations may have been present, such as

4485-419: The subject being valued, called "comparables". Only SOLD properties may be used in an appraisal and determination of a property's value, as they represent amounts actually paid or agreed upon for properties. Sources of comparable data include real estate publications, public records, buyers, sellers, real estate brokers and/or agents, appraisers, and so on. Important details of each comparable sale are described in

4554-412: The surveyor returns to the property, there is already an understanding of what problems are in the property. This document format has been revised in 2010 to include an easy to assimilate format for the reader. The problem with the earlier format often reported to RICS by clients in receipt of the previous 'Homebuyer's Survey and Valuation' was that the structure did not easily distinguish the faults from

4623-406: The town is bustling with tourists and workers, and an off-season where the town is populated only by a small amount of local year-round residents. In addition, resort towns are often popular with wealthy retirees and people wishing to purchase vacation homes , which typically drives up property values and the cost of living in the region. Sometimes, resort towns can become boomtowns due to

4692-432: The transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. Thus, the definition of value used in an appraisal or Current Market Analysis (CMA) analysis and report is a set of assumptions about the market in which the subject property may transact. It affects

4761-463: Was introduced in December 2013). The primary difference between guidance note and the practice note for the consumer is the format of the reports. A bespoke style or a framework (traffic light signal) style. For surveyors guidance is "best practice" and practice note is "mandatory". The guidance note version can be provided in an agreed word document style format with an appendix for photographs etc. There

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