Real Estate Appraisal

Real Estate Appraisal Book

From Value to Worth
Sayce S., Smith J., Cooper R. & Venmore-Rowland P.
Blackwell Publishing, 2006.
www.blackwellpublishing.com
This workbook is intended for teaching purposes only and is designed to compliment the book.
Spreadsheet

# 15

Book page

# 164

The identification of the key variables using a senstivity analysis with realistic
ranges for each variable, in the context of constructing a scenario.

This workbook is intended for teaching purposes only.

Real Estate Appraisal

Sensitivity Analysis
moving to:

Scenario Analysis
Sensitivity Analysis in workbooks 13 & 14 showed how to undertake breakeven analysis and the use of two variable data tables.
The investor may wish to see the results using a scenario analysis, looking at say: Optimistic; Pessimistic and Best Estimate outcomes.
For this Excel's Scenario Manager can be used:

Purchase Cost (gross)

Income
Rental Growth p.a.
Senior Debt (LTV)
Exit Valuation Yield
Net future Sale Proceeds
Discount (Target) Rate
Exit Costs

2,000,000
135,000 (In Advance)
4.00%
70.00% (Interest Only)
6.25%
2,627,970
10.00%

Ungeared Cash Flow

Purchase Cost
Income
Net Sale Proceeds
Net Cash Flows

Mar-06
###
135,000

IRR =
NPV =

###
14.07%
265,664

Mar-07

Best Estimate
Mar-08

Mar-09

135,000

135,000

135,000

135,000

135,000

135,000

Mar-10

2,627,970
2,627,970

Rental Growth and the Exit Valuation Yield have been identifed as key variables.
Go to: Tools: Scenarios and a Scenario has been set up,
with the output on the next worksheet.
Please note:
It is wise to name the cells being used
Set up a descriptor for the Scenario, otherwise your starting
point will be lost if you print out your various scenario
permutations.

Best Estimate

0.04
0.0625
Best Estimate

Page 3

Optimistic

0.05
0.0575
Optimistic

Page 4

Pessimistic

0.02
0.0675
Pessimistic

Page 5

Real Estate Appraisal

Scenario Summary
Best Estimate

Optimistic

Pessimistic

Changing Cells:
Rental_Growth
4.00%
5.00%
2.00%
Exit_Yield
6.25%
5.75%
6.75%
Result Cells:
IRR
14.07%
17.55%
9.66%
NPV
265,664
517,366
-21,071
Notes: Current Values column represents values of changing cells at
time Scenario Summary Report was created. Changing cells for each
scenario are highlighted in gray.

Real Estate Appraisal

Using Comments in Worksheets

Comments can be a very useful addition to a worksheet. They assist in providing
detailed or extra information relating to the inputs and formulae in a specific cell.
Comments are used extensively in this re-fp workbook.
This worksheet provides a guide to :
A.
B.
C.
D.
E.
F.

Printing Comments
Adding a Comment
Editing a Comment
Deleting a Comment
Showing Comments
Using the Reviewing Icons

A. To Print Comments
1.
2.
3.

4.
N.B.

B.

3.
4.
5.

3.
4.
5.

Click on the cell from which the comment is to be deleted.

Click on the right mouse button
Click on Delete Comment
The comment is now deleted

Showing Comments
1.
2.
3.
4.

F.

Click on the cell to which the comment has been added

Do one of the following:
a.
Click on Insert on the Tool Bar
b.
Click on the right mouse button
Click on Edit Comment
Edit the comment in the text box.
Click on another cell.

Deleting a Comment
1.
2.
3.
4.

E.

Click on the cell to which the comment is to be added

Do one of the following:
a.
Click on Insert on the Tool Bar
b.
Click on the right mouse button
Click on Insert Comment
Add your comment to the text box
Click on another cell
The comment is now attached to the previous cell
This
a comment
This
is is
shown
by the cell having a red triangle in the top right corner
box
To view the comment hovver over the cell.

Editing a Comment
1.
2.

D.

Print preview can be used before printing to scale the worksheet onto the paper.
To use: click Print Preview
Click Set up on the tool bar
Click Page, and scale the worksheet to the paper.

Adding a Comment
1.
2.

C.

Click on the worksheet in question

On the File menu, click Page Setup, then click the Sheet tab.
Do one of the following:
a.
To print the comments where they appear on the worksheet click:
As displayed on sheet in the comments box.
b.
To print the comments at the end of the worksheet, click At end
of sheet in the comments box, and check the box Row and
column headings.
Click Print

Click on
Click on
Click on
Click on
a.
b.
c.

Tools in the tool bar

Options
the View tab
one the the 3 following toggle buttons
None
Comment indicator only
Comment and indicator

Using the Reviewing Icons

This places the comment applications as icons in the tool bar.

1.
2.
3.
4.

Click on View in the tool bar

Click on Toolbars
Click on Reviewing
This now gives you the Reviewing icons, which include:
l
New Comment
l
Previous Comment
l
Next Comment
l
Show Comment
l
Show All Comments
l
Delete Comment

Real Estate Appraisal

Authors' Disclaimer:

Disclaimer Clause
This workbook is intended for teaching purposes only.
The authors are providing this workbook on an as is basis and make no representations or
warranties of any kind with respect to its contents and disclaim all such representations and
warranties. In addition, the authors make no representations or warranties about the accuracy,
completeness, or suitability for any purpose of the information, or any statistical or mathematical
information provided including any formulae pertaining thereto.
The information contained in this workbook may contain technical inaccuracies or typographical
errors. All liability of the Authors howsoever arising for any such inaccuracies or errors is
expressly excluded to the fullest extent permitted by law.
The Authors will not be liable for loss or damage arising out of or in connection with the use of
this workbook. This is a comprehensive limitation of liability that applies to all damages of any
kind, including (without limitation) compensatory, direct, indirect or consequential damages, loss
of data, income or profit, loss of or damage to property and claims of third parties."