Real estate appraisal is one of the main stages in the real estate market. Each property must be clearly priced based on various characteristics ranging from sq. meters and ending with the level of prestige of the area, developed infrastructure.
To begin the assessment, it is necessary to research the market, study consumer preferences, the ratio of certain types of real estate, or rather their commercial or non-commercial stay
The purposes of real estate valuation can be different (purchase and sale of an object, insurance and property disputes, taxation of real estate, implementation of investment projects, secured loans, etc.), they correspond to several types of value. Before starting work on real estate appraisal, the appraiser needs to determine the type of value applicable in this situation. The report must reflect the estimated type of value and justify its choice.
There are several approaches to real estate valuation: comparative, profitable and costly.
income approach used to evaluate investment projects and in calculating the shares of the municipality and individuals investing in capital construction or reconstruction. Those. the approach used for the estimated income of objects - the value of real estate objects is equal to the value of future income from its use. The cost of monetary resources depends not only on the magnitude of their supply, but also on the conditions for their provision and return. Therefore, the buyer of a real estate object, aimed at making a profit from its use, must compare his expenses for the purchase of real estate and the planned income. If purchased for 1,000,000 rubles. the object can make a profit over the next 10 years at 100,000 rubles. per year, after which it will completely lose its value, then after 10 years the buyer will only be able to return his funds. At the same time, having invested them in a bank, he would receive interest on the deposit for the same 10 years.
Any investment in real estate is inevitably associated with risk due to many factors. The risk depends on the stability of the socio-political and economic situation. Obviously, the more risk an investor is willing to put his funds, the more income he plans to receive from their investment.
Another important point: future income should compensate not only for the investment spent, but also for the losses caused by the fact that for some time this investment does not work.
Cost approach is a set of valuation methods based on determining the costs necessary to restore or replace an object, taking into account accumulated wear and tear. It is based on the assumption that the buyer will not pay more for the finished object than for the creation of an object of similar utility. However, it should be borne in mind that the costs of creating a property are not equivalent to its market value. Therefore, the scope of the cost approach is quite narrow and is used in the absence of sufficient information when assessing the value of real estate; when insuring real estate, when the sum insured, insurance premium, insurance compensation are determined based on the costs of the insured; when evaluating specialized buildings (schools, hospitals, railway stations, etc.); in the calculation of taxes and fees established by law; in the revaluation of fixed assets.
Property valuation by the cost method is carried out in stages.
Market (comparative) approach- this is a set of methods for estimating the value based on a comparison of the object of assessment with its analogues, in respect of which there is information on the prices of transactions with them, where the value of the object cannot exceed the cost of similar objects with identical characteristics. In my work, I will consider exactly the market approach, or rather the pair sales method, which consists in determining the market value by considering the sales prices of comparable sites as the market value of the property being assessed.
This method, in my opinion, is the most successful, but it is quite difficult for a beginner in the real estate market to determine the exact price, relying on logic and primary information, here you need to be a middle-class specialist.
Real estate valuation -- the process of determining the market value of an object or individual rights in relation to the property being valued. Real estate valuation includes: determining the value of ownership or other rights, such as lease rights, rights of use, etc., in relation to various real estate objects.
Real estate valuation is the determination of the market value in accordance with the goal, the valuation procedure and the requirements of the ethics of the appraiser. immovable objects (land, land plots, buildings, structures, apartments and construction in progress), produced by independent appraisers.
Mass real estate appraisal is the appraisal of a large number of properties on a specific date using standard methods and statistical analysis.
When calculating the market value of an object, the value of property rights, lease rights and other rights in relation to this object is determined.
Appraisal activity is a sphere entrepreneurial activity aimed at evaluating natural resources, financial assets, business, investment projects, intellectual property, fixed assets, movable and real estate.
At the same time, evaluation activity is also a field of scientific activity with its own subject, methods, principles and standards.
The subject of appraisal activity is the establishment of market, investment, liquidation and other types of value of appraisal objects.
The subjects of valuation activities are specialists involved in valuation, on the one hand, and customers - legal entities, citizens, the state represented by authorized bodies, on the other hand.
Appraisal activity is necessary both for public authorities, for example, for the purpose of taxation, and for individuals and legal entities for the needs of civil circulation.
There are several main areas in valuation activities - valuation of land, natural resources, real estate, machinery and equipment, intangible assets and business.
Why do you need a real estate appraisal
This type of service is required in the following cases:
purchase and sale, exchange of real estate;
investments in authorized capital;
secured lending (mortgage);
assessment of the rental rate when renting real estate;
determination of the cost of inseparable improvements when buying out or terminating a lease;
minimization of taxation of the enterprise;
putting on the balance of donated or found in the process property inventory;
registration of property rights;
real estate appraisal for insurance purposes.
For valuation purposes, real estate objects can be:
buildings intended for public, industrial and social use;
industrial complexes;
apartments, houses, separate rooms, cottages, etc.;
warehouse, office and industrial premises;
plots of land;
various structures - bridges, roads, fences, access roads, etc.;
objects of construction in progress, including suspended, mothballed or discontinued.
The client can order an appraisal of a real estate object, which, in fact, combines several objects. The customer of the work will receive an objective, reliable result, which can become a weighty argument in the course of making managerial decisions.
Objectives of the assessment
When conducting appraisal work, the primary issue is the purpose of the appraisal. The customer must clearly formulate the purpose of the assessment, and explain to the appraiser how he plans to use the results of the assessment.
It must be understood that the objectives of the assessment can be very diverse, while they also determine the type of value to be established: market, liquidation, specialized, and so on. This, in turn, influences the Appraiser's choice of specific valuation approaches and methods. Below are the main objectives of the assessment of various objects, the most common in the practice of assessment.
Valuation for lending
Valuation for insurance
Valuation for purchase/sale
Valuation for determining rental rates
Valuation for contribution to the authorized capital
Valuation for determination of rental rates
The need to calculate the cost of rent often arises in cases where the owner or his authorized person cannot independently determine the amount of the rental rate. An example of such a case would be the leasing of non-standard residential real estate. Moreover, it is difficult to do without estimating the cost of rent when renting property that requires overhaul. Equally relevant is the assessment rent carried out in relation to real estate (warehouses, offices, land) located in state property allowing to determine fair compensation for the use of property.
High demand in the non-residential real estate market today is used for estimating the cost of renting an office, which allows you to determine the most probable cost of renting a room, which, in turn, depends on specifications premises, the average market rental price, as well as the situation on the Moscow real estate market.
The assessment of the cost of renting a land plot is carried out at the conclusion or prolongation of a land lease agreement under commercial use helping to determine the reasonable amount of payments and avoid possible conflicts of interest between the tenant and the landlord.
Valuation for lending
Business development without borrowing is almost impossible. The most common attraction mechanism is lending. Today, in the practice of domestic banks, the most common type of security for the return of a loan issued by a borrower is a pledge. The issue of compliance of the requested funds with the value of the pledge is determined by an independent assessment of the market value of the property provided as pledge.
One type of lending is a mortgage. Specificity e? that the acquired property becomes the object of collateral. Mortgage for individuals, when purchasing residential premises, is already a familiar and fairly affordable tool. Legal entities and individual entrepreneurs just starting e? master.
Report of an independent appraiser (whether it is a real estate appraisal under mortgage lending, valuation of shares or property of an organization) is the basis on which the bank relies when deciding whether to issue a loan.
Valuation for insurance
Usually property valuation for insurance precedes the signing stage insurance contract or is carried out when fixing insured event. According to existing legislation, the sum insured should not exceed the market price of the insured property, set on the date of registration of the insurance contract.
As a rule, insurance appraisal is of great relevance in cases where it is necessary to establish a market price for expensive property. These properties include real estate, vehicles, equipment, etc. last years more and more often, an assessment is also made for insurance of exclusive and rare items, intellectual property. Such an assessment during insurance should be extremely accurate and competent, since every little thing in assessing an object of this type can significantly change the value of the property.
An independent insurance assessment is the most effective method of resolving any disputes within a civilized framework that may arise in the event of an event stipulated by the insurance contract.
Valuation for purchase/sale
When conducting a transaction for the sale of property in the absence of information about similar transactions, there are always problems between the selling and buying parties related to the establishment of the final amount of the transaction. That is why when concluding serious transactions e? parties apply to an independent appraisal company and order the valuation service for purchase/sale.
When conducting an appraisal for the purchase and sale of property, the expert takes into account all the parameters and characteristics of the property being appraised, takes into account market trends at the time of the transaction, uses various approaches and methods to determine the market value of the property.
Valuation for contribution to the authorized capital
The authorized capital is one of the key indicators of the company, speaking about e? financial condition and the size of the organization. At the same time, an assessment for a contribution to the authorized capital is necessary both when creating a company, and in a number of other cases.
According to the legislation, the authorized capital can be contributed as cash, and non-monetary, as well as any rights (for example, property) that can be expressed in monetary terms. It is to determine this monetary equivalent that an assessment is made for a contribution to the authorized capital. The following non-monetary contributions are subject to assessment for contribution to the authorized capital:
contribution to the authorized capital of equipment, machinery, buildings and other objects classified as fixed assets;
contribution to the authorized capital of securities;
contribution to the authorized capital of rights to the results of intellectual activity (know-how, inventions, patents, licenses, programs for electronic computers);
contribution to the authorized capital of property rights.
Also, an assessment of the authorized capital may be needed in situations where the licensing authority requires its increase in order to obtain a license to perform any activity.
Assessment for customs clearance
One of the tasks of an entrepreneur engaged in foreign economic activity is to establish an adequate customs value for goods imported into Russia from abroad.
An independent assessment to confirm the customs value of the goods can significantly reduce taxes and customs duties. In addition, confirmation of the declared customs value for customs makes it possible to set prices for exported and imported products. As practice has shown, an assessment to confirm the customs value of goods (confirmation of the cost of materials imported from abroad) minimizes all possible disputes and disagreements with the customs authorities regarding their price.
Score for accounting
In accounting practice, there is a regular need to assess property for the purposes of revaluation, write-off or balance sheet.
A competent assessment for accounting allows you to get general indicators of all the funds available at the enterprise, as well as those sources from which these funds come. Immediately, we note that the assessment for accounting, for example, the assessment for the write-off of property, or the assessment when putting on the balance sheet is carried out in accordance with the current legislation using specially developed methods.
Usually, the fixed assets of an enterprise make up the bulk of the assets, so their value and composition are of considerable interest to shareholders, founders, investors and company executives. That is why the assessment and revaluation of fixed assets of the organization is always in demand. The results of the inventory and revaluation of fixed assets of the enterprise allow you to clearly imagine the real financial situation of the company, which, in turn, makes it possible to increase efficiency economic activity enterprises.
In addition, the revaluation of fixed assets is an ideal basis for calculating depreciation and property tax.
The procedure and rules for valuation for writing off property (putting it on the balance sheet) are subject to the regulation on maintaining financial statements and accounting of Russia and various RAS (regulations on accounting). At the same time, the valuation upon putting on the balance sheet (withdrawal from it) is carried out at the actual price of the objects.
Evaluation for management decision making
In any business, in order to make management decisions, reliable and up-to-date information about the situation on the market and the value of the company's assets is necessary.
It is in this matter that the services of independent appraisers can be useful.
Before starting certain business activities, the management of the organization must clearly understand their goals. A competent assessment for management decisions allows the company's management to determine the tactical goal for any specific action, and the strategic one for the long term. At the same time, for example, an assessment for business restructuring should have measurable and specific goals. In other words, for each goal there should be a certain criterion by which it is possible to assess the level of achievement of this goal. If there is no such criterion, then it is impossible to exercise control, which is a key management function. Evaluation for management decisions, and types of e? there may be several - an assessment for transfer to the company's trust management or an assessment during business restructuring, and makes it possible to clearly define the goals of entrepreneurial actions aimed at improving the organization's performance.
Evaluation for Litigation
Evaluation for the court is necessary during the consideration of lawsuits on property. In a court session, questions always arise about the specific cost of claims, and only independent evaluation for the court can become the factor that will put an end to the litigation.
Any court requires the exact cost of the claim, therefore, a specific price of a house, apartment, land plot or other property considered in court is required.
This price must be reasonable. This justification is the report of an independent appraiser on the market value of the property.
An assessment for the court is usually required in such situations:
assessment in case of disputes with tax authorities on the correctness of the calculation and payment of taxes;
assessment when determining the amount of damage (or lost profits);
appraisal during the division of property;
appraisal during the seizure of property for municipal and state needs;
Cost types
In valuation practice, there are various types of value. Clause 5 of FSO No. 2 The value of real estate is divided into the following types:
When determining the market value of the valuation object, the most probable price at which the valuation object can be alienated as of the valuation date as of open market in a competitive environment, when the parties to the transaction act reasonably, having all the necessary information, and any extraordinary circumstances are not reflected in the value of the transaction price, that is, when:
The investment value is the value of the object of assessment for a specific person or group of persons at the established by this person (persons) investment purposes use of the object of assessment.
When determining the investment value, in contrast to determining the market value, it is not necessary to take into account the possibility of alienation at the investment value on the open market. Investment value can be used to measure the performance of an investment.
When determining the investment value of the appraisal object, the value for a specific person or group of persons is determined for the investment purposes of using the appraisal object established by this person (persons) -- investment property to generate income in the form of rent and capital gains. When determining the investment value, in contrast to determining the market value, it is not necessary to take into account the possibility of alienation at the investment value on the open market.
When determining the liquidation value of the appraisal object, the estimated value is determined, which reflects the most probable price at which this appraisal object can be alienated for the exposure period of the appraised object, which is less than the typical exposure period for market conditions, in conditions when the seller is forced to make a transaction for the alienation of property. When determining the liquidation value, in contrast to determining the market value, the impact of extraordinary circumstances is taken into account, forcing the seller to sell the appraisal object on conditions that do not correspond to market ones.
When determining the cadastral value of the valuation object, the market value is determined by mass valuation methods, established and approved in accordance with the legislation governing the cadastral valuation. Cadastral value determined by the appraiser, in particular for tax purposes.
There are several approaches to the valuation of any type of real estate used by professional appraisers:
Each of the 3 approaches has its own specific methods. The main approaches to real estate valuation
income approach
The income approach to real estate valuation is based on determining the value of a real estate object based on the calculation of expected income from owning (using) this object. This indicator is very important because it allows you to predict the cost of the object in the future.
The income approach is one of the most used methods of real estate valuation in valuation practice today.
According to the modern economist Vishnevetsky A.V., this approach is also called "marginal" (from the English term "margin", often used in Russia as an analogue of the concept of "profit"). The applicability of the marginal approach is clearly expressed in the period economic growth in the state. The income approach is an integral part of the Due Diligence procedure.
The income method is mainly based on determining the value of real estate by calculating the discounted income stream (from ownership or use of this object). This method is based on the principle of expectation - establishing the present value of income and other benefits that may be received in the future from the ownership of this property. It is logical that the owner of real estate will not give up his property below the amount that he could receive by continuing to exploit it, and the buyer will not pay more than the amount that the subsequent use of this object for commercial purposes will bring to him. Thus, the price of real estate is determined on the basis of the value of future income by agreement between the parties.
When calculating the income approach, the following methods are used: income capitalization and discounting cash flows. These techniques are the main ones in this method.
The essence of the method -- income approach evaluates the value of real estate as the current value of future cash flows. At the same time, this approach reflects the level of risk for the property being valued, as well as the quality and quantity of income that the property under appraisal can bring during its service life. The main advantage income approach is that it allows to take into account future investment risks now.
The disadvantage of the method is that future income - the predicted amount of income from rent and the amount of future resale of the object, are determined by the appraiser by analyzing a number of factors, and therefore may carry a certain error, since it is impossible to determine the state of the real estate market in the long term with absolute accuracy.
Cost approach
Cost approach (asset-based approach) is a set of valuation methods in which the value of an object is equal to the sum of the value of the land plot and the cost of reproduction (replacement) of all improvements, minus accumulated depreciation, and the value of liabilities, that is, the value of the object of valuation depends on the cost of creation similar object. This approach is used to evaluate detached buildings, households, and enterprises.
Comparative approach
Comparative approach - a set of methods for estimating the value of the object of assessment, based on a comparison of the object of assessment with objects - analogues of the object of assessment, in respect of which information on prices is available. An object - an analogue of the object of assessment for the purposes of assessment is recognized as an object similar to the object of assessment in terms of the main economic, material, technical and other characteristics that determine its value. (cm. federal standard grades #1)
Everything in the world has a price, and some things even cost.
Standards of Ancient African Appraisers, vol. 1, p. 362, art. 412
Theme 6
REAL ESTATE VALUATION - NEED AND MAIN APPROACHES
Real estate valuation as a judgment on the value of real estate is organically linked to market analysis and is its logical continuation. Essentially, valuation is market knowledge focused on a particular property. Its purpose is to determine the value of real estate in a changing market, and as such, valuation is a necessary condition for making economically sound decisions in real estate transactions.
♦ Whatever real estate transaction we take, whether it is the alienation of real estate (sale, exchange), the contribution of real estate to the authorized capital of a partnership or company, the transfer of real estate as a pledge or renting it out, in any case we face the problem: what price it is necessary to appoint, so as not to sell too cheap, and not to overcharge, how to evaluate our contribution to a particular commercial enterprise, what amount of credit we can count on when pledging real estate. All these are varieties of the same problem - how much does real estate cost? The more accurately the value of real estate is determined, the more rationally the funds of the purchaser of real estate are used, the more reasonable is the price set by the seller of real estate. At the same time, the characteristics of the real estate market are such that it is much more difficult to get a reliable idea of the value of an object than in other markets.
As noted above, real estate objects are distinguished by such physical characteristics as stationarity, uniqueness, and durability. The real estate market is characterized by such features as the secrecy of information, a limited number of transactions, the locality of the market, its dependence on regional economy. What do you think is the connection between these circumstances and the need for real estate appraisal? The limited number of transactions, the lack of direct analogues, the secrecy of information cause the need for real estate valuation as a special procedure, which is a condition for making economically rational decisions when making real estate transactions.
♦ Of course, this does not mean at all that real estate valuation is always carried out with the conscious use of the rules and principles that are summarized below, and in detail - in many textbooks on real estate valuation, written by both domestic and foreign authors. But Monsieur Jourdain, too, spoke in prose without suspecting it.
If you try to give a short answer to the question posed above, then it may sound as follows: real estate appraisal is the process of establishing a reasonable monetary equivalent of the value of a property. Real estate appraisal always acts as:
♦ targeted process (a process associated with a specific real estate object and its environment): an object with a certain composition and quality of rights, located in a certain environment, is subject to assessment;
♦ a process tied to a certain type of operation, which is expected in relation to the property being valued (sale, lease, pledge, taxation, etc.);
♦ a process tied to certain participants: the customer and the appraiser;
♦ a process tied to a specific point in time; evaluation results are only valid for a limited period.
It follows from the above that the value of a property (the term "value", strictly speaking, is more accurate than the concept of "value") is directly dependent on:
♦ characteristics of real estate as a physical body (location, technical characteristics);
♦ composition and quality of transferred rights;
♦ motivation of participants in the transaction;
♦ conditions for making and financing the deal.
The variety of factors influencing the value of real estate determines the variety of varieties of value, the value of which may be subject to determination in the evaluation process. At the same time, all this diversity can be reduced to three groups of factors that, one way or another, but are constantly taken into account in the assessment of real estate and are reflected in the definitions of value, and in the principles and methods of assessment.
We can say that these three groups refer to the past, present and future of the object of evaluation.
Real estate appraisal should take into account the costs incurred in creating an object, the current assessment of the object by the market and, finally, the benefits and benefits that the object can bring in the future. At the same time, both past costs and future benefits are reduced to their modern equivalent.
This general principle, in fact, is the philosophy of evaluation.
Based on it, the varieties of determining its value used in real estate valuation can be grouped as follows.
Cost types based on past cost accounting
replacement cost(full restoration costs) - the costs in current prices that must be incurred when recreating an exact duplicate of this property (using the same materials, quality of work, design, etc.).
replacement cost(replacement costs) - expenses in current prices for the creation of an object that has an equivalent utility with this object (object of assessment), but using modern materials, technology, etc.
As you can see, these types of value are primarily determined by the very physical characteristics of real estate, and therefore they are the basis on which any valuation process is carried out.
Insurance value- the amount of the value of real estate, which is determined on the basis of the cost of restoration or replacement to determine the amount of insurance compensation in the event of the destruction of the property.
Types of value determined by the benefits from the use of the property
Cost in use- the value of a particular property with its current use for a particular owner.
Two things are important when determining value in use:
♦ attachment of value to a specific use of real estate;
♦ attachment of value to a specific owner (user).
The “cost in use” of your apartment, office, etc. for another owner (user) will be completely different than, for example, for you, since he is in a different situation. Think about what factors determine the individual value of an apartment for the family that lives in it, what factors determine the individual value of an office for a company.
Investment cost(value in use for the investor) - the value of the monetary equivalent of the value of real estate for an investor who uses this property to generate income in one form or another: resale, leasing, etc.
Types of value based on the current market valuation of the property
Market price- the most probable (the price that real estate should reach in a competitive and open market, subject to all the conditions of a fair transaction between the seller and the buyer, provided that each of them acts responsibly and consciously and the price of the transaction is not influenced by factors not related to it.
All of the above types of value are tied to the specific situation in which the property is located, and to a greater or lesser extent bear the imprint of this situation.
It should be borne in mind that when two independent persons meet on the market - for example, a buyer and a seller, the problem of determining some general basis for the transaction inevitably arises, which makes it possible to move away from individual ideas and preferences.
This basis is the market value. In order for the market price to accurately reflect market value, a number of conditions must be met. Among them we highlight the following:
♦ The market is open and competitive, ie allowing free interaction of a sufficient number of independent buyers and sellers. For example, when determining the market value of an object, it is impossible to focus on prices that are deliberately formed on the so-called “primary” market when state property is sold in the process of its privatization.
♦ The motivations of the participants in the transaction are typical for this market, that is, the buyer and seller act economically rationally. For example, you buy an apartment either for your own residence or for renting out, but not at all because you had a first date there.
♦ The parties to the transaction are sufficiently informed about the situation on the market, they know the actual content of the transaction, the nature of the transferred rights, possible consequences etc., i.e. duly consulted. When purchasing an apartment, you should remember that at the same time you assume the risks associated with the restoration of its equipment, repairs after a fire, and therefore should ideally take into account the costs of its insurance.
♦ The property has been on the market for a sufficient amount of time so that potential buyers have the opportunity to get acquainted with it, with similar objects and make an informed decision. For example, if you contacted a real estate agency and you are offered to inspect an apartment and conclude a deal immediately, since the seller is urgently leaving forever, then the proposed conditions do not correspond to the concept of market value.
♦ Payment is made in a form typical for this market and on the terms specified at the conclusion of the transaction. The determination of market value for a residential or commercial real estate market must be in the same currency in which payments are made, or by indicating the relationship between the expression of value in one currency and payment in another.
♦ The price is not affected by factors not related to the transaction. For example, if the sale is to a subsidiary or under roof pressure, then it is clear that the sale is at a price that is unlikely to match market value.
In the presence of all of the above factors, the market price of real estate accurately reflects its market value, but in reality it is almost impossible to achieve such a correspondence - in the market we always deal with market prices, but not with market value.
That is why there is a need for real estate valuation as a special procedure, during which a judgment on a certain value of the market value of an object is made on the basis of an analysis of market information by an appraiser.
conclusions
♦ It makes sense to talk about market value only where there is a market: if there is no real estate market, there is no market value either.
♦ Market value is an abstraction, but an abstraction that makes it possible to determine the basis of the price.
♦ Determining the market value is always subjective: two different appraisers can make different judgments about the value of the market value.
REAL ESTATE VALUATION - NEED AND MAIN APPROACHES
Theme 6
Standards of Ancient African Appraisers, vol. 1, p. 362, art. 412
Everything in the world has a price, and some things even cost.
Real estate appraisal as a judgment on the value of real estate is organically linked to market analysis and is its logical continuation. Essentially, valuation is market knowledge focused on a particular property. Its purpose is to determine the value of real estate in a changing market, and as such, valuation is an essential condition for making economically sound decisions in real estate transactions.
♦ Whatever real estate transaction we take, whether it is the alienation of real estate (sale, exchange), the contribution of real estate to the authorized capital of a partnership or company, the transfer of real estate as a pledge or renting it out, in any case we face the problem: what price it is necessary to appoint, so as not to sell too cheap, and not to overcharge, how to evaluate our contribution to a particular commercial enterprise, what amount of credit we can count on when pledging real estate. All these are varieties of the same problem - how much does real estate cost? The more precisely the value of real estate is determined, the more rationally the funds of the purchaser of real estate are used, the more reasonable is the price set by the seller of real estate. However, the characteristics of the real estate market are such that fair presentation about the value of the object is much more difficult than in other markets.
As noted above, real estate objects are distinguished by such physical characteristics as stationarity, uniqueness, and durability. The real estate market is characterized by such features as the secrecy of information, a limited number of transactions, the locality of the market, and its dependence on the regional economy. What do you think is the connection between these circumstances and the extreme importance in real estate valuation? The limited number of transactions, the lack of direct analogues, the secrecy of information cause the need for real estate valuation as a special procedure, which is a condition for making economically rational decisions when making real estate transactions.
♦ Of course, this does not mean at all that real estate valuation is always carried out with the conscious use of those rules and principles that are summarized below, and in detail - in many textbooks on real estate valuation written by both domestic and foreign authors. But Monsieur Jourdain, too, spoke in prose without suspecting it.
If you try to give a short answer to the question posed above, then it may sound as follows: real estate appraisal is the process of establishing a reasonable monetary equivalent of the value of a property. Real estate appraisal always acts as:
♦ targeted process (a process associated with a specific real estate object and its environment): an object with a certain composition and quality of rights, located in a certain environment, is subject to assessment;
♦ a process tied to a certain type of operation, which is expected in relation to the property being valued (sale, lease, pledge, taxation, etc.);
♦ a process tied to certain participants: the customer and the appraiser;
♦ a process tied to a specific point in time; evaluation results are only valid for a limited period.
It follows from the foregoing that the value of a property (the term ʼʼvalueʼʼ, strictly speaking, is more accurate than the concept of ʼʼcostʼʼ) is directly dependent on:
♦ characteristics of real estate as a physical body (location, technical characteristics);
♦ composition and quality of transferred rights;
♦ motivation of participants in the transaction;
♦ conditions for making and financing the deal.
The variety of factors influencing the value of real estate determines the variety of varieties of value, the value of which may be subject to determination in the evaluation process. At the same time, all this diversity can be reduced to three groups of factors that, one way or another, but are constantly taken into account when assessing real estate and are reflected in the definitions of value, and in the principles and methods of assessment.
We can say that these three groups refer to the past, present and future of the object of evaluation.
Real estate appraisal should take into account the costs incurred in creating the object, the current market valuation of the object and, finally, the benefits and benefits that the object can bring in the future. At the same time, both past costs and future benefits are reduced to their modern equivalent.
This general principle, in fact, is the philosophy of evaluation.
Based on it, the varieties of determining its value used in real estate valuation can be grouped as follows.
