Improving real estate valuation methods. Improving methods for analyzing the most effective use of real estate for the purposes of valuation Thesis: residential real estate valuation
The real estate market, unlike the stock market, is more than far from perfect in many respects, which determines the features of its study. On the one hand, analysts are faced with difficulties, and sometimes the impossibility of correct and unambiguous formalization of economic relationships in the real estate market. On the other hand, it is obvious that there is no prospect of transferring analysis technologies used in other markets to the real estate market in their pure form, since these technologies are adapted for use in a different market environment. In view of the foregoing, high-quality analytical work in the real estate market seems to be a highly complex subject that requires the analyst, in addition to deep theoretical knowledge of real estate economics, constant practice and creative search in research that forms professional intuition.
Studying almost a century of history of the functioning of real estate markets in the developed countries of the world, one can come to the conclusion that insufficient attention paid to the quality of analytical work is one of the main causes of most major crises in the real estate markets. A typical example is the crisis in the US real estate market in the late 80s and early 90s. According to experts, excessive and indiscriminate investment in new construction has led to a glut of the market and, accordingly, lack of market demand for a large number of projects for which loans were issued. This situation was based on unrealistic market expectations stemming from the wrong structure of incentives in the analysis, weak analysis methodology and incomplete data characterizing the current conditions. The structure of incentives that guided developers, appraisers and credit organizations was deformed by the interest of some to receive loans, others to justify obtaining a loan, and still others to allocate their funds. At the same time, all parties solved their problems at the expense of unjustifiably optimistic expectations.
The use of weak analysis methodology, expressed in inadequate assumptions and procedures, in interaction with insufficiently high-quality data from local markets, as a rule, resulted in unsound market research and, accordingly, investment decisions based on them. As a result of the crisis, credit organizations a stable syndrome of distrust in general to any projects and market research in particular has formed. And this, in turn, led to the understanding that real estate market analysts in their work should be guided by some general principles that are necessary (but not sufficient) to obtain accurate conclusions and results. On the other hand, there is an urgent need for understandable and easily identifiable criteria that determine the compliance of market research with the category of validity.
Considering the prospects for the development of the real estate market in Russia, we can assume that the absence of potential crises is an overly optimistic scenario. However, the consequences of such crises may be less significant if already today, at the stage of active market development, some general principles and principles are formulated and implemented in everyday practice.
requirements for analytical studies, on the basis of which investment decisions will be made.
Not only the threat of crises, but also current everyday problems - increasing competition, reduced opportunities for short-term super-profits, the start of long-term and capital-intensive commercial real estate development projects, the entry of foreign investors into the market with high requirements for justifying decisions, etc. - objectively testify to the fact that the importance of qualitative analysis in the real estate markets of Russia will become increasingly important in the near future.
2.2 Research of the real estate market for the purpose of substantiating investment decisions.
The ultimate goal of any study of the type under consideration is to measure the ratio of supply and demand for a specific type of product in the real estate market at a specific (usually future) point in time.
The special characteristics of real estate as a commodity, along with the special place of real estate in a market economy, form a fairly wide range of socio-economic information necessary for positioning this product on the market. Current and retrospective macroeconomic characteristics of the national and regional economy, socio-demographic indicators of the regional and local markets, parameters of the regional and local real estate markets - these are just the general areas in which it is necessary to conduct research.
Principle 1. For analysis, only that information should be selected that can really determine the future productivity of the investment object.
When following this principle, the main difficulty for the analyst is the lack of standard rules or unambiguous recommendations on which to form the initial information. It is here that the analyst must show all his knowledge, professional intuition, creativity and practical experience. Moreover, it is here that the basis for the consistency of the study as a whole is laid.
principle 2. All current and prospective data on which the study is based should be used in quantifying the performance of the real estate investment project under consideration.
However, even carefully selected information that is directly related to the subject of assessment is, figuratively speaking, a "bunch of bricks" from which the analyst must lay down a solid foundation for analytical research in accordance with all the rules of building art. And here you can not do without a strong solution that connects the individual elements into a single monolith.
Principle 3. All individual blocks of information selected to justify an investment decision should be interconnected by a clear logical scheme, ending with a forecast of future market conditions and the corresponding productivity of the project under consideration. The description of the logic circuit must be presented explicitly.
A positive perception by the customer of a report with the results of a market research, in which there is no logical scheme, can only be if:
a) the analyst takes advantage of the client's ignorance, or
b) the customer is initially favorable to the results.
On the other hand, the construction of a convincing and obvious logical scheme is a demonstration of the highest professional skill of the analyst.
Continuing the reasoning about the need to build a logical scheme of research, let's consider another principle that specifies the content of market analysis.
Principle 4. The content of market analysis should be reduced to a discussion of the factors that make up the main ratios for determining the performance of a commercial real estate object.
In accordance with this principle, the analyst in the course of the study must formulate the main relationships that determine the performance of the commercial facility, and then identify the hierarchy of parameters-arguments, the functions of which are the factors included in the main expression for performance.
Let us illustrate a practical approach to the implementation of this principle using the following simplified example.
Let the criterion for the performance of the project under consideration be the net operating income (NOI) in a specific period of the future. Then, by definition, the main expression for determining performance will have the following form:
NOI=PGI-V&L+M-FE-VE, where
PGI- potential gross income,
V&L- losses from underloading and non-payments.
M I- Other income.
F.E.- Fixed operating expenses
VE- variable operating expenses.
Consider the procedure for identifying the parameters that determine the expected values of the main factors.
Potential Gross Revenue is determined by the value of the rental rate, which in turn is a function of the current rental rate, as well as trends in the ratio of market supply and demand over time.
property is a function of the cumulative market capacity, demand parameters, market absorption coefficient and the growth of the real estate absorption area. For projects, the projected load determines two indicators - the level of load and the time schedule for absorption by the market to this level.Growth of real estate takeover area determined either by growth in the number of jobs (employment rate) or population growth. In turn, the expansion of the absorption area leads to the need for new real estate.
It should be noted that employment growth and population growth in one case can be directly related, for example, when new jobs are opened and the influx of new able-bodied people. In another case, population growth can grow without an increase in employment, for example, due to an increase in incoming pensioners or an increase in the birth rate. Qualitative analysis involves the use of several sources of information that provide historical trends and range growth projections, followed by data comparison. Segmentation of range growth is also mandatory, eg by age group, sex, family size, etc. The absence of these positions in the study should be attributed to the inconsistent choice of data for use in the analysis.
Demand parameters are determined by such specific indicators as the area (office or production) per workplace, spending on purchases per capita, the number of apartments or houses per capita, etc. With the help of demand parameters, the amount of required real estate is calculated, which corresponds to the growth in the area of real estate consumption. For example, by applying average spending per purchase to population growth, retail sales are predicted to increase, and thus the need for additional retail space. When analyzing the housing market, population growth segmented by age, income, size or family composition is converted into segmented demand. A sound analysis of demand parameters involves the study of historical trends, the current state and forecasting their likely value in the future. Moreover, a consistent analysis measures the change in demand not only due to new range gains, but also due to changes in the existing population and employment structure. For example, during economic upswings, growing companies require large areas, and changes demographic situation in the direction of increasing people of retirement age will require an appropriate type of housing.
residential property appraisal value
In general, the first chapter is devoted to a greater extent to the theoretical foundations, the basic categories associated with real estate valuation.
The second chapter of the work presents the results of real estate appraisal from the standpoint of three approaches to determining the market value: appraisal in terms of costs (cost approach), appraisal by direct comparison of sales (comparative approach), appraisal in terms of expected or actual income (income approach) .
When comparing the results of the assessment, it was found that all approaches give different results. Let us consider the main directions for improving the presented approaches to real estate valuation.
In modern appraisal practice, the technology of carrying out replacement cost calculations using UPVS collections is often used. The use of these collections began in 1997, when market information on real estate was practically absent, and the use of these collections was the only way to determine the "market value", mainly for the revaluation of fixed assets. In the last decade, there have been great changes in the information support of the real estate market and budgeting. The Gosstroy of the Russian Federation has switched to a new estimate and regulatory framework. Decree of the Gosstroy of Russia No. 16 of April 08, 2002 “On measures to complete the transition to a new estimated and regulatory base for pricing in construction” canceled from 01/01/2003 the regulatory documents of the Gosstroy of the USSR, drawn up at the price level provided for by the estimated and regulatory bases of 1991. and 1984. Instead of them, state elemental estimated norms (GESN) and federal unit prices (FER) are introduced. Gosstroy of Russia approved and put into effect:
· GESNr-2001 "State elemental estimated norms for repair and construction work";
· GESN-2001 "State elemental estimated norms for general construction works";
GESNm-2001 "State elemental estimated norms for equipment installation"
HPES are designed to determine the composition and the need for resources necessary to fulfill construction works at facilities, drawing up cost estimates (estimates) using the resource method, as well as for payments for work performed and write-offs of materials.
Gosstroy of Russia develops Federal unit prices (FER, FERr and FERm) only for the Moscow region. Further, the prices for the Moscow Region are transferred by Gosstroy to the Regional Centers for pricing in construction to link prices to regional conditions. After binding, the collections of prices are sent back to Gosstroy for their further approval. Currently, the process of developing a new regulatory framework has not yet been completed. Conducting real estate valuation based on the new regulatory framework is a very complex and time-consuming task that requires special knowledge and skills. In order for the new regulatory framework to enter into the practice of valuation, it is necessary to carry out a set of works on the development of software and computing systems adapted to solving applied problems of real estate valuation.
Recently, regional centers for pricing in construction have begun to work actively, firms specializing in the provision of information services have appeared, for example, NPF Center information technologies in construction."
And only real estate appraisers still use long-outdated collections of the 70s of the last century and at the same time justify the “market value” of objects on their basis. Experienced appraisers have long understood the shortcomings of the use of UPVS collections, primarily related to the list of costs included in unit prices, average indexation, inconsistency in technologies, the ratio of the scope of work, etc.
So, in the collections of UPVS, the following cost items are taken into account:
· direct costs;
overhead costs;
Planned savings (profit);
general site costs for the allocation and development of the construction site;
cost of design and survey work;
costs associated with the production of work in the winter;
The cost of premium wages
the cost of maintaining the directorate of a standing enterprise;
· losses from the liquidation of temporary buildings and structures;
· the cost of transporting workers over a distance of more than 3 km. in the absence of public transport;
· the cost of paying employees bonuses for the mobile nature of work.
Experienced appraisers in their calculations use their own developments based on adjustments to analogues or consolidated estimates.
In the work of P.G. Grabovoi, S.P. Korostelev “Property appraisal, Part I. Real estate appraisal”, a specific example shows that the results of calculating the replacement cost of residential real estate using the methodology of the UPVS significantly, several times, differ from market indicators.
However, in the majority of reports reviewed by the Expert Council of the Russian Society of Appraisers, the assessment of the market value of real estate is still based on outdated UPVS. Moreover, in order to somehow bring the results of these calculations closer to market indicators, a certain multiplying factor is introduced into them, which is called “entrepreneur's profit”. It is accepted absolutely arbitrarily, since it is not possible to remove this indicator from the market in modern conditions. It should be emphasized here that, in accordance with IVS-2003, “the application of market value requires the conclusion of a valuation solely on the basis of market data”. When applying the RSA, the appraiser determines unequivocally a non-market value, which should be reflected in the report.
In Russia, there is still no reliable information base on the aggregated basic indicators of the cost of construction, which are available from Western appraisers (following the example of WESSEXS, LAXTONS, R.S.MEANS).
Currently, the main recognized information base for real estate valuation are the developments of Co-Invest LLC. This firm quarterly publishes the bulletin "Price Indices in Construction", as well as the series "Appraiser's Handbook": "Industrial buildings", "Residential buildings", "Collections of purchasing power parities of currencies in national construction markets", "Handbook of the replacement cost of buildings and structures in current price level, etc.
When using these publications, it must be remembered that most of their calculations are based on the normative base of the planned economy, indexed by certain price coefficients and, therefore, the final results of the assessment may have a significant error for the reasons stated above. When applying certain indices, it is necessary to carefully study the prerequisites for their calculation.
Recently published and announced as the first in the country, expected by appraisers, the Regional Guide to Construction Costs (RCC-2006). It provides cost indicators by type of construction work, aggregated cost indicators (UCS) and "information for assessing the required amount of investment in the express option." In fact, the latter definition refers to the estimated cost of objects-analogues of modern buildings and structures. Part III of the RCC contains "analogue objects with technical and economic indicators of structural elements, analogous objects with technical and economic indicators for the object as a whole and a summary table of technical and economic indicators recommended for determining the cost of residential buildings and social and cultural facilities." Cost indicators are defined in prices as of 01.01.2006 for the "Moscow Region". The directory includes cost indicators for 18 types of modern residential buildings and 27 non-residential real estate. In RCC-2007 this list of objects has been significantly expanded.
The publication of RCC creates the conditions for its application in real estate and business valuation procedures. If in real estate appraisal it is possible to use part II of the handbook "Aggregated value indicators", then in the cost approach to business appraisal it is possible to use part III "Objects-analogues of buildings and structures".
Thus, RCC collections should become the basic basis for real estate valuation. However, there are significant shortcomings of these collections. The main one is that they do not provide the initial data and the main assumptions of the obtained values of the cost of analogues. So, it is not entirely clear what specific composition of the equipment is taken into account in the final indicators, what was included in the builder's other costs, etc. The joint work of estimators, analysts and appraisers in the direction of improving the RCC can lead to the creation of an information base that is so necessary for real estate appraisers.
The main direction in the development of appraisal activity is currently becoming the appraisal of the market value of real estate. This becomes possible due to the fact that our country is accumulating a database of the actual market value of real estate.
In order to simplify the process of appraisal of residential real estate in appraisal agencies, a regression model of the cost of an apartment can be used, which allows you to calculate the cost of a residential property depending on a number of its parameters.
An example of building such a model is given in the magazine "Real Estate" for December 2005. The model was built according to the price lists of several real estate companies that are engaged in the implementation of housing of various consumer characteristics in various districts of the city of Novosibirsk. For the analysis, information was collected on 450 apartments (150 options for each type of apartment - one-, two-, three-room) according to the following parameters:
apartment price,
the area in which the residence is located,
property type:
public housing,
Housing acquired under a privatization agreement,
Property purchased under a sale and purchase agreement
* material of the building in which the apartment is located:
Panel, brick, monolith,
* house type:
Elite,
improved layout,
typical,
full size,
- "Khrushchev",
storey of the house,
the floor on which the apartment is located,
total area of the apartment,
apartment living area,
kitchen area,
the presence of a balcony or loggia,
having a phone.
Let us consider in detail the procedure for building a model using the example of one-room apartments.
At the first stage of building the model, the matrix of correlation coefficients was analyzed in order to identify parameters that strongly depend on each other. The main task was to select such factors, the correlation coefficient for which would not exceed the value of 0.8. Based on the results of the analysis, a matrix of correlation coefficients was built, which takes into account 6 factors, that is, exactly half of those initially collected, since the remaining factors did not satisfy the condition imposed on the correlation coefficient.
Based on the collected data on the selected factors, the following regression model was built:
C \u003d -10.12 + 9.24 Stotal + 35.62 * x1 - 21.17 * x2 + 15.07 * x3 +
65 * x4 + 64.48 * x5 (3.1)
or in general:
C \u003d -a0 + asStot + a1x1 + arr + a3x3 + a4x4 + a5x5 (3.2)
The following notation is used in the presented equation:
C - the price of an apartment with fixed parameters defined below,
Stot - the total area of the apartment,
x1 is a dummy variable characterizing the area in which the apartment is located,
x2 is a dummy variable characterizing the material of the house where the apartment is located;
x3 is a variable that characterizes the number of storeys of the building in which the appraised apartment is located;
x4 is a dummy variable characterizing the floor on which the apartment is located;
x5 is a dummy variable characterizing the presence of a telephone in the apartment.
Statistical indicators for this model confirmed the significance of the results obtained.
Thus, the resulting model very well reflects the dependence of the average cost of apartments on its parameters in the housing market of the city of Novosibirsk (without taking into account extreme options).
The presented models were put into practice in the real estate agencies of the city of Novosibirsk "Zhilfond" and "Amir - Real Estate", which have full-time employees for assessing the cost of apartments for sale, and also acting as collateral in loan agreements. It should be noted that experts highly appreciated the effectiveness of their application.
The second important problem appraisers face is predicting the value of an apartment in the future. This problem becomes especially relevant when assessing the cost of an apartment for mortgage purposes, since the sale of an apartment will take place in the future, and it is important to determine the rate of growth in the cost of an apartment for the period of a loan agreement.
The initial data for building a model of price dynamics in the secondary housing market were taken from the Real Estate magazines by quarters of the corresponding years. For each year, information was collected on 240 apartments - 80 for each type of apartment (one-, two-, three-room apartments). . The main purpose of building the model is to determine the model for changing the prices of real estate in the secondary market.
The structure of the collected data on apartments is shown in fig. 2.1, 2.2, 2.3.
Rice. 2.1. The structure of apartments considered when building the model, by type of housing
Rice. 2.2. The structure of apartments considered when building the model, by type of housing
Rice. 2.3. The structure of the apartments considered when building the model, by the type of material of the house
The temporal analysis of economic phenomena distinguishes between different types of evolution.
1. Trend, trend or long-term movement. There is no strict definition of a trend, it is revealed intuitively. A trend corresponds to a slow change in some particular direction that persists over a long period of time.
2. Cycle, short-term component - fast quasi-periodic movement, in which there is an increase phase and a decrease phase.
3. Seasonal component - changes that occur regularly, as opposed to a cycle.
4. Random fluctuations, effects - chaotic movement of a relatively high frequency, which is more or less constant.
Some statistical series represent one or another type of evolution in its pure form, but most of them are a combination of all or individual components.
Theoretically, a series of price dynamics is a combination of trend, seasonal component and random fluctuations. On the present stage During the development of the real estate market, the seasonal component of the price of an apartment is disrupted, which is due to high rates of price growth and the investment attractiveness of the market in question. That is why special attention was paid to highlighting the trend in the dynamic series under consideration.
According to the series of dynamics of prices for apartments, the following model was built.
Polynomial of the second degree:
yi = a + bt2, (3.3)
where i - apartment type,
t - time period.
It should be noted that, in accordance with the criteria used in statistics, the correlation coefficient should be close to 1 (greater than 0.7), the significance factor F should be less than 0.03 (for the given model parameters).
Thus, the obtained models reflect well the dynamics of prices in the secondary housing market of the city of Novosibirsk.
According to the obtained model, the growth in the cost of one-room apartments should have been 22.0% in 2006, while the actual growth in cost was 24.3%.
According to this model, the growth in the cost of a two-room apartment in the city of Novosibirsk in 2006 was supposed to be 21.7%, while in fact the growth rate was 21.6%.
In accordance with the presented model, the growth in the cost of a three-room apartment in the city of Novosibirsk in 2006 was supposed to be 21.5%, while in fact the growth rate was 31.0%.
Substituting real data on the cost per square meter of apartments in the city of Novosibirsk in each quarter of 2006, it can be noted that this value falls within the limits of the confidence intervals built according to the model.
According to experts, the resulting model adequately describes the current situation in the real estate market at the moment. The forecast for growth in the cost of housing by the end of 2006 for certain types of apartments coincides with real data, since the growth of the market predicted by experts is 20-30%.
The appraiser is constantly faced with the problem of predicting the cost of apartments, this problem is especially acute when assessing for lending purposes. The correctness of the decision depends on the experience, qualifications of the specialist, as well as on the quality of the collected data on the market of the object being evaluated. The use of the proposed statistical models in the work of specialists will help improve the accuracy of forecasts, as well as the quality of residential real estate valuation.
RUSSIAN ACADEMY OF CIVIL SERVICE
UNDER THE PRESIDENT OF THE RUSSIAN FEDERATION
Federal State Educational Institution of Higher Professional Education
"NORTH-WESTERN ACADEMY OF PUBLIC SERVICE"
in Kaluga
finance and credit
GRADUATE WORK
Kaluga
Introduction
Chapter 1. Theoretical foundations for assessing the market value of real estate
1.1 Real estate valuation: basic concepts and principles of valuation
1.2 Approaches and methods for assessing the value of real estate
1.3 Property valuation issues
Chapter 2. Determination of the market value of the property
2.1 Description of the subject matter
2.2 Determination of the market value of real estate under the cost approach
2.3 Determination of the market value of real estate in the framework of the market approach
2.4 Determination of the market value of real estate under the income approach
3.1 Determination of the final value of the market value of the object of assessment
Conclusion
Bibliography
Introduction
The transition of our country to a market economy required an in-depth development of a number of new areas of science and practice, in particular, real estate valuation.
The real estate market is a sector of the national market economy, which is a set of real estate objects, economic entities operating in the market, market functioning processes, i.e. processes of production (creation), consumption (use) and exchange of real estate and market management, and mechanisms that ensure the functioning of the market (infrastructure and legal environment of the market).
Now the real estate market includes residential apartments and rooms, office buildings and premises, buildings for industrial and commercial purposes, cottages, summer cottages and rural houses with land plots. Regional peculiarities of the real estate market should be taken into account.
In production and economic practice economic entities there are many cases when it becomes necessary to assess the market value of the property of enterprises. Not a single operation of buying and selling property, lending against collateral, insurance, resolving property disputes, taxation, etc., can do without valuation.
Determining the market value of real estate is a complex and unique process, since it is almost impossible to find two absolutely identical properties. Even in the case when buildings are built according to the same standard project, but located on different land plots, their cost can vary significantly.
The relevance of the topic of the thesis is due to the fact that today there is an increasing need for a competent and objective assessment of the value of real estate, and the institution of property valuation has not yet been fully formed, there is no information base for valuation, the professional training of appraisers in Russia has not yet reached the world level.
The purpose of the work is to determine the market value of the property and justify ways to increase it.
To achieve this goal, it is necessary to solve the following tasks:
1. Explore the theoretical basis for assessing the market value of real estate;
2. To characterize the object of assessment and its environment;
3. Justify the market value of the appraisal object based on three generally accepted approaches;
The object of research is the procedure for determining the market value of property.
The subject of the study is the justification of the market value of the property and the development of recommendations for its increase.
Structurally, the work consists of an introduction, three chapters, a conclusion and a list of references. The first chapter discusses the theoretical foundations of real estate valuation, the second chapter calculates the market value of a property, the third one harmonizes the results of the valuation and determines ways to increase the market value of real estate.
The theoretical and methodological basis of the study is the dialectical method of cognition, as well as the works of scientists, periodicals and Internet materials on the problem under study. In addition, the following methods were used: economic-statistical, monographic, calculation-constructive, as well as the comparison method.
Chapter 1. Theoretical foundations for assessing the market value of real estate
1.1 Real estate valuation: basic concepts and principles of valuation
Various benefits (objects, things, property) are created, sold and acquired to meet certain needs of the state, legal entities and individuals, as well as to obtain benefits from their possession and use. From the possibility of this or that object of property to satisfy the existing needs and from the benefits that the possession of this object will bring in the future, its value, and therefore, the cost, depends.
All operations and transactions with real estate require knowledge of the value of the property. In market conditions, the value of real estate depends on factors, trends and changes in the economy and society as a whole. The need for real estate appraisal arises in the following cases:
§ transactions of purchase and sale or leasing;
§ corporatization of enterprises and redistribution of property shares;
§ attraction of new shareholders and additional issue of shares;
§ cadastral valuation for the purposes of taxation of real estate objects: buildings and land plots;
§ real estate insurance;
§ lending secured by real estate;
§ making real estate objects as a contribution to the authorized capital of enterprises and organizations;
§ development of investment projects and attraction of investors;
§ liquidation of real estate objects;
§ execution of inheritance rights, court sentence, resolution of property disputes;
§ other operations related to the sale of property rights to real estate objects.
Immovable things (real estate, real estate) include land plots, subsoil plots, isolated water bodies, and everything that is firmly connected with land, that is, objects that cannot be moved without disproportionate damage to their purpose, including forests, perennial plantations, buildings, structures. Immovable things also include aircraft and sea vessels subject to state registration, inland navigation vessels, and space objects. Other property may also be classified as immovable by law.
In real estate valuation, land is considered to have a value, while improvements are considered to be a contribution to value.
Real estate is in free civil circulation and is the object of various transactions, which gives rise to the need to assess its value, i.e. in determining the monetary equivalent of various types of real estate at a particular point in time.
In today's economy, there are many different types of value. They are necessary due to various needs and functions. This includes such types as borrowed value, insurance value, fair market value, book value, rental value, salvage value, investment value and many others. However, in general, value can be divided into two categories: value in exchange and value in use.
Value in exchange is the price that will prevail in a free, open and competitive market based on the equilibrium established by the factors of supply and demand. It is sometimes called objective cost because it is determined by real economic factors.
Value in use is the value of the property for a specific user or group of users, i.e. the value of real estate that is used as part of a going concern (for example, real estate used by a factory).
Of all the types of value, the most widespread is the market value - the main type of value in the conditions of market relations. When determining the market value, we proceed from the fact that the market existed in the past (property has already been sold), exists in the present (property is being created for sale) and will exist in the future, since neither the past nor the present of the market contradict this.
Based on the foregoing, we can conclude that not only the market itself, but also the instruments formed by the market, the most important of which is the cost, have a three-component nature. From this perspective, we can say that the cost:
Valid cost, i.e. the most probable price in a given market;
Truly market-based, since the space of market values, which includes the cost of a particular object, is formed solely under the influence of factors of a free, open and competitive market;
Indeed, it is objective, since it reflects the opinions of all the main subjects of the market of the manufacturer (seller), buyer and investor, thereby exhausting the market interests of the parties.
Value can be drawn from the past by putting ourselves in the place of the buyer, from the present by putting ourselves in the place of the builder, and from the future if we put ourselves in the place of the investor. Three main approaches to property valuation follow from this: market, cost and income approaches.
The main task in determining the value is to predict the quantity, quality and duration of future benefits from the ownership of the object of assessment and convert these benefits into real value. Property is analyzed based on the principles of valuation.
The evaluation principles are divided into four groups:
1) principles based on user perceptions (principles of utility, substitution and expectation);
2) principles arising from the process of real estate operation (principles of contribution, residual productivity, marginal productivity, balance, economic size and economic division);
3) principles determined by the action of the market environment (principles of alternativeness, variability, dependence, supply and demand, competition and compliance);
4) the principle of the best and most efficient use is the main principle of evaluation. This principle combines all other principles and is the foundation of any real estate appraisal.
A prerequisite for real estate valuation is to take into account the specifics of the functioning of the real estate market, since the state of the real estate market has a significant impact on income flows, risk levels and on the possible sale price of a property at a certain point in the future, i.e. on the main data used in the valuation using the income approach.
1.2 Approaches and methods for assessing the value of real estate
In real estate appraisal, there are three generally accepted approaches to determining the value: costly, market and profitable. Each approach has its own established methods, techniques and procedures. The conceptual similarity of approaches to the evaluation of various property objects is revealed. At the same time, the type of the object being evaluated determines the features of specific methods arising from the specific evaluation problems inherent, as a rule, only this species property.
Cost approach
The cost approach to the valuation of real estate is based on comparing the costs of creating a real estate object with the value of the valued or comparable objects. The approach is based on a study of the investor's ability to acquire real estate and proceeds from the principle of substitution, which states that the buyer, exercising due prudence, will not pay for an object more than the amount that it would cost to obtain the relevant building plot and build an object similar in purpose and quality for the foreseeable future without significant delays.
The main stages of the assessment procedure in this approach:
1. Calculation of the cost of acquiring or long-term lease of free and available land in order to optimize its use;
2. Assessment of the replacement cost of the building being assessed. The calculation of the replacement cost is based on the calculation of the costs of recreating the object in question, based on current prices and conditions for the manufacture of similar objects on a certain date.
3. Determining the amount of physical, functional and external depreciation of the property;
4. Estimation of the value of entrepreneurial profit (investor's profit);
5. Calculation of the final cost of the appraised object by adjusting the replacement cost for depreciation, followed by an increase in the resulting value by the cost of the land plot.
The cost approach is most appropriate when evaluating properties that have recently been put into operation, it leads to the most convincing results in the case of a sufficiently justified cost of the land plot and insignificant accumulated depreciation of improvements. The cost approach is justified in estimating the value of planned objects, special-purpose objects and other property, transactions for which are rarely concluded on the market, and can be used in valuation for insurance purposes. This approach, when evaluating objects subject to reconstruction, allows you to determine whether construction costs will be offset by an increase in operating income or proceeds from the sale of property. The use of the cost approach in this case avoids the risk of overinvestment.
Also, the cost approach is used for the purposes of taxing the property of legal entities and individuals, upon arrest real estate, to analyze the best and most efficient use of a piece of land.
Determining the value of a land plot
In accordance with Art. 35 of the Civil Code of the Russian Federation, upon transfer of ownership of a building, structure, structure located on someone else's land to another person, it acquires the right to use the corresponding part of the land plot occupied by the building, structure, structure and necessary for their use, on the same conditions and the same amount as the previous owner.
Of all land valuation methods, the method of comparative sales analysis is of decisive importance.
The replacement cost of construction of the property under appraisal is calculated at current prices as new (excluding accumulated depreciation) and related to the appraisal date. The basis for determining the replacement cost is the calculation of the costs associated with the construction of the facility and its delivery to the customer. Depending on the procedure for accounting for these costs, it is customary to allocate direct and indirect costs in the cost of construction.
Direct costs are directly related to construction (the cost of materials, wage construction workers, the cost of construction machines and mechanisms, etc.). Indirect costs - costs that are not directly related to construction (fees to design and estimate organizations, the cost of investments in land, marketing, insurance and advertising costs, etc.). The developer's profit reflects the costs of managing and arranging the construction, general supervision and the entrepreneurial risk associated with the development. The profit of the entrepreneur is defined as part of the profit from the sale of the object. Regardless of the amount of interest and the corresponding basis (a component of the value of property), the amount of entrepreneurial profit remains constant.
The main source of comparative data on the cost of real estate objects are construction contracts for the erection of structures, such as the one being assessed. In addition, design appraisers typically maintain their own databases of current prices for completed homes, office buildings, apartments, hotels, shop buildings, and industrial buildings. Currently in Russia there is a system of standards and price levels determined by the corresponding price indices.
Built objects under the influence of various natural and functional factors lose their operational qualities and are destroyed. In addition, the market value of the object is influenced by external economic impact from the immediate environment and changes in the market environment. At the same time, physical depreciation (loss of performance), functional aging (loss of technological compliance and cost due to scientific and technological progress), external or economic depreciation (change in the attractiveness of an object in terms of changes in the external environment and the economic situation in the region) are distinguished. Together, these types of depreciation constitute accumulated depreciation, which will be the difference between the replacement cost of the object and the cost of reproduction (replacement) of the object of assessment.
The most complete and reliable source of information about the technical condition of a building or structure is the materials of a natural survey. The first condition for conducting such surveys should be an accurate definition of the functional purpose of the object of assessment: use for its intended purpose or with a change in technological and functional parameters. In this case, it is necessary to present the limits of changes in loads and impacts on the supporting structures of buildings.
The second condition for conducting research is obtaining complete information about the natural and climatic parameters and specific factors of the impact of the area where the object is located and their changes in the process of technogenic activity.
Market Approach
A prerequisite for the application of market approach methods is the availability of information about transactions with similar real estate objects (that are comparable in purpose, size and location) that took place in comparable conditions (time of the transaction and conditions for financing the transaction).
The comparative approach is based on three main principles of real estate valuation: supply and demand, substitution and contribution. Based on these principles of real estate valuation, the market approach uses a number of quantitative and qualitative methods to highlight the elements of comparison and measure adjustments to market data of comparable properties to model the value of the property being valued.
The main principle in the market approach to real estate valuation is the substitution principle, which states that a potential buyer will not pay a price for property that exceeds the cost of acquiring a similar, from his point of view, property.
The main difficulties in applying the methods of the market approach are associated with the lack of transparency of the Russian real estate market. In most cases, the real prices of real estate transactions are unknown. In this regard, often when assessing, the prices of proposals for objects put up for sale are used.
The sales comparison method determines the market value of a property based on an analysis of recent sales of comparable properties that are similar in size and use to the property being valued. This method of valuation assumes that the market will set the price for the property being valued in the same way as for comparable, competitive properties. In order to apply the sales comparison method, specialists use a number of valuation principles, including the principle of substitution.
The application of the sales comparison method consists in sequentially performing the following steps:
1. detailed market research in order to obtain reliable information about all factors related to objects of comparable utility;
2. identifying suitable units of comparison and conducting a comparative analysis for each unit;
3. comparison of the object being evaluated with the selected objects of comparison in order to adjust their sales prices or exclude them from the list of those being compared;
4. bringing a number of adjusted indicators of the cost of comparable objects to the market value of the object of assessment.
Real estate offices, government sources, own databases, publications, etc. can be used as sources of information about real estate market transactions.
After choosing the unit of comparison, it is necessary to determine the main indicators or elements of comparison, using which it is possible to model the value of the object through the necessary adjustments to the purchase and sale prices of comparable real estate objects.
In valuation practice, when determining the value of real estate, such main elements of comparison are distinguished as the transferred rights to real estate, the conditions for financial settlements when acquiring real estate, the terms of sale (purity of the transaction), the time of sale, the functional purpose of the object, location, convenience of access roads, area of the object, technical condition and level of finishing of premises.
This method is most effective for regularly sold objects.
Quantitative and qualitative methods are used to highlight the elements of adjustment measurement.
Quantitative methods include:
paired sales analysis (two different sales are compared to determine the adjustment for one comparison item);
Statistical analysis (the method is based on the use of the apparatus of mathematical statistics for correlation and regression analysis);
· Analysis of the secondary market (this method determines the amount of adjustments, based on data that are not directly related to the object of assessment or the object of comparison) and others.
Quality practices include:
classification (comparative) analysis (the method is similar to the analysis of paired sales, except that the adjustments are expressed not in percentages or monetary amounts, but in categories of fuzzy logic);
Distribution analysis (comparative sales are distributed in descending order of adequacy, then the place of the object of assessment in the series of comparative sales is determined).
income approach
Determining the market value of real estate using the income approach is based on the principle of expectation. According to this principle, the typical investor, that is, the buyer of a property, acquires it in anticipation of receiving future income from use. Considering that there is a direct relationship between the size of the investment and the benefits from the commercial use of the investee, the value of real estate is defined as the value of the rights to receive income generated by it, in other words, the value of the property is defined as the present value of future income generated by the valuation object.
The advantage of the income approach compared to the cost and market approaches is that it reflects the investor's view of real estate as a source of income to a greater extent, that is, this quality of real estate is taken into account as the main pricing factor. The main disadvantage of the income approach is that, unlike the other two approaches, it is based on forecast data.
The main stages of the assessment procedure in this approach:
1. Preparing a forecast of future income from the lease of the areas being assessed for rent for the period of ownership and, based on the data obtained, determining the potential gross income (GRP), which is calculated according to formula 1.1:
PVD \u003d S * Ca, (1.1)
S is the area to be leased, sq.m;
Sa - rental rate for 1 sq.m.
2. Determination based on market analysis of losses from underutilization of space and in the collection of rent, calculation of the actual gross income (ARI). As a rule, the owner in the long run does not have the opportunity to permanently lease 100% of the building area. Losses of rent occur due to underemployment of the property and non-payment of rent by unscrupulous tenants. The degree of unemployment of an object of income-producing real estate is characterized by the coefficient of underutilization, determined by the ratio of the value of unleased areas to the value of the total area to be leased.
The calculation of the actual gross income (ARI) is carried out according to the formula 1.2:
DVD \u003d PVD * Kz * Ks, (1.2)
DVD actual gross income;
PVD potential gross income;
Kz area load factor;
Kc coefficient of collection of payments.
It should be noted that other income received from the operation of the facility in excess of rental payments (for example, for the use of additional services - car parking, etc.) must be added to the DIA calculated by the above method.
3. Calculation of the costs of operating the property being valued, which is based on an analysis of the actual costs of its maintenance and / or typical costs in this market. Expenses can be conditionally fixed (property tax, insurance premiums, payments for a land plot), conditionally variable (utilities, current repairs, salaries of maintenance personnel, etc.), replacement costs (expenses for the periodic replacement of fast-wearing structural building elements).
Thus, the estimated value of operating costs is subtracted from the DIA, and the final figure is net operating income (NOR).
4. Recalculation of net operating income into the current value of the object.
Direct capitalization method - a method for determining the market value of an income-generating object, based on the direct conversion of the most typical income of the first year into value by dividing it by the capitalization ratio obtained on the basis of an analysis of market data on the ratio of net income and the value of assets similar to the object being valued, obtained by the market method extraction. Such a Western classic version of the direct capitalization method, in which the capitalization ratio is extracted from market transactions, is practically impossible to apply in Russian conditions due to the difficulties in collecting information (most often, the conditions and prices of transactions are confidential information). Based on this, in practice it is necessary to use algebraic methods for constructing the capitalization coefficient, which provide for a separate assessment of the rate of return on capital and the rate of its return.
It should be noted that the direct capitalization method is applicable to the valuation of operating assets that do not require, at the date of the valuation, large investments in the duration of repairs or reconstruction.
1.3 Property valuation issues
Difficulties are associated with a number of problems that arise in property valuation (approaches and methods), incorrectness or inconsistency of laws and regulations in this area. Let's consider these questions in a little more detail.
The first problem is by account, and not by purpose - the choice of capitalization and discount rates.
1. The cost of a loan (cost of capital) - for enterprises that do not have independent behavior (there is no securities market).
2. The average marginal value of own finances - for enterprises whose shares are quoted on the market.
3. Based on the average operating profitability of the enterprise or its own industry.
4. Average marginal marginal costs of the projects under study (when investing).
5. Rates of reimbursement for loans.
6. Planned norms.
7. Rate of interest on loans (a political economy concept related to national income (ND) and domestic national product (GNP)).
8. Profitability of an alternative investment (for example, a deposit account in a bank).
9. Minimum risk-free return, from an investor's point of view.
The real short-term interest rate, defined as the difference between the yield on Treasury bills and the consumer price index.
A lot of practical methods for choosing a rate with the same theoretical base speaks of the unfavorable methods and criteria for choosing it. The definition of the room rate is outside of financial management theory - in the field of psychology (the realm of art, not science).
In order to make an assessment by different specialists, the value of the compound interest rate should be adopted by law and reflected in the methodology, as it was in its time, according to the standard coefficient of efficiency of capital investments (investments - as they say now). Initially, the efficiency rate was different for each industry, then one rate was adopted for all industries. It should be emphasized that the standard efficiency ratio played the same role (carried the same burden) as the capitalization rate (efficiency rate, comparison rate, investment placement rate).
The second problem is related to point valuation of the property value. The situation is such that ten experts working independently of each other will give ten different estimates of the value of the same property (property). This is due to the calculation procedure and the choice of standard coefficients. The situation is reminiscent of the manufacture of a part. On the same machine, different parts will be manufactured by the same worker according to the same drawing. There are many reasons for this, most of which, in principle, cannot be ruled out. Therefore, a system of tolerances for the dimensions of parts has been adopted in production. If the dimensions of the manufactured part are within tolerance, then it is considered fit. The deviations and scatter of the initial data used for the calculation in all approaches and methods, as a percentage of the average, are more significant than the tolerances for the dimensions of the parts.
The way out of this situation (the solution to this problem) is to replace the point valuation of the property value with the interval one, on the one hand, and the numerical calculation should be carried out by probabilistic methods. The concept of evaluation in mathematics implies an approximate calculation, most often at the level of an order of magnitude. For example, when calculating on a slide rule, it was required to determine the number of digits in the integer part of the number.
Another problem is related to the choice of weighting factors when reconciling property value calculations made using the three approaches. Each author (expert, appraiser) accepts weight coefficients (factors of significance of the calculation method) at his own discretion, and the difference between the estimates can be significant. One way out of this situation is to adopt a weighting factor that is evenly distributed in a certain range for each assessment method (approach).
The next problem arises in the comparative (market) assessment of the value of property, when it is necessary to introduce correction factors to bring the object being valued and market analogues to a comparable type. Here, too, there is considerable arbitrariness. This is especially true of the correction factors when comparing the locations of the territorial location of the property being valued, and a number of others.
One of the most difficult problems is the reliability of information. This applies to both market information about the asking and sold price of the assessed value of the property, and information on standards when calculating the value using the standard method in the cost approach. Previously, design and technological institutes of all branches of the national economy had this information. This information is either lost or out of date.
To remove most of the problems that arise in the process of estimating the value of property, all calculations should be performed on the basis of probability intervals. As a result of the calculation, the value of the property will be presented as a truncated distribution. The median cost estimate should be recommended as the offer price of cost. In this case, the chances for the seller and the buyer are the same: the probability for the buyer to buy cheaper than the offered price is equal to the probability for the seller to sell for more than the offered price.
In this case, both the seller and the buyer have full information about the possible prices of the sale and purchase and their probability. Depending on the urgency of the proposed transaction, counterparties can make informed decisions: for the buyer to wait and look for another acquisition object, if time is needed; for the seller - a reduction in the asking price if there is an urgency in the implementation of the transaction.
There are many such options on the market. For the seller and the buyer, the urgency in buying and selling can be different.
In 2001, Decree of the Government of the Russian Federation No. 519 of July 6 was adopted, in which the Ministry of Property Relations of the Russian Federation is charged with the duty of "development and approval of methodological recommendations for valuation activities." This should be done in relation to the various objects of assessment, types of value of the object of assessment, the conduct of the assessment, as well as the examination of assessment reports. The work is carried out in coordination with the federal executive authorities that regulate the relevant field of activity.
However, the ministry is not in a position to develop a methodology for all property objects (for all occasions), and even more so to develop regulatory materials.
Therefore, at the regional level, depending on the existing property market, on the basis of an industry-wide methodology, develop regional methods for groups of homogeneous objects with the creation of the necessary regulatory framework. Then the problem arises of coordinating and approving local methods at the level of the administration of the region, city or region.
The procedure for agreeing and approving regional methodological materials in relation to various objects of property should be regulated by the Ministry of Property Relations of the Russian Federation.
This will help to more reasonably assess all types of value of various types of property, which will remove various misunderstandings, lead to comparability of the calculation results by different appraisers and appraisal firms, and reduce the semi-criminal connotation in the field of appraisal activities.
Chapter 2. Determination of the market value of the property
2.1 Description of the subject matter
Currently, there is a fairly stable demand for new real estate in the form of detached buildings, in the price range of $330-$3250 sq.m. In general, the offer ranges from $400 sq.m. to $4500 sq.m. At the same time, there is a tendency to some increase in the upper limit of the offer price.
This is explained by the fact that until recently insolvent demand becomes financially justified.
On the other hand, particularly prestigious office space and retail space have by now "found" their relatively permanent owners. Accordingly, the prices for premises, although less prestigious, but still expected to be sold, are rising. In addition, fluctuations in the prices of proposals are not always justified from the point of view of economic logic.
The property is owned by LLC "Aris" and is located in the Leninsky district of the city of Kaluga.
The object includes a three-storey brick office building with a restaurant with a total area of 1.375.8 sq.m.
The object is located on one of the longest highways of the city, relatively close to the business and administrative center of Kaluga. Transport accessibility is good.
Description of the land
Plot shape rectangular;
Land area 556.0 m2
Soil condition sandy soils form the basis of the building foundations.
Topography of the area: the relief of the site is calm.
Infrastructure provision:
The following communications are connected to the residential building for:
· water supply;
sewerage;
· power supply;
heat supply;
telephonization
Possible restrictions on use and easements
Permitted use. The practice of working in the real estate market shows that a change in the functional purpose of real estate is possible only upon agreement with the local administration, which is also confirmed by the owner of the appraisal object.
easements. The site is assumed to be subject to typical easements, such as right of way and communications, but it is assumed that none of the existing easements should be an obstacle to the best and most efficient use of the site. The site does not include monuments, unique natural objects, power transmission towers, alignment marks, etc., so there are no special restrictions for the construction of office and residential premises.
Building Description
The building has 3 floors, made in compliance with modern construction standards.
Table 1
Structural elements of the building
| Structural element | Characteristic | Technical condition |
| Foundations | Concrete belt | Excellent |
|
and their exterior |
silicate brick red finishing brick, t=0.5 |
Excellent |
| Partitions | brick | Excellent |
|
Covers: Attic; Interfloor; Above basement |
W/concrete W/concrete W/concrete |
Excellent |
| Roof | Combined | Excellent |
| floors | Parquet, tiles, linoleum | Excellent |
|
Wooden |
Wooden modernized | Excellent |
| Interior decoration | Euroclass | Excellent |
|
Sanitary and electrical devices: heating · water pipes sewerage electric lighting · telephone · ventilation |
Central, from the boiler room Drain to city sewer Hidden wiring Natural |
Excellent |
| Other works | blind areas | Excellent |
2.2 Determination of the market value of real estate under the cost approach
In this case, an administrative brick three-story building was chosen as an analogue object in accordance with Sat. UPVS No. 33, tab. 4 (Enlarged indicators of the replacement cost of the construction of residential, public, communal buildings and consumer service buildings. M: 1972) Table 52 as the most appropriate in terms of design features to the object of assessment.
table 2
Comparative analysis of the object of assessment and the object-analogue
(Determination of the coefficient of similarity)
| Structural elements | Analog object | Object of assessment | Similarity degree (similarity coefficient) | Specific weight, elements % | |||
| analogue object | object of evaluation | ||||||
| 1 | 2 | 3 | 4 | 5 | 6 | ||
| 1. Foundations | reinforced concrete blocks | reinforced concrete blocks | 1,00 | 5,0 | 5,0 | ||
| 2. Walls and partitions | brick | brick | 1,00 | 24,0 | 24,0 | ||
| 3. Overlays | w/concrete | w/concrete | 1,00 | 9,0 | 9,0 | ||
| 4. Floors | concrete | concrete | 1,00 | 10,0 | 10,0 | ||
| 5. Openings | simple wooden | simple wooden | 1,00 | 11,0 | 11,0 | ||
| 6. Interior decoration | simple | - | 0,00 | 8,0 | 0,0 | ||
| 7. Sanitary and electrical devices |
central heating · water pipes sewerage · ventilation electric / lighting |
central heating · water pipes sewerage · ventilation electric / lighting |
1,00 | 12,7 | 12,7 | ||
| 8. Roof | roll on reinforced concrete slabs | ─ | 0,00 | 6,0 | 0,0 | ||
| 9. Stairs and entrances | – | – | 1,00 | 5,0 | 5,0 | ||
| 10. Simple work | – | – | 1,00 | 9,3 | 9,3 | ||
| TOTAL: | 0,8 | 100 | 86 | ||||
| Correction factor | 0,86 | ||||||
Determination of the total replacement cost of the appraised object.
Basic input data:
Capital group - I.;
· Building volume: Vstr. = 4444 m3;
· Total area: S=1.375.8 m2;
Sources of regulatory data: Sat UPVS No. 4, table 52
Basic calculation formula:
PVA \u003d US1969 x Vstr. x I69-84 x I84-20.12.2007 x Kn, (3.1)
where PVS is the total replacement cost of the object, rub.
US1969 cost of building a unit of construction volume in 1969 prices; US1969=24.9 r/m3
Vpage construction volume, cub. m;
I69-84 index of cost conversion from 1969 prices to 1984 prices; for residential and commercial buildings on average - 2.21;
I84-20.12.2007 - index of conversion of the cost from prices in 1984 to prices on the date of assessment (20.12.2007) according to Inf. Sat. on pricing and settlements for work performed in construction, Kaluga: December 2007;
K84-20.12.2007 = 61.07
Кn is a correction factor for the difference of the object-analogue of the assessment. Kn=0.86
Calculation of the total replacement cost of the object:
PVA \u003d 24.9 x 4,444 x 2.21 x 61.07 x 0.86 \u003d 12.843.755.88 rubles.
Assessment of depreciation (depreciation) of an object
Based on the estimated effective life of the object (capitality group I), physical depreciation (depreciation) as of the valuation date will be 5%, i.e. RUB 642.187.80
Since the building is new, there is no functional (moral) deterioration.
Economic (external) depreciation has not been established: buildings of this type and condition are currently in demand on the market, and there is no reason to assume that this situation will change significantly in the near future.
Determining the entrepreneur's profit
The entrepreneur's profit is the market-determined level of return that the entrepreneur expects to receive in the form of a premium for the use of his capital invested in construction.
The profit of an entrepreneur (Ppr) can be determined from the ratio of entrepreneurial income Dpr and the cost of construction (C / b str.) Taking into account the construction period (Tstr.) According to the formula:
According to the Kaluga construction organizations, the cost of construction of 1 square. m of individual office buildings of conventional construction is an average of 10,500 rubles. including finishing. Normal interior decoration increases the cost of construction by 9-12%. Luxury finishing increases the cost of individual works by 1.38 times (Marshall & Swift Handbook). The construction period currently usually does not exceed 2 years. The cost of investing in Kaluga in retail space located within the central part of the city lies in the range of $$ 1200÷3500 sq. m. m. Let's take for our calculations the value - 1200 US dollars, or 30936 rubles. Under these conditions, the profit of the entrepreneur:
= 0.937, or 97.3%.
Table 3
Calculation of the final value of the object of assessment
Thus, the market value of the property, obtained using the cost approach, is 25,982,918.15 rubles, or rounded 25,982,918 rubles. (Twenty-five million nine hundred eighty-two thousand nine hundred eighteen rubles) without VAT.
2.3 Determination of the market value of real estate in the framework of the market approach
Table 4
Characteristics of objects of comparison
| Characteristics of comparison objects | Object of assessment | Object No. 1 | Object No. 2 | Object No. 3 | Object No. 4 | ||||
| 1 | 2 | 3 | 4 | 5 | 6 | ||||
| Address of the object | Kaluga, st. Suvorova, d.29 |
Kaluga, st.Tele-visionnaya, 2a |
Kaluga, st. Moscow, d.237 |
Kaluga, st. Azarovskaya, 26 |
Kaluga, crystal, |
||||
| Year of construction | 2002 | 1995, reconstruction 1998 | 2003 | 1971, reconstruction 2002 | 1988 | ||||
| Total area (sq. m.) | 1375,8 | 1157,1 | 297,3 | 2234,0 | 3806,0 | ||||
| Main purpose in current state | Office space, cafes, recreation areas | Office rooms | Office space, recreation areas | Office and exhibition premises | Office rooms | ||||
| Initial appointment | Same | Administrative building | Administrative building | book base | Administrative-industrial building | ||||
| External enclosing structures | brick | brick | brick | brick-panel with foam block inserts | reinforced concrete panels | ||||
| Location | above average | average | average | below the average | below the average | ||||
| Land plot |
122971 m2 (other buildings available) |
under the building | under the building + ramp area | ||||||
| Finish quality | class "E" | class "U" | luxury class | luxury class | class "E" | ||||
| Quality of parking and vehicles | Along the street, spec. organized, 20 m long; playground in the yard | Parking along the street (20 m); indoor parking | Organized parking (special site) | Along the street, spec. organized 20 m long; indoor parking | Limited indoor parking | ||||
| Sale period | –– | December 2007 | August 2007 | February 2007 | October 2006 | ||||
| number of storeys | 3 floors | 2 floors | 3 floors | 2 floors | 3 floors | ||||
| Price 1 sq. m. of total area, rub. rub. | – | 33000 | 41500 | 28500 | 15500 | ||||
Definition (justification) of adjustments
1. Adjustment for market conditions(date of sale)
In this case, the most correct method is to use the pair sales method. It involves the selection of objects that differ only in the time of sale and determine the amount of adjustments. We did not find such objects, therefore the amount of adjustments was determined on the basis of data on monthly inflation rates for the periods of interest to us according to the formula:
where Mi is the average monthly inflation rate, Kinfl. = 1.0072
Calculation formula: Kinfl = Ksr.m.infl = const Ksr.m.infl = 1.0072
100 × Ktcrminfl 100
Table 5
2. Location.
The location of the compared objects was assessed based on an expert assessment on a scale: “excellent”, “excellent”, “good”, “above average”, “average”, “below average”, “satisfactory”, “bad”, “very bad”. Thus, the scale consists of 8 gradations. Each gradation was estimated at 10%.
Table 6
| Object of assessment | Object No. 1 | Object No. 2 | Object No. 3 | Object No. 4 | |
| Location | above average | average | average | below the average | below the average |
| Amount of adjustments, % | - | +10 | +10 | +20 | +20 |
3. Correction for physical difference.
The only significant difference between the objects of comparison and the object of assessment is the material of the enclosing structures in the object of comparison No. 3 - reinforced concrete panels, while in the object of assessment and other objects of comparison, brick was used for these purposes. This difference is estimated by us at 6%.
4. Correction for the state of the object
The state in which the object of sale and purchase is located has a direct impact on its price. The easiest way to take into account the difference in the “condition” factor is to adjust the sale price for the cost of the repair work that needs to be carried out so that the object of comparison becomes consistent with the condition of the object of evaluation.
In this case, the state of the object was assessed by an expert in the range of the following gradations: "excellent", "good", "above average", "average", "below average", "satisfactory", "poor", very poor" with the price of one gradation – 6%.
Table 7
5. Adjustment for finish quality
When evaluating the quality of finishing, six levels of quality were considered:
Top quality - class "luxury";
Improved quality - class "U";
average quality - class "C";
Satisfactory quality - class "E" (economical)
low-level quality - "N";
very bad - "Oh".
Gradation price 5%
Table 8
6. Correction for the area of the object.
In our case, we have an area range from 297.3 m2 to 3806.0 m2. According to our research, an increase in area by 1 m2 gives a decrease in the price of 1 m2 by:
(Sob.av. Sob.ots) x K, (3.3)
where: Sob.av. area of the comparison object;
Sob.ots area of the object of assessment;
K empirical coefficient, K = 0.00533
Calculation formula:
Table 9
7. Adjustment for the presence of a land plot.
The presence of a land plot is regarded as an advantage, since it is one of the potentials of the facility. Studies show that in most cases, the presence or absence of a land plot near office buildings is estimated by the market within 5% of the value of the object (in addition to the parking lot).
8. Correction for number of storeys.
In our case, objects with the number of floors from 2 to 5 are considered. Studies show that more than 3 floors are not considered an advantage. The current state of the office space market is such that investors and tenants prefer to use buildings with 2÷3 floors as office space. From the point of view of market value (value in exchange), and not investment (in use), the cost of 1 sq.m of buildings with more than 3 storeys is lower than the cost of 1 sq.m. 2÷3 storey buildings. Up to 5 ÷ 6 floors, such a reduction in cost lies within 3 ÷ 5%. For 9, 11-storey buildings, this value is 12÷15%.
9. Adjustment for the availability and quality of parking.
The presence of parking at the property is regarded as an increasing cost factor. In this case, the availability and quality of parking was assessed. The quality of parking was considered in three options:
· outdoor parking- along the street in front of the facade of the building there is a parking space within 50m; such parking was expertly estimated at 5%, (medium quality);
· organized parking - outside the road there is a special asphalted area for car parking - 10%, (good quality);
· indoor parking - parking for cars outside the gates of the enterprise (on the internal territory) - 0%, (poor).
Table 10
Final Adjustments
| Comparison elements | COMPARABLE SALES | ||||
| Object of assessment | Object No. 1 | Object No. 2 | Object No. 3 | Object No. 4 | |
| 1 | 2 | 3 | 4 | 5 | 6 |
| Selling price, rub./sq. m | –– | 33000 | 41500 | 28500 | 15500 |
| Transferred rights | Full ownership | Full ownership | Full ownership | Full ownership | Full ownership |
| Adjustment amount | ― | 0% | 0% | 0% | 0% |
| Adjusted Price | ― | 33000 | 41500 | 28500 | 15500 |
| Financing conditions | Market | Market | Market | Market | Market |
| Adjustment amount | ― | 0% | 0% | 0% | 0% |
| Price after adjustment | ― | 33000 | 41500 | 28500 | 15500 |
| Terms of sale | Commercial | Commercial | Commercial | Commercial | Commercial |
| Adjustment for terms of sale | ― | 0% | 0% | 0% | 0% |
| Price after adjustment | ― | 33000 | 41500 | 28500 | 15500 |
| Market conditions (date of sale) | ― | December 2007 | February 2007 | October 2006 | |
| Adjustment for market conditions | ― | 0,0 | +9,0 | +13,0 | +17,1 |
| Price after adjustment | ― | 33000 | 45235 | 32205 | 18151 |
Conclusion: The smallest number of adjustments was made for the object of comparison No. 3, therefore, the price of the object of assessment is taken equal to the adjusted price of the object of comparison No. 3, i.e. 32205 rub./sq.m. The found value lies in the price range from 18,151 rubles/sq.m to 45,235 rubles/sq.m. The value of the appraisal object, obtained by direct comparison of sales, will be: 32205 × 1375.8 = 44.307.639 rubles.
Thus, the value of the appraisal object is 44,307,639 rubles. (Forty-four million three hundred seven thousand six hundred thirty-nine rubles) without VAT.
2.4 Determination of the market value of real estate under the income approach
The work used the method of direct capitalization to assess the value of the property as ready for use. This method gives a fairly accurate estimate of the present value of future income in the case when the expected income stream is stable or has a constant growth (fall) rate.
Income Analysis
All income for the property being valued is projected based on the rent for premises of various functional purposes. We have conducted a market study, the purpose of which is to establish rental rates for residential premises that would be comparable to the object of assessment. This research included interviews with several owners, leasing agents and developers, studying the prices of offers and the terms of the current lease.
In the course of the preparatory work, it was found that, taking into account the location of the object and its profile, the following monthly rental price should be taken for calculation: 1175 rubles/sq.m.
Cost analysis
Operating expenses are the ongoing costs associated with owning and operating a property. They are divided into constants - the value of which does not depend on the degree of occupancy of the building by users (property taxes, insurance premiums, land rent), and variables - depending on the degree of occupancy of the building (payment for electricity, water, etc.).
Property taxes include: land tax, building tax. Since the value of land was not made within the framework of this assessment, the level of its taxation should not be determined.
The property tax is 2% of the book value of the property (Book value = Cost - Depreciation).
For a newly purchased object, the initial cost is equal to the purchase price. For a newly built or under construction building, the cost is equal to construction costs, depreciation is 0. The book value of the building at the valuation date is the sum of the purchase price (or book value at the time of acquisition) of the building and the costs incurred for renovation, excluding VAT. We consider the amount of property tax to be constant, because for a building of capital group 1, the depreciation rate is 1% per year, and a change in the value of property tax can be safely neglected.
Insurance payments amount to 0.3% of the replacement cost of the finished object, excluding VAT.
In this case, the amount of utility bills is assumed to be 7% of the actual gross income (ARI).
The inclusion of facility management costs in operating costs is due to the peculiarity of the property as a source of income. Owning real estate, unlike owning a cash deposit in a bank, requires some effort to manage the property. Whether this is managed by the owner or a third party, including management costs in total costs, we acknowledge that part of the gross rental income is not generated directly by the property, but by the efforts of the manager.
For this type of facility, management costs account for 2.2% of the actual gross income.
Since the building was built in 2002 and major repairs are not required, the cost of current repairs is determined at a rate of 4% of the EIA.
Based on the available reliable data on the cost of replacing short-lived building elements that have similar characteristics to the object of assessment, a value of 3.6% of the EED was taken into account.
Other expenses typically amount to 2% of operating expenses.
Determination of the overall capitalization ratio
The capitalization ratio reflects the dependence of the value of the object on the expected income from its operation. Due to the lack of sufficient data on sales of similar properties, the capitalization rate can only be determined by the summation method, according to which the value of the capitalization rate is equal to the sum of:
SC \u003d NPb / r + R + L ± Sv.k., where
SC - capitalization rate;
NPb/r risk-free rate of return;
P is the risk premium corresponding to the investment in this asset;
L - premium for low liquidity of the object;
St. to. capital return rate.
The risk-free rate on term foreign currency deposits in banks of the highest category is 5-9% (we accept 7%).
Risk premium (P). The probability of loss of property was estimated based on information on the number of cases of loss of property in the city of Kaluga, taking into account the collected data P = 4%.
Additional risk premium – 4%.
The liquidity ratio is determined by the approximate time for the sale of this type of property, which we estimate, taking into account the current economic situation, at 0.4 years.
Kn/liq. = Kbezrisk. × sale time = 0.07 × 0.4 = 0.028 or 2.8%
The investment management risk premium is assumed to be 4.8%.
The second component of the overall capitalization ratio, the rate of return on capital or the increase/decrease in the value of the fund, is calculated as the ratio of one to the number of years required to return the invested capital.
The time it takes for the return of capital, according to the calculations of a typical investor, is 20 years, based on this, the capital recovery rate will be 5% (1/20).
At present, the situation on the market for non-residential premises in Kaluga is such that for relatively new properties with little natural wear and tear (depreciation) there is no reason to expect a decrease in their value in the foreseeable future. In addition, the cost increase is greatly influenced by the favorable location of the facility close to the city center and major highways. In this case investment attractiveness object of assessment is obvious, therefore the rate of return of capital is taken with a sign (-).
The total capitalization ratio is:
R0 = 0.07 + 0.04 + 0.028 + 0.048 - 0.05 = 0.186
Calculation of the value of the object of appraisal using the method of direct capitalization of rental income
To calculate the potential gross income (GRP), the available monthly rental rates per year are used: 14,100 rubles/sq.m.
Thus, the PVH from the lease of the areas of the object of assessment will be: 14100 × 1375.8 = 19.398.780 rubles;
Calculation of the effective gross income (EGI) is made taking into account possible losses from underloading of delivered payments and losses in the collection of rent. For calculations, a value of 8% was taken, determined on the basis of available data from external sources and our own observations.
The calculations carried out showed that the EPD of the object of assessment is:
19.398.780 × 0.92 = 17.846.877.6 rubles
Table 11
Determination of the market value of the appraisal object using the method of direct capitalization of income
| Effective Gross Income (EVI) | RUB 17846877.60 |
| Operating expenses, | RUB 3,045,391.19 |
| including | |
| building tax | RUB 291,494.44 |
| insurance payments | RUB 53897.45 |
| · communal payments | RUB 1249281.43 |
| object management | RUB 392,631.31 |
| current repairs (4% of EVD) | RUB 713875.10 |
| Other expenses (2% of OR) | RUB 47115.76 |
| reserve for substitution (3.6% of the EVD) | RUB 642487.59 |
| Net operating income (NOI) before tax | RUB 14801486.41 |
| Net operating income (NOI) including income tax | RUB 11249129.67 |
|
Overall capitalization ratio (R0) |
0,19 |
| The value of the property being appraised is | RUB 60479191.77 |
Thus, the market value of the property, obtained using the income approach, is 60.479.191.77 rubles, or rounded 60.479.192 rubles. (Sixty million four hundred seventy nine thousand one hundred ninety two rubles) without VAT.
Chapter 3
3.1 Determination of the final value of the market value of the object of assessment
Applying various approaches to property valuation, we came to the following results:
Table 12
| Approaches (methods) | Weight coefficient | Cost, rub. |
| Cost approach (comparative unit method) | 0,35 | 25982918 |
| Market Approach (Direct Sales Comparison Method) | 0,25 | 44307639 |
| Income approach (direct income capitalization method) | 0,4 | 60479192 |
| Total cost | 1,00 | 44362607,85 |
The cost approach by weight is mainly used to evaluate objects that are unique in their type and purpose, or objects with little wear and tear. The building under appraisal belongs to the category of real estate objects with a low level of depreciation, therefore, the share of the market value value obtained using the cost approach will have a fairly high coefficient of 0.35.
The data underlying the market approach cannot be considered absolutely reliable, and therefore the results of the market approach to estimating the value of this object must be treated with caution. Based on this, the result of the market approach is given a weighting factor of 0.25.
The income value reflects the market behavior of a typical investor, so the result of this approach is assigned a maximum weighting factor of 0.40.
Thus, in our opinion, the following distribution of coefficients is the most objective:
Cost approach – 0.35;
· market approach – 0.25;
income approach – 0.40.
Taking into account the weight coefficients, the market value of the appraisal object as of 20.12.2007. is rounded 44.362.608 rubles. (Forty-four million three hundred sixty-two thousand six hundred and eight rubles) excluding VAT.
The value of a company's real estate is determined by its discounted future cash flows, and new value is created only when companies receive a return on invested capital that exceeds the cost of raising capital. Cost management further deepens these concepts, since in such a management system it is on them that the entire mechanism for making major strategic and operational decisions is built. Properly established cost management means that all the aspirations of the company, analytical methods and management techniques are geared towards one common goal: to help a company maximize its real estate value by building management decision-making around key value drivers.
Cost management is fundamentally different from the planning systems adopted in the 60s. It has ceased to be a function exclusively of the management apparatus and is designed to improve decision-making at all levels of the organization. It starts with the premise that a top-down command-and-control style of decision-making does not work, especially in large multi-business corporations. This means that lower-level managers need to learn how to use cost indicators to make smarter decisions. Cost management requires balancing the balance sheet on par with the income statement and maintaining a reasonable balance between long-term and short-term business objectives. If cost management is implemented and organized properly, the corporation reaps enormous benefits. Such management, in fact, is a continuous reorganization aimed at achieving maximum value.
For the object being evaluated, cost management is reduced to a more efficient use of available space.
The appraised building has an attic with a total area of 328.2 m2, which is currently partially used as a stationery warehouse. On the one hand, carrying out an appropriate reconstruction will make this room residential. On the other hand, in recent years, due to the expansion of cooperation between Kaluga enterprises and nonresident and foreign companies, the demand for hotel services has increased significantly. In this regard, it is proposed to carry out a comprehensive reconstruction of the attic to transfer it to the category of a residential attic, where it is planned to organize a hotel of 14 deluxe double rooms.
The cost of measures for the reconstruction of the attic is presented in Table 13.
Table 13
Estimated cost for the reconstruction of the attic
| № | Name of works | Cost, rub. |
| 1 | General construction works (dismantling) | 406.211 |
| 2 | General construction works (new) | 2.448.728 |
| 3 | Cold and hot water supply | 49.818 |
| 4 | Heating | 90.144 |
| 5 | Sewerage and plumbing equipment | 31.738 |
| 6 | Supply and exhaust ventilation and air conditioning | 67.534 |
| 7 | Electric power equipment and electric lighting | 422.402 |
| 8 | Communication device | 37.010 |
| 9 | Security and fire alarm | 114.531 |
| 10 | Automatic heating, ventilation | 7.638 |
| 11 | Room improvement | 872.640 |
| Total | 4.548.394 | |
To finance these works, it is planned to use a loan on the following terms:
· Loan amount – 5.250.000 rubles.
· Interest rate – 14% per year;
· Loan term – 1 year;
· Securing the property being valued;
· Loan repayment terms – quarterly payment of interest and principal in equal installments, i.е. for 1.866.506 rubles. at the end of each quarter.
As already noted, the hotel will consist of 14 deluxe double rooms. The cost of living in such a room in Kaluga hotels ranges from 1400 rubles. up to 2500 rub. per day. For calculations, the value of 1600 rubles is taken, since the object being evaluated is located close to the city center, but initially this building was not intended for the hotel business, which creates certain inconveniences for customers.
The investment horizon is set for 1 year, as there are no objective grounds to believe that the property being valued will not be sold after this period.
Cash flow is presented in table. fourteen.
Table 14
Cash flow in RUB
| Item of expenses | 1st quarter | 2nd quarter | 3rd quarter | 4th quarter | Total for the year |
| Reconstruction | 4548394 | – | – | – | 4548394 |
| Loan service | 1866506 | 1866506 | 1866506 | 1866506 | 7466025 |
| Operating expenses | 124539 | 127030 | 129571 | 132162 | 513302 |
| income tax | - | 292073 | 291463 | 290841 | 874377 |
| Total | 6539439 | 2285609 | 2287540 | 2289509 | 13402098 |
| Item of income | 1st quarter | 2nd quarter | 3rd quarter | 4th quarter | Total for the year |
| Hospitality | – | 1344000 | 1344000 | 1344000 | 4032000 |
| Depreciation | 1299145 | 1302393 | 1305649 | 1308913 | 5216100 |
| Credit | 5250000 | – | – | – | 5250000 |
| Total | 6549145 | 2646393 | 2649649 | 2652913 | 14498100 |
| Balance | 9706 | 360784 | 362109 | 363404 | 1096002 |
The main source of income is the hotel business. At the same time, it is important to emphasize that with an excess demand for this type of service, no objective reasons for the low occupancy of rooms have been identified.
To determine how much the current market value of the property being valued will increase as a result of the recommended measures, it is advisable to use the capitalization ratio used in the income approach. This is due to the fact that this project is an investment project, i.e. focused primarily on income generation.
Consequently, the increase in the current market value of the appraisal object will be:
1.096.002 / 0.19 = 5.768.432 (rub.)
(Five million seven hundred sixty eight thousand four hundred and thirty two rubles) excluding VAT.
Conclusion
As follows from the provisions of the standards, "all methods, procedures and techniques for measuring market value, if they are based on market indicators and correctly applied, lead to the same expression of market value." At the same time, "any method based on market information is inherently comparative." Thus, according to existing standards, only the quality of information and the correct application of procedures can serve as a limitation on the use of a particular method.
In the first chapter of the work, the concept of real estate, types of real estate value, basic approaches, methods of real estate valuation, as well as problems associated with justifying the value of real estate are considered.
Real estate is physical objects with a fixed location in space and everything that is inseparably connected with them, both below the surface and above the surface of the earth, or everything that is a service item, as well as the rights, interests and benefits arising from the ownership of objects.
A real estate object is understood, firstly, as an enterprise as a whole as a property complex, and secondly, a land plot, an integral part of which may be: a building (structure) or a group of buildings; isolated water bodies, perennial plantings; engineering structures and networks; stationary structures landscaping of the territory of the site; elements of economic, transport and engineering support; other objects.
Real estate appraisal is carried out from the standpoint of three approaches: profitable, costly and comparative. Each approach allows you to emphasize certain characteristics of the object.
Each of the three considered approaches involves the use of its inherent methods in the assessment:
Method of direct capitalization of income;
Sales comparison method;
Comparative unit method.
Thus, in the event of a decrease in the efficiency of their use, real estate objects can change their purpose. This happens both as a result of depreciation of buildings and other improvements, and under the influence of trends in the real estate market.
In the second chapter, the valuation of the property was carried out using three approaches to valuation.
Each of the methods used has advantages and disadvantages.
The comparative approach provides a direct assessment of the market value, based on statistics on the real commercial real estate market. When processing the data, special measures have been taken to protect the creditor from overestimation. In this regard, the comparative approach is given the most weight.
The cost approach makes it possible to best take into account the design features and the physical condition of the object of assessment. At the same time, the information base is not perfect. The main problems are related to the valuation of land. In addition, when calculating the replacement cost, one has to rely on average conversion indices to current prices, which can lead to errors.
The income approach is based on market data and avoids some of the disadvantages of the cost approach. The main source of error in the method is the uncertainty associated with the use of forecast data on income and growth rates.
In the third chapter of the work, the results of the assessment of the market value of the property were agreed, its final value was substantiated, and recommendations were given for increasing it.
Calculations showed that the market value of the appraisal object as of 20.12.2007. is rounded 44.362.608 rubles. (Forty-four million three hundred sixty-two thousand six hundred and eight rubles) excluding VAT.
However, the proposed value management measures make it possible to increase the current market value by 5,768,432 rubles. (Five million seven hundred sixty eight thousand four hundred and thirty two rubles) without VAT.
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Substituting real data on the cost per square meter of apartments in the city of Novosibirsk in each quarter of 2006, it can be noted that this value falls within the limits of the confidence intervals built according to the model. According to experts, the resulting model adequately describes the current situation in the real estate market at the moment. The forecast of growth in the cost of housing by the end of 2006 for certain types of apartments coincides with real data, since the growth of the market predicted by experts is 20-30%. The appraiser is constantly faced with the problem of predicting the cost of apartments, this problem is especially acute when assessing for lending purposes. The correctness of the decision depends on the experience, qualifications of the specialist, as well as on the quality of the collected data on the market of the object being evaluated.
Introduction
After binding, the collections of prices are sent back to Gosstroy for their further approval. Currently, the process of developing a new regulatory framework has not yet been completed.
Conducting real estate valuation based on the new regulatory framework is a very complex and time-consuming task that requires special knowledge and skills. In order for the new regulatory framework to enter into the practice of valuation, it is necessary to carry out a set of works on the development of software and computing systems adapted to solving applied problems of real estate valuation.
Recently, regional centers for pricing in construction have begun to work actively, firms specializing in the provision of information services have appeared, for example, NPF Center for Information Technologies in Construction.
Suggestions for improving real estate valuation methods
When using these publications, it must be remembered that most of their calculations are based on the normative base of the planned economy, indexed by certain price coefficients and, therefore, the final results of the assessment may have a significant error for the reasons stated above. When applying certain indices, it is necessary to carefully study the prerequisites for their calculation.
Recently published and announced as the first in the country, expected by appraisers, the Regional Guide to Construction Costs (RCC-2006). It provides cost indicators by type of construction work, aggregated cost indicators (CSI) and "information for assessing the required amount of investment in the express option."
In fact, the latter definition refers to the estimated cost of objects-analogues of modern buildings and structures.
Residential real estate appraisal (3)
In particular, there has been an ever-increasing demand for valuation to reflect assets in financial reporting in accordance with IAS, US GAAP or Russian accounting standards; assessment of the value of intangible assets to determine the effectiveness of marketing and brand strategies; valuation for the purpose of making purchase and sale transactions, lease of assets, M&A and other transactions for the transfer of ownership and other property rights; valuation for the purposes of insurance, additional issue of shares or buyback of shares during the privatization of state-owned enterprises; appraisal for the purpose of lending secured by property, etc. . According to the results of a study by the Expert RA rating agency, the most demanded services over the past year and a half were real estate and business valuation services in general.
Thesis: residential real estate appraisal
FEDERAL AGENCY FOR EDUCATION SEI HPE "MOSCOW STATE SERVICE UNIVERSITY" Faculty: "Institute of Regional Economics and Municipal Administration" Department: "State and Municipal Administration" course project. Topic: Improving real estate valuation methods.
Discipline: Management of municipal real estate. Completed by a student of the Group GRDS 3-2 Shevchuk M.V. Accepted by the teacher Dubovik M.V.
Improving real estate valuation methods
Thus, RCC collections should become the basic basis for real estate valuation. However, there are significant shortcomings of these collections.
The main one is that they do not provide the initial data and the main assumptions of the obtained values of the cost of analogues. So, it is not entirely clear what specific composition of the equipment is taken into account in the final indicators, what was included in the builder's other costs, etc.
The joint work of estimators, analysts and appraisers in the direction of improving the RCC can lead to the creation of an information base that is so necessary for real estate appraisers. The main direction in the development of appraisal activity is currently becoming the appraisal of the market value of real estate.
This becomes possible due to the fact that our country is accumulating a database of the actual market value of real estate.
Abstract: residential property valuation
Other situations for application: - feasibility study for new construction, - determination of the best and most efficient use of land, - renovation, - final price negotiation, - institutional and special purpose buildings, - insurance purposes. — method of market comparisons: assessment of the market value of property based on data on recent transactions with similar objects. It is assumed that a rational investor or buyer will not pay more for a particular property than it would cost to acquire another similar property with the same utility. - income method: the value of property is determined by the size, quality and duration of the period of receipt of those benefits that this object is expected to bring in the future.
20. methods of cost approach to real estate valuation (improvements).
Attention
Origin · Natural (natural) objects. · Artificial objects (buildings).2. Purpose · Free land plots (for building or other purposes) · Natural complexes (deposits) for their exploitation · Buildings For housing.
Scale Land plots. .Complex of administrative buildings. Building. Premises or parts of buildings (sections, floors).4. Ready for use Ready objects Requiring reconstruction or major repairs Requiring completion of construction. 1.2 Methodology for evaluating residential real estate.
Improving real estate valuation methods
So, in the collections of UPVS, the following cost items are taken into account: direct costs; overhead costs; Planned savings (profit); general site costs for the allocation and development of the construction site; cost of design and survey work; costs associated with the production of work in the winter; The cost of premium wages the cost of maintaining the directorate of a standing enterprise; · losses from the liquidation of temporary buildings and structures; · the cost of transporting workers over a distance of more than 3 km. in the absence of public transport; · the cost of paying employees bonuses for the mobile nature of work. Experienced appraisers in their calculations use their own developments based on adjustments to analogues or consolidated estimates.
In the work of P.G. Grabovoi, S.P. Korostelev “Property valuation, Part I.
Topic: Improving real estate valuation methods
Statistical indicators for this model confirmed the significance of the results obtained. Thus, the resulting model very well reflects the dependence of the average cost of apartments on its parameters in the housing market of the city of Novosibirsk (without taking into account extreme options).
The presented models were put into practice in the real estate agencies of the city of Novosibirsk "Zhilfond" and "Amir - Real Estate", which have full-time employees for assessing the cost of apartments for sale, and also acting as collateral in loan agreements. It should be noted that experts highly appreciated the effectiveness of their application. The second important problem appraisers face is predicting the value of an apartment in the future.
Valuation of a residential property
Suggestions for improving real estate valuation methods Conclusion List of references and sources Appendix INTRODUCTION Among the elements of a market economy, a special place is occupied by real estate, which acts as a means of production (land, administrative, industrial, warehouse, retail and other buildings and premises, as well as other structures) and a subject or object of consumption (land plots, houses, dachas, apartments, garages). Real estate is the basis of personal existence for citizens and serves as the basis for economic activity and development of enterprises and organizations of all forms of ownership.
In Russia, there is an active formation and development of the real estate market and an increasing number of citizens, enterprises and organizations are involved in real estate transactions.
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