As should be an expert assessment of the property. Recommendation for a customer

07.12.2009 12:34
Real property (real estate) - this land and all that is placed on them and is closely connected with them, that is, objects, movement is impossible without causing disproportionate harm to them.

Such a definition is given in the draft Regulations (National Standard) expert assessment of real estate. More clear definition of property is given in the International Valuation Standards. The document property is defined as a physical piece of land and the related improvements made by man. This material, tangible "thing" that you can see, touch, including land and all structures on it, and either above or below it.

In order to distinguish the concept of property as a physical object and property as a legal concept, there is such a thing as ownership of the property, including all the rights, interests and privileges associated with owning real estate, and expressed by any evidence of ownership, which exist separately from the property as a physical object.

Thus, "real estate" refers to material concepts as "ownership" - to the intangible. It is important to know because the approaches, methods and procedures for expert assessment of tangible and intangible assets are different, and the customer should know what he wants to evaluate: a property as a material object, or the ownership of this facility as an intangible asset.

Consider the composition of the elements of real estate as a tangible asset. Above it was stated that the property - this plot of land and improvements on it, under it and over it.

Land - is part of the earth's surface defined by boundaries, which is characterized by a specific location, using economic, legal regime and other essential features as defined in relation to his rights.

Improve the land - any physical objects placed within the boundaries of the land and physically associated with it, as well as physical consequences of any actions that led to a change in topography, the condition of the development of land or the profit potential of its use. To improvements typically include buildings, perennial plants construction in progress and other objects.

Building - building and architectural sites, the primary purpose is to create conditions for labor, social and cultural services, protection of valuables.

Buildings - Engineering and construction projects designed to create and perform technical functions (mines, oil wells, roads, dams, culverts, etc.) or for public services (construction of city beautification, etc.).

Perennial plants - all kinds of artificial perennial plants, regardless of age: fruit and berry, technical, safety, decorative planting and planting of all kinds; artificial planting botanical gardens, parks, streets, boulevards, courtyards, business areas, etc.

Construction in progress - the objects on which the established order is not furnished the documents on acceptance of the facility.

Unfortunately, under Ukrainian legislation, in most cases the main component of real estate, land can not be considered formally a tangible asset, since it is not the property owner improvements (buildings, structures, etc.) located on this site, so you can evaluate only the right to use this site. Currently, expert assessment of real estate in the land and improvements could be made only if there is documentation of ownership of the land. In all other cases, the property serve only to improve on the land: building, construction, perennial plantations and so on to the customer evaluation is necessary to know all of the above in order to properly make reference to the assessment of specific property. However, the compilation task to assess the property is just one of the stages of evaluation.

That the customer had an idea about the whole process of assessment, we consider it necessary to at least briefly to familiarize him with technology assessment of the property.

Valuation of property - a complicated creative process is laborious, consisting of several stages and phases:

1. Problem Statement (problem definition).
2. Preliminary examination of the object and the conclusion of the assessment object.
3. Data collection and analysis.
4. The choice of evaluation methodology.
5. Evaluation of the right to use or possession of the land.
6. Score improvements (buildings, structures, etc.) using several approaches.
7. Harmonization of evaluation results obtained using different approaches.
8. Reporting, and expert advice on evaluation and submitting them to the customer.

If the stages of 8.4 customers, mainly be interested in the results, the implementation stages of the 1.3 it should be directly involved. As this publication has been prepared primarily for customers, then we dwell on the disclosure of the contents of the first stages (1-3) and only concisely - in the following (4-8).

Problem Statement (problem definition) - a very important stage, because of the quality of works at this stage depends on choice of an appropriate evaluation methodology that will determine the future of its results. Formulation of the problem involves the following steps:

* Identification of the property;
* Identify the object of evaluation;
* Define the date of valuation;
* Goal setting and evaluation function;
* Establish the form of assessed value;
* Drafting restrictive conditions and to familiarize them with the customer.

Consider the content of the individual stages.

Identification of real estate - is the establishment and fixation of the written name of the object, its legal status, location, physical structure and actual performance.

Establishment of the subject assessment - is to identify what should be evaluated: the whole complex of property rights, or only some property rights (the right to lease, to share in the joint rights and so on).

Determining the date of valuation - is a very important moment for the entire evaluation process, since over time the cost of real estate under the influence of numerous external and internal factors may vary. Date of assessment - is the date on which the object is determined by the cost estimates. As a rule, the valuation date set together expert appraiser and customer, and it coincides with the date of the inspection object. In some cases, the valuation date may be set by third parties, for example, tax authorities or courts in connection with the insolvency of the company, the liquidation committee in the bankruptcy of the enterprise, etc.

Goal setting and evaluation function -
one of the most important stages of determining the subsequent choice of evaluation methodology, on which, in turn, is largely dependent results and evaluation.

Formulating the objective of the evaluation, it is necessary to answer the question: what is assessed? Purpose of the evaluation determines the form of assessed value (assessment base), which should be determined after the establishment of objectives, the nature of the data, as well as the principles and approaches that will guide the evaluator, making an assessment of the object. Therefore, the unambiguous definition and fixation of the purpose of evaluation is carried out precisely at the stage of formulation of the problem together the customer and the appraiser. Examples of goals might be:

* Determine the market value of full ownership of buildings and estimated object with the right to use the land;
* Determine the market value of full ownership of the estimated room;
* Definition of the liquidation value of the property, etc.

Customer should be aware that the use of the results of real estate valuation for purposes other than those specified in the problem and the evaluation report is incorrect and unacceptable. This is due to the fact that, for example, methods of assessing property for sale to differ from the methods used to assess for its elimination, etc.

Forming the evaluation function is required to answer the question: what should be assessed? That is, the evaluation function determines the scope of its future use. Assessment can be made for subsequent purchase, sale, loan, lease, liquidation, insurance, real estate, etc. When the problem and the evaluation report should be indicated, for some function or functions will be used in the evaluation.

If one purpose of the assessment may be several evaluation functions and vice versa. We give examples of some combination of goals and evaluation functions:

* Purpose of the assessment - to determine the market value of full ownership of the building is estimated, the evaluation function - the results of evaluation will be used when making a decision regarding the sale of the assessed building;
* Purpose of the assessment - to determine the market value of full ownership of the property and rights of long-term lease of the land under it, the evaluation function - assessment can be used to:
o subsequent sale;
o loans secured assessed;
o issue and public offering, selling shares to staff;
o the division of property;
* Purpose of the assessment - to determine the market value of non-specialized assets and depreciated replacement cost of the specialized assets of the company; function evaluation - the evaluation will be used to determine the fair value of fixed assets at their reassessment in order to display it in the accounting and financial statements.

In conclusion, the description of this stage we would like to give the customer the following advice - if the appraiser can not help you in setting goals and the evaluation function, or confused in these terms, it is better to abstain from its services, since the correctness of future results of the evaluation of the appraiser is questionable.

Determination of the value depends on the purpose and function of evaluation, as well as the type of property. On the types of cost estimates, and their choices based on those factors detailed in the preceding article. Therefore, we only recall that there are market and non-base assessment.

Market-based framework for the assessment include the market value and market value for existing use. Non-market framework for the assessment includes such costs as investment value, liquidation value, liquidation value (not to be confused with the previous one), the insurance value, tax value, replacement value, use value, the special price. Determination of the cost is a direct and rather demanding task evaluator as causes subsequent selection of assessment methodologies, including the choice of approaches, methods and evaluation procedures.

Drafting restrictive conditions and to familiarize them with the customer is the final step in the stage of the problem. Expert-evaluator should compile a list of restrictive conditions and assumptions that accompany the process of assessing the value of any property. Restrictive conditions and assumptions are formulated by the appraiser and agreed with the customer in order to protect their mutual interests. This is done in order to avoid any future performance assessment and reporting of possible conflicts in the relationship between the customer and the expert. This publication does not address in detail the contents of restrictive conditions and assumptions, however, every customer must request the Expert to provide for each of these explanations. If the expert is not able to do this, it should abandon its services.

Preliminary examination of the object and the conclusion of assessment - second stage of the evaluation process, consisting of the inspection object familiarization with background information about it and establish sources of its occurrence, preparation and signing of the Treaty on the expert assessment of the application to him - the task of the assessment.

Technology survey and collect information on the object is known to every qualified appraiser and no need to expound. I would like to remind the customer that the more complete and detailed information about the object he will provide expert, the greater the extent the estimated cost of the project will be true. Sometimes asks the expert to urgently assess the property and the latter agrees to do the job without going to the site. This is one of the most serious breaches of professional evaluators, and we would ask customers not to push appraisers to commit such violations.

After inspecting the facility and the talks usually contract between the customer and the experts, which specifies the rights and obligations of the parties, the cost of assessment services, turnaround time, the conditions of confidentiality vzaimopredstavlyaemyh data and documents, and other special conditions that both sides deem it necessary to include in the contract. By the Treaty of applied job containing the name of the customer and experts, the definition of the subject and the date of assessment, goals and evaluation functions of the form (s) of the appraised value, the restrictive conditions and assumptions.

The choice of evaluation methodology - the third stage of the evaluation process, which is carried out by the Expert. In implementing this stage proves the possibility of using specific approaches and techniques applicable to the evaluation of this specific property.

International Valuation Standards and Norms professional appraiser in Ukraine include the use of real estate evaluation of the three generally recognized in professional appraisal practice approaches: the income, cost and comparative. Each of the approaches can be implemented in several ways. The choice of approaches and methods used in assessing a particular property is determined to assess the selected base evaluation and the nature of the object.

The income approach is based on determining the value of the subject being evaluated on the basis of present value of expected income from the ownership of this object. The main methods of the income approach are: a method of direct capitalization of income and discounted cash flow method. The method of direct capitalization will be applied in cases where the expert believes that the projected annual net operating income is constant and does not have a pronounced tendency to change, and the period of its receipt is not limited in time. Discounted cash flow method (indirect capitalization) will be applied in cases where the expert believes that the projected cash flows from use of the object estimates are not identical in size and unstable for the selected forecast period. Methods of income approach is especially helpful when the market bases evaluation of project cost.

The cost approach is based on the determination of the cost of reproduction or replacement facility assessment of the valuation date with further adjustments in the amount of its depreciation and impairment. The main methods of cost-based approach are: the method of reproduction and the functional analogue substitution method. Practically, both methods of this approach are identical and differ only in the procedure for determining a gross cost of reproduction, or gross replacement cost analogue object. The cost approach is recommended when replacing an object by assessing its reconstruction physically possible and economically feasible, and to assess the specialized facilities, the market for sale that do not.

Comparative approach based on comparative analysis of sales prices of objects such as object evaluation, and making the appropriate adjustments to reflect differences between the objects of analogues and evaluation sites, which is determined by the assessed value of the object. The comparative approach is recommended to determine the value if an active market of this type of objects.

The choice of methods and approaches is the prerogative of the evaluators. International and Ukrainian normative documents for assessment is recommended to use when evaluating a particular object as much as possible approaches and methods in each approach, and if you can not use a particular approach and method - to give clear explanations of such restrictions. The customer should be aware of these provisions and require their strict compliance with the appraiser.

Assessment of rights of use or possession of land and assessment of improvements (buildings, structures, etc.) that make up the fifth and sixth stages, are the direct work of the appraiser who performed them with the use of certain valuation procedures and techniques. The customer is hardly necessary to know in detail the technology to perform these operations, although it may require clarification from the assessor on any of them.

Harmonization of evaluation - the seventh stage of the evaluation process, resolution of inconsistencies in the results obtained when assessing property values ??by different methods and determine the most probable appraised value of the object. Customer's good to know that the regulations prohibited the evaluation results to coordinate by calculating the arithmetic mean of values ??derived from the use of several methods, as well as the fact that the reasoning approval procedures should be mandatory set forth in the Report.

Report writing and expert opinions on expert evaluation is the final stage of the evaluation process. In accordance with the norms of professional activity of the appraiser, the report must contain: the amount of estimated human rights, the purpose of evaluation, the type of determined value, the valuation date and the date of the report, a brief description of the evaluation methodology, a description of the subject being evaluated and his closest associates, the calculations of the value of the subject being evaluated by one or more methods, coordination of the results of the Report and the reasons for the final selected the appraised value. At the end of the report should be given a certificate, a certificate indicating that assessment done objectively and personally made this an appraiser in accordance with the norms of professional activity. As appendices to the report may be given some baseline data, copies of documents used in this work, individual calculations, photographs of the object or its individual elements, etc., as well as copies of documents proving the professional qualifications of the appraiser.

Allowed even an oral report on the real estate appraisal, however, as practice shows, in most cases used the written form of the report in an abbreviated (tabular) or extended (narrative) forms. An abbreviated form of the Report is used for small ordinary objects. Each report shall be signed by the appraiser and sealed by an expert organization, which employs the appraiser.

Any evaluation report is valid only in full and only referred to therein purposes. Neither the client nor the judge can not use the report or any part thereof otherwise than as provided for evaluation.

Of course, the recommendations set out in the increasingly large enough to relate to customers of the evaluation, however, even the customer evaluation 10 m2 rentable area can fully exercise their rights set forth in this recommendation.
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