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Real Estate Property Valuation: How and Why.

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Real Estate Property Valuation How and Why

Real estate appraisal is an event aimed at determining the likely price for the transfer of property rights to another party in the event of property alienation. This procedure is used to calculate the value of real estate in the payment of taxes and the allocation of subsidies for its purchase.

A certain amount for a living space is one of the subjects of a public offer; therefore it is not compulsory and can be changed in accordance with the interests of one of the parties. This concept is valid for the legal relationship of participants in market transactions. When determining the price for the approval of the tax rate or the issuance of a subsidy, the value of the property will change every year.

Determination of the cost of residential premises is regulated by Federal Law No. 135 “On appraisal activities in the Russian Federation” dated July 29, 1998 with the latest amendments adopted on January 1, 2016.

According to the regulatory act, the appraisal of a real estate object can be carried out independently or with the help of the expertise of a competent specialist who has been trained and received a federal certificate.

If it is necessary to carry out judicial measures for the alienation of property, a state cadastral examination is appointed. According to the normative act “On appraisal activities” Art. 6, the right to carry out the procedure for determining the cost of residential premises also has its owners – individuals or organizations.

Different valuation methods use their own valuation qualifications:

  • Market. Analysis of a similar segment of the real estate market in the ratio of technical characteristics and the average price of an apartment.
  • Investment. A certain value is formed that can be reimbursed for a specific period of ownership of the residential premises.
  • Liquidation. The minimum amount guaranteed to be obtained through the sale or alienation of property.
  • Cadastral. Strictly fixed real estate price based on the conclusion of the relevant commission.

Factors affecting the cost of an apartment

Property valuation, as an event, should include step-by-step steps to analyze the property characteristics of a building and collect information on pricing policy in a similar market segment.

Assessing an apartment yourself should take into account the following factors:

  • The area of ​​the apartment or land. Rule: the larger the area, the more expensive real estate works only with a small or medium-sized living space. If the area of ​​the property is large, a reduction coefficient for utility costs is applied.
  • Specifications. The number of floors, modern layout, and building material significantly affect the final estimated cost.
  • The presence of administrative centers and food departments nearby. The abundance of social facilities nearby will increase the estimated cost of the apartment.
  • Legal component of real estate. The absence or presence of third party claims to property will allow a significant adjustment in the final price.

The above factors are successfully applied in the comparative method of obtaining the appraised value of real estate. To use other methods, you can apply the income capitalization method. At the same time, for analysis, they take the full cost of housing, determined by the cadastral authorities, in comparison with the expected profit from the ownership of the property.

In some cases, the cost method of analyzing the appraised value of an apartment is used. This takes into account certain risks associated with the purchase of real estate in the secondary market or in an unfinished new building.

The procedure for self-assessment of an apartment

The necessary steps to make an assessment of a living space yourself:

  1. Analyze the location of the property (within the city or outside it). Check out the value of a similar property by examining related ads.
  2. Consider the remoteness of the apartment in question from infrastructure facilities (shops, schools, kindergartens, public transport stops).
  3. Compare the technical condition of the building with the necessary expenses for its repair.
  4. Analyze the level of security of housing, as well as the availability of additional comfort (availability of parking for cars, playground).
  5. Consider the presence or absence of a management company in an apartment building.

Based on the information received, determine the average cost of real estate by deducting the approximate price of negative factors to the total amount.

The most popular question and answer to it according to self-assessment of an apartment

Question: Good afternoon, my name is David. Can I conduct an independent assessment of my home and request from the executive and law enforcement authorities the necessary documentation and information about the apartment?

Answer : Hello, David. On the basis of the Federal Law “On Appraisal Activities”, you have the right to conduct an independent appraisal of real estate. Moreover, in Art. 14 of this standard states that the appraiser has the right to request the information necessary for the examination in writing or orally.

Conclusion

Self-assessment of real estate – legal actions to determine the value of a particular residential property. The main points of the implementation of valuation activities:

  1. Analyzing a similar segment of the real estate market by comparing the similar and different characteristics of different households.
  2. The ratio of the availability of communications and the location of important infrastructure facilities.
  3. Equipping the object under consideration with additional features (parking, housing administration).

An independent appraisal activity must be carried out in accordance with the Federal Law, as well as regulatory standards and other legal acts of the United Kingdom.

Raj Hirvate
Hi, I'm Raj Hirvate and I am a Tech Blogger from India. I like to post about technology and product reviews to the readers of my blog. Apart from blogging i'm a big Anime fan I Love Watching Naruto, One piece and Death Note.

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