Since ancient times, various peoples of the world have used amulets and talismans for protection. Their...
The comparative approach is based on the principle of an efficiently functioning active market. The essence of the comparative approach is as follows: the data on similar transactions with the property being assessed are compared, the advantages and disadvantages of analogous properties in comparison with the subject of valuation are taken into account, as a result of this, the cost of analogues is adjusted by introducing appropriate amendments.
The comparative approach is used when there is reliable and available for analysis information on the prices and characteristics of analog objects. In applying a comparative approach to valuation, the evaluator should:
a) select the units of comparison and conduct a comparative analysis of the object of assessment and each object-analogue for all comparison elements. Several comparison units can be selected for each analogue object. The choice of units of comparison must be justified by the evaluator. The appraiser must justify the refusal to use other units of comparison adopted in the assessment and related to the factors of supply and demand;
b) adjust the values \u200b\u200bof the comparison unit for analog objects for each comparison element, depending on the ratio of the characteristics of the assessment object and the analog object for this comparison element. When making adjustments, the evaluator must introduce and justify the scale of adjustments and provide an explanation of under what conditions the values \u200b\u200bof the introduced adjustments will be different. The scale and procedure for correcting the unit of comparison should not change from one analogue object to another;
c) agree on the results of correcting the values \u200b\u200bof the units of comparison for the selected analog objects. The appraiser must justify the scheme for agreeing the adjusted values \u200b\u200bof the units of comparison and the adjusted prices of analogue objects (clause 22 FSO 1).
At the same time, an analogue object is understood as a real estate object that is close in its technical, legal, operational, economic and other factors to the object of valuation. At the same time, there are no absolutely identical real estate objects in all respects. Therefore, it becomes necessary to adjust the prices of similar objects accordingly.
Data on comparable objects can be obtained on the basis of materials of the information and analytical publication "News of the Real Estate Market" ("Green Square"), the newspaper of free advertisements "Iz Ruk v Ruki" (the magazine "All Real Estate"), the Center system and a number of real estate agencies ...
After the selection of analogous objects and identification of the main elements of comparison, it is necessary to conduct a comparative analysis of the object of assessment and each analogue object.
Further, adjustments are made for the presence / absence of the selected comparison elements. When making adjustments, the following comparison elements are used: transferred ownership rights, financial settlement terms, terms of sale, time of sale, location, physical characteristics, economic characteristics, deviations from the intended use, and the presence of movable property. At the same time, these adjustments are introduced in a certain sequence. The first four adjustments (for transferable ownership, financing terms, terms of sale and time of sale - in that order!) are carried out in the following order: after each adjustment, the prices of analogue objects are recalculated. This method of making adjustments is called cumulative (that is, adjustments are entered on a dependent basis). The rest of the adjustments can be made in any order (on an additive or independent basis).
In addition, adjustments are subdivided into percentage (coefficient) and cost (monetary) adjustments. Percentage adjustments are made by multiplying the selling price of the analogue or comparison unit by the percentage adjustment. An example of percentage adjustments - adjustments for depreciation, time of sale, etc. Cost adjustments can be of two types: relative (if adjustments are applied to the price of a comparison unit - 1m 2 of the total area, 1m 3 of the building volume) and absolute (if adjustments are applied to the price of an object - analogue as a whole). Monetary adjustments are usually adjustments for the presence or absence of additional improvements (for example, the presence of a pool or garage in a country house, etc.). The amendments can be positive or negative. If the analog is worse than the object of assessment, then a positive adjustment is introduced, and vice versa.
In general, the following methods of the comparative approach can be distinguished:
1. Methods of comparative analysis of sales.
2. Methods of mathematical modeling.
3. Expert methods.
TO methods of comparative analysis of sales can be attributed:
- method of quantitative analysis of sales;
- method of qualitative (relative) comparative analysis;
- method of gross rent.
When using the method of quantitative analysis of sales, the objects of analogues are compared according to the selected criteria and corrections are introduced - percentage or cost. One way to determine cost adjustments is to identify multiple comparable paired sales, that is, sales of two items that are nearly identical, except for one characteristic that needs to be assessed in order to make the correct adjustment.
All types of adjustments must be justified.
Let us show by example the introduction of interest and cost adjustments.
Example 8.
We will estimate the cost of an apartment with an area of \u200b\u200b45 sq. M. Using the pair sale method The calculations are presented in the form of table 16.
Table 16
An example of calculating the cost of an apartment using the pair sales method
| Comparison items | Analogs | ||||||||||||
| The cost of 1 sq.m. | 67 044,1 | 67 099,5 | 67 777,8 | 62 526,3 | 69 750,0 | ||||||||
| Property rights | Complete | Complete | Complete | Complete | Complete | Complete | |||||||
| Adjustment | |||||||||||||
| Adjusted price | 67 044,1 | 67 099,5 | 67 777,8 | 62 526,3 | 69 750,0 | ||||||||
| Financing conditions | Cash | Cash | Cash | Cash | Cash | Cash | |||||||
| Adjustment | |||||||||||||
| Adjusted price | 67 044,1 | 67 099,5 | 67 777,8 | 62 526,3 | 69 750,0 | ||||||||
| Terms of sale | Through RA | Through RA | Through RA | Through RA | Through RA | Through RA | |||||||
| Adjustment | |||||||||||||
| Adjusted price | 67 044,1 | 67 099,5 | 67 777,8 | 62 526,3 | 69 750,0 | ||||||||
| Sale time | 03.09.2007 | 03.09.2007 | 01.09.2007 | 03.09.2007 | 03.09.2007 | 03.09.2007 | |||||||
| Comparison items | Analogs | ||||||||||||
| Adjustment | +5 % | ||||||||||||
| Adjusted price | 67 044,1 | 70 454,5 | 67 777,8 | 62 526,3 | 69 750,0 | ||||||||
| Location | Oktyabrsky district | Oktyabrsky district | Oktyabrsky district | Oktyabrsky district | Oktyabrsky district | Oktyabrsky district | |||||||
| Adjustment | |||||||||||||
| Adjusted price | 67 044,1 | 70 454,5 | 67 777,8 | 62 526,3 | 69 750,0 | ||||||||
| Floor | 3/9 | 9/9 | 3/9 | 9/9 | 9/9 | 3/5 | |||||||
| Adjustment | 2676,7 | 2 676,7 | 2 676,7 | ||||||||||
| Adjusted price | 69720,8 | 70454,5 | 70454,5 | 69 750,0 | |||||||||
| Number of adjustments | |||||||||||||
| Weights (assigned expertly) | 0,1 | 0,35 | 0,1 | 0,1 | 0,35 | ||||||||
Rationale for the time-of-sale adjustment amount:analogue object No. 2 was sold two months before the appraisal object. During these two months, the value of real estate increased by 5%. We will introduce an increasing percentage adjustment for object No. 2 in the amount of 5%. Then the adjusted cost will be equal to 67,099.5 * (1 + 5/100) \u003d 70454.5 rubles.
Justification of the amount of adjustment per floor: analogues 2 and 3 have the same characteristics, except for the number of storeys. Therefore, the difference in the cost of 1 sq. m of objects is due to the difference in this factor. The adjustment per floor is equal to 70454.5 - 67777.8 \u003d 2 676.7 rubles. Let us introduce an upward cost adjustment for objects No. 1, 3 and 4, since their position is worse relative to the object of assessment. The position of the objects of analogues 2 and 5 is comparable to the position of the object of assessment. No amendment required.
The agreed cost of 1 sq. m will be 69720.8 * 0.1 + 70454.5 * 0.35+ 70454.5 * 0.1 + 65203 * 0.1 + 69750 * 0.35 \u003d 69 609.405 rubles.
The total cost of the apartment is 45 sq. m will be roughly 3,132,425 rubles.
At the same time, when agreeing, the weights for analogue objects are set based on the number of adjustments made and their magnitude, since the most similar object will have fewer differences from the evaluated object.
Using qualitative (relative) comparative analysis when analyzing sales, only the direction of adjustments is determined (up or down), then the prevailing sign and range of prices are determined for each analogue object. After that, the cost of the object of assessment is calculated.
Gross rent method can be viewed as a special case of the sales comparison method. It is based on the use of market information on the value of the gross rental multiple (GRM), which is quantitatively equal to the ratio of the value of real estate to annual income.
The cost of the evaluated object is equal to:
Vots \u003d A p * BPMav, (1)
where A p is the annual rent (potential gross annual income).
The gross rent method is applicable to the valuation of profitable real estate widely sold in the market. This method is undeservedly forgotten by appraisers, but it is based on market information and is more reliable than, for example, the direct capitalization method. After all, the gross rental multiple is calculated based on market information (based on potential gross income), while the capitalization ratio is calculated taking into account some assumptions, assumptions (based on net operating income). This method also requires fewer calculations, so the end result - the value to be determined - will be much more reliable.
Example 9.
Let us estimate the value of the property by the gross rent method if the following information is known (table 17):
Table 17
Similar information.
47 Types of adjustments in real estate appraisal and the sequence of their application
To determine the total value of the property being appraised, an adjustment to comparable sales is required. The calculation and adjustments are made based on the logical analysis of previous calculations, taking into account the significance of each indicator. The most important is the precise determination of the correction factors.
First, relative adjustments are made, then absolute and monetary ones.
Percentage (relative) corrections are introduced by multiplying the selling price of the analogue object or its comparison unit by a coefficient reflecting the degree of differences in the characteristics of the analogue object and the evaluated object. If the object being evaluated is better than a comparable analogue, then a raising coefficient is added to the price of the latter, if it is worse - a decreasing one.
Cost adjustments:
a) absolute corrections, introduced to the unit of comparison, change the price of the sold analogue object by a certain amount, in which the difference in the characteristics of the analogue object and the evaluated object is estimated. A positive correction is made if the evaluated object is better than a comparable analogue, negative if it is worse;
b) monetary adjustmentsadded to the price of the sold analogue object as a whole, change it by a certain amount, in which the differences in characteristics are estimated.
Cumulative percentage adjustments determined by multiplying all individual percentage adjustments.
Amendment in the form general grouping usually used in the developed real estate market, where there are a large number of sales. The cumulative adjustment is made within the selected group of comparable objects.
Sequence of amendments:
1. Amendment to Funding Terms.
2. Amendment for Special Conditions of Sale.
3. Adjustment for the time of sale.
4. Correction for location.
5. Correction for physical characteristics
48. Methods for calculating physical depreciation of real estate, functional and economic obsolescence.Wear - characterizes the decrease in the usefulness of the property, its consumer properties with the tz. potential investor and is expressed in a decrease in value over time under the influence of various factors.
Depreciation is usually measured as a percentage, and depreciation is measured as impairment.
Wear types: physical, functional, external (economic)
Physical deterioration - the gradual loss of the technical and operational qualities of the object originally laid down during the construction under the influence of natural and climatic factors, as well as human life.
Methods for calculating the FI of buildings:
1.regulatory (for residential buildings)
2. cost
3.life method
Normative method for calculating physical wear and tearinvolves the use of various regulatory instructions at the intersectoral or departmental level. An example of such instructions is the Rules for assessing the physical deterioration of residential buildings VSN 53-86 of Gosgrazhdanstroya (State Committee for Civil Engineering and Architecture under the USSR GOSSTROE. Moscow, 1990), used by the Bureau of Technical Inventory in order to assess the physical deterioration of residential buildings during technical inventory, planning capital repairs of the housing stock, regardless of its departmental affiliation.
The physical deterioration of the building should be determined by the formula:
, where is the physical deterioration of the building,%; F i - physical wear of the i-th structural element,%; L i - coefficient corresponding to the share of the replacement cost of the i-th structural element in the total replacement cost of the building; n is the number of structural elements in the building.
For all its clarity and persuasiveness, it has the following disadvantages:
· Impossibility to initially take into account atypical operating conditions of the facility due to its “normative character”;
· Labor intensity of application due to the necessary detailing of the structural elements of the building;
· Impossibility of measuring functional and external wear;
· Subjectivity of specific weighting of structural elements.
Cost method for determining physical wear and tear. Physical wear and tear at the time of its assessment is expressed by the ratio of the cost of objectively necessary repair measures that eliminate damage to structures, elements, systems or buildings as a whole, and their replacement cost.
The essence of the cost method for determining physical wear and tear is to determine the cost of recreating building elements.
The calculation of the depreciation is based on the reasonable actual costs of bringing the worn out elements to “practically new condition”, the result obtained as a result of applying this approach can be considered quite accurate. Among the disadvantages inherent in this technique, it is necessary to note the mandatory detailing and accuracy of calculating the cost of repairing worn-out building elements.
Determination of physical deterioration of buildings by the method of life. Based on the essence of the previously considered basic evaluative concepts that characterize the total accumulated depreciation of a building in terms of the time of its operation, it can be argued that physical depreciation, effective age ( calculated based on chronological age /from the date of commissioning to the date of assessment / taking into account its technical condition, which affects the value of the object) and economic life ( the operating time of the building during which the object generates income) bearing structural elements are in a certain ratio. This ratio can be expressed by the following formula:
where AND(%) - wear in percentage; EV - the effective age, determined by an expert based on the technical condition of the elements or the building as a whole; VF - typical length of physical life; OSFJ - remaining physical life.
The percentage of depreciation of elements or the building as a whole calculated in this way can be converted into value terms (depreciation):
,
where And - wear percentage; ВС - replacement cost.
Functional wear. Signs of functional wear in the assessed building, as a rule, are the discrepancy between its space-planning and (or) design solutions to modern standards, including various equipment necessary for the normal operation of the structure based on its current or intended use.
Depending on the physical possibility and economic feasibility of eliminating the causes that caused functional wear, it is divided into removable and irreparable.
The cost expression of functional wear is the difference between the cost of reproduction and the cost of replacement, since the calculation of the latter, according to the definition, deliberately excludes functional wear from consideration.
COMPARATIVE APPROACH TO REAL ESTATE VALUATION
The comparative approach is based on the principle of substitution and is based on a very simple assumption: if, when evaluating an object, we find out that the same object has already been sold for a certain amount, then it is quite logical to assume that the evaluated object is worth the same.
The key concept in the comparative approach is a similar object (analogue object), with which the evaluation object is compared in the future. An object-analogue of the object of appraisal for the purposes of appraisal is an object similar to the object of appraisal in terms of the main economic, material, technical and other characteristics that determine its value.
The main characteristic for the object of assessment is the size of the transaction with it. If the appraiser does not have price information about the analogue object, then even its maximum similarity with the appraisal object cannot help in determining the value.
Considering that each real estate object is unique, and also that price information is available about a very limited number of objects, then the selected analogue objects will inevitably differ from the object of appraisal, therefore the main meaning of the comparative approach is to answer the question: “How much would an object cost- analogue, if it had exactly the same characteristics as the object of assessment? "
The answer to this question is carried out by adjusting the prices of analog objects for existing differences with the object of assessment.
Corrections, also called corrections, are positive and negative, absolute and relative.
The correction sign is determined depending on the ratio of the characteristics of the analog object and the object of assessment. If the analogue object is better than the evaluation object, then a negative correction is made, if the analogue object is worse, then a positive one.
Absolute amendments the adjustments measured in monetary units are called, relative adjustments measured in fractions or percentages.
When evaluating a property, you should adhere to a certain amendment sequence ... If all amendments are either relative or absolute, then the amendment procedure is as follows:
- Property Rights Amendment.
- Amendment to Funding Terms.
- Amendment to Terms of Sale.
- Adjustment at the date of sale.
- Location correction.
- Corrections for other physical characteristics.
If both absolute and relative corrections are determined, then first relative corrections are made according to this order, and then absolute ones.
In the process of real estate appraisal by a comparative approach, the calculation of the values \u200b\u200bof amendments can be made by various methods.
In this work, we will use an analytical method of making corrections, which consists in the fact that the magnitude of the correction is determined by logical-analytical reasoning.
For example, if an apartment is assessed without recent repairs, and an apartment with just renovated work is an analogue object, then the correction for repairs can be calculated by summing up the cost of a similar amount of work and the necessary building materials. The resulting value will act as an amendment to the analog object with a negative sign.
Within the framework of the analytical method, it is necessary to analyze what all the above types of amendments are and how one should approach their analytical definition.
Amendment for rights introduced in cases where the object of assessment and the object-analogue are provided to their current users on different property rights. From a theoretical point of view, one should avoid the selection as analogs of objects granted under another law, but due to the limited choice of objects of analogs, in practice such objects are often not rejected.
The adjustment for rights is the difference between the net income that can be obtained with full ownership and with other rights, and is numerically equal to the present value of these losses for the entire period under consideration.
Financing amendment should reflect the differences in price caused by the unequal ratio of equity and borrowed funds in the transaction.
Attraction of borrowed funds is carried out in two cases: when there is not enough available own funds to complete a transaction, and when there is a need to increase the profitability of the investor's (owner's) own funds without making changes to the object itself, the procedure for its operation, etc.
The effect of changes in the return on equity due to borrowing is called the effect of financial leverage or the effect of financial leverage.
Thus, the adjustment for financing terms represents the difference in cash flows with different ratios of equity and borrowed funds and is numerically equal to the amount of financial leverage. In the domestic practice of real estate appraisal, the adjustment for financing conditions is less common than in Western practice, because in modern Russian conditions, the number of transactions involving borrowed funds is small.
Amendment to the terms of sale is introduced, firstly, in cases where supply or demand prices are used as price information about analogue objects, and secondly, under such special conditions as sale by installments, etc. The introduction of each of the special conditions of sale will inevitably affect the price of the object.
The amendment to the terms of sale represents the difference in value under different terms of sale and is numerically equal to the bargaining discount (deal-offer case) or the bringing of all payments to date (direct-installment case). The amount of the discount for bargaining is determined empirically and currently in the real estate market is 10-15%.
The need to make date of sale adjustments is caused by the fact that information about transactions with similar real estate objects, as a rule, dates from the past time periods. Moreover, there are often cases when a significant time period separates the date of the transaction with the analogue object and the valuation date.
Consequently, the adjustment at the date of sale represents an adjustment to the date of valuation of the transaction prices for similar items.
The adjusted value of the analogue object is numerically equal to the future value of the specified sale price of the analogue object.
Location correction the real estate object is due to the fact that often the area where the real estate object is located is the main pricing factor of real estate.
The cost of absolutely identical objects located in different areas of the city can differ by a very significant amount. This is due to the fact that the concept of location is very broad and includes the competitive environment, engineering, social and transport infrastructure, prestige, etc.
It is this latitude of the term that makes the location correction the first of the physical adjustments. This adjustment is a reflection of the effect of location on the difference in the value of the same property and is numerically equal to the difference in the average values \u200b\u200bof the respective territories or the capitalized difference in average income. The word territory can be understood as city districts, historical established districts, etc.
Corrections for other physical characteristics are too individual to be reduced to some single algorithm.
It should be noted that each subsequent amendment is made to the price of the analogue object, adjusted taking into account the previous amendments. After making all the corrections, the appraiser receives the adjusted prices for each of the selected analogues. To calculate the value of the object of assessment using a comparative approach, it is necessary to average the results obtained. If the difference between the minimum and maximum adjusted prices of analogue objects does not exceed 10%, then averaging is carried out using the arithmetic mean method. If the differences are more significant, then the value of the property is calculated as a weighted average. The weights are the reciprocal of the number of corrections.
Sourse of information:
lecture material from the guidelines for the implementation of settlement and graphic work in the discipline "Appraisal of land and other real estate" / Associate Professor Ph.D. S.I. Komarov. - M .: GUZ, 2012 .-- 71 p. - chapter "Comparative approach to real estate appraisal"
5.1. Comparative approach to real estate appraisal .. 57
5.2. Comparative Approach 59
5.1. Comparative approach to real estate appraisal
The fundamental principle of the comparative approach to real estate valuation is the principle of substitution. It states that if there are several similar properties on the market, a rational investor will not pay more than the amount that would cost the acquisition of real estate of similar utility.
The substitution principle is also applicable to profitable real estate. The typical information investor compares the properties for sale in profitable real estate and considers alternative capital investment options. Investors compare ROIs for different projects, rates of return, and capital expenditures across different options, while taking into account tax advantages, management costs, and other factors.
The following main stages of real estate valuation using a comparative approach can be distinguished:
1. At the first stage study the state and development trends of the real estate market and especially the segment to which this object belongs. The real estate objects that are most comparable to the one being appraised, which were recently sold, are identified.
2. In the second stage information on similar objects is collected and verified; the collected information is analyzed and each analogue object is compared with the evaluated one.
3. In the third stage adjustments are made to the sales prices of comparable items.
4. At the fourth stage the adjusted prices of analogue objects are agreed and the total value of the market value of the real estate object is displayed on the basis of a comparative approach.
At the first stage of the assessment real estate comparative approach studies the state of the real estate market and trends in its development, carries out its segmentation and determines which segment of the market belongs to the evaluated object. Further in this segment, according to certain criteria, the objects that are most comparable with the investigated object (analogous objects) are identified.
Market segmentation is the process of dividing the market into sectors (segments). The division takes place into sectors that have similar objects and subjects.
Objects should be similar in purpose of use, quality, transferred rights, location.
Subjects should be similar in terms of solvency, funding opportunities, investment motivation.
Comparable properties must belong to the same segment of the real estate market as the one being evaluated; transactions with them must be carried out on terms typical for this segment. In particular, the following points should be monitored:
Exposure period - This is the time that an object must be on the market in order to be sold. The exposure period differs for different market segments.
Independence of the subjects of the transaction. If the buyer and seller are related, or are representatives of a holding company and an independent subsidiary, or have other interdependence and mutual interest, transactions between them are usually not at market prices and data on them cannot be used for comparison.
Investment motivation. Investors must have similar motives and objects must have the same best and most efficient use. Thus, the purchase of a building in order to organize an office in it cannot be used as an analogue if the building is planned to be used as a hotel, since the expected streams of income and expenses will be different.
The main criteria when choosing comparable objects (analogs) are:
1) Property rights.
2) Terms of financing.
3) Conditions and time of sale.
4) Location.
5) Physical characteristics.
Different units of comparison are used by different segments of the real estate market.
Earth comparison units:
§ price for 1 ha;
§ price per hundred square meters;
§ price for 1 front meter:
§ price for 1 sq. m.
Building plot comparison units:
· Price for 1 sq. m. total area;
· Price for 1 sq. m. net area to be leased;
· Price for 1 cubic meter m.
The gross rental multiplier or the total capitalization ratio can be used as the economic unit of comparison when evaluating projects based on the ratio of income and sales price.
Classification and essence of amendments
Different methods of calculating and making adjustments for differences between the assessed object and a comparable analogue, allow us to classify the introduced amendments as follows:
Percentage adjustments, as a rule, are introduced by multiplying the selling price of the analogue object or its comparison unit, a coefficient reflecting the degree of differences in the characteristics of the analogue object and the evaluated object. At the same time, the reasoning is as follows: if the evaluated object is better than a comparable analogue, then a multiplying coefficient is added to the price of the latter. Otherwise, a reduction factor is applied to the price of the comparable analogue.
Percentage adjustments include, for example, adjustment for location, depreciation, time of sale.
Cost adjustments
a) Monetary adjustments made to the unit of comparison (1 hectare, unit of density, 1 weaving), change the price of the sold analogue object by a certain amount, in which the differences in the characteristics of the analogue object and the evaluated object are estimated. The amendment is made positive if the evaluated object is better than a comparable analogue. Otherwise, a negative adjustment is applied to the price of the comparable equivalent.
The monetary corrections made to the unit of comparison include a correction for physical condition, as well as corrections calculated by statistical methods.
b) Monetary adjustments made to the price of the sold analogue object as a whole change it by a certain amount, in which the difference in the characteristics of the analogue object and the evaluated object is estimated.
The monetary amendments made to the price of the sold analogue object as a whole should include amendments for the presence or absence of additional improvements (warehouse extensions, parking lots, etc.).
5.2. Comparative approach methods
Calculation and amendment
Many different methods are used to calculate and amend, among which are the following:
o methods based on the analysis of paired sales;
o expert methods of calculation and amendment;
o statistical methods.
Paired sales method
A pair sale means the sale of two objects, ideally an exact copy of each other, with the exception of one parameter (for example, location), the presence of which explains the difference in the price of these objects. This method allows you to calculate the correction for the aforementioned characteristic and apply it to adjust the sales price of an analogue property comparable to the valuation object for this parameter.
The limited application of this method is explained by the complexity of the selection of objects of pair sale, the search and study of a large amount of information.
Expert calculation and amendment methods
The basis of expert methods for calculating and making corrections, usually percentage, is the subjective opinion of an expert appraiser about how much the object being evaluated is worse or better than a comparable analogue.
Let us denote the cost of the appraised object - X, and the selling price of a comparable analogue will be taken equal to - 1.0
In this case, the reasoning boils down to the following:
1. The object is 15% better than the analogue, then the price of the analogue should increase by the same 15%:
X \u003d 1.0 + 15% x 1.0 \u003d 1.0 x (1+ 0.15) \u003d 1.15
2. The evaluated object is 15% worse than the analogue, the price of the analogue will decrease:
X \u003d% x 1.0 \u003d 1.0 x (\u003d 0.85.
3. The analogue is better than the evaluated object by 15%. The price of the analogue should decrease:
1.0 \u003d X + 15% x X \u003d X (1 + 0.15), X \u003d 1 / 0.87.
4. The analogue is 15% worse than the evaluated object. Analogue price should rise:
1.0 \u003d X - 15% x X \u003d X x (, X \u003d 1 / 0.85 \u003d 1.18.
Expert calculation and adjustment methods are usually used when it is not possible to calculate sufficiently accurate dollar adjustments, but market information is available on percentage differences.
Statistical methods for calculating corrections
When appraising real estate by the comparative analysis of sales, in the process of adjusting for differences between the appraised object and its analogue, it is not always possible to calculate the likely price of the object relatively accurately. If you do not use such methods of calculating corrections as correlation regression analysis, you should introduce as few corrections as possible for differences in the characteristics of compared objects. This primarily concerns corrections for physical differences (in particular, scale corrections).
The essence of the method of correlation-regression analysis is the permissible formalization of the relationship between changes in prices of a property and changes in any of its characteristics.
This method is laborious and requires a sufficiently developed real estate market for its application, since it involves the analysis of a large number of representative samples from the database.
Evaluation of projects based on the ratio of income and sales price
In this case, the following comparison units are used as comparison units:
1. Gross Rent Multiplier (GRM).
2. General capitalization ratio (OCC).
1. Gross rental multiplierrepresents - the ratio of the selling price to either Potential Gross Revenue (GVR) or Actual Gross Income (GVR).
To use BPM you need:
a) Estimate the market rental income from the appraised property.
b) Determine the ratio of gross (actual) income to the selling price for comparable sales of an analogue.
c) Multiply the rental income from the evaluated object by BPM.
The probable selling price of the appraised property is calculated using the formula:
Tsob \u003d Dr x BPM \u003d Dr x Tsa / PVD;
where Tsob is the probable selling price of the assessed object;
Dr - rental income from the evaluated object;
VRM - gross rental multiplier;
CA - the selling price of a comparable analogue;
LDPE - potential gross income.
BPM is not adjusted for convenience or other differences between the subject of assessment and comparable analogs, since the calculation of BPM is based on actual lease payments and sales prices, which have already taken into account these differences.
The method is quite simple, but has the following disadvantages:
It can only be used in a developed and active real estate market;
Does not fully take into account the difference in risks or capital return rates between the subject of assessment and its comparable analogue;
It also excludes the likely difference in net operating income.
2. Total capitalization ratio
When using the general capitalization ratio, the process of determining the probable selling price of the assessed object can be represented as the following stages:
1. selection of comparable (including in terms of risk and income) sales in this segment of the real estate market;
2.total capitalization ratio (CCR) is determined by the ratio of net operating income (NPR) of a comparable analogue to its selling price:
Kkap \u003d CHODa / Tsa;
where Kkap is the capitalization ratio;
CHODa - analogue net operating income;
Tsob \u003d CHODob / Kkap,
where Tsob is the probable price of the subject of assessment;
CHODob - net operating income of the appraised object;
Kkap - capitalization ratio calculated from market data for comparable peers.
Analysis of the calculations obtained and the final conclusion on the likely price of the object by the method of a comparative approach to real estate appraisal
The final stage of the comparative approach in real estate appraisal is the analysis of the calculations made in order to obtain the final value of the value of the object being evaluated. In this case, it is necessary:
1. Carefully check the comparable sales figures used for the calculation and their corrected values.
2. Reconcile the adjusted LFLs by calculating the weighted average.
The weighted average calculated by the appraiser will be the probable selling price of the appraised property, which can be rounded within acceptable limits in each specific case.
Questions for self-control
1. What are the main units of comparison used in the comparative approach?
2. What are the main criteria for applying the method of paired sales used in the comparative approach?
3. Is it possible to adjust the elements (characteristics) of the appraised property when modeling its value using a comparative approach?
4. What is the difference between quantitative and qualitative methods of calculating and making adjustments when applying the comparative approach? When is it possible to use only qualitative adjustment methods?
5. How many comparable properties are necessary and sufficient to implement the paired data analysis method in the comparative approach?
6. List the advantages and disadvantages of the gross rental multiplier method.
7. What are the main statistical characteristics used in the comparative approach when preparing the initial market data and analyzing the adjusted sales prices of comparable real estate objects in order to assess the reliability of the simulated value of the estimated real estate object?
Test for the current control of knowledge
1. For which real estate objects is the comparative approach to assessing their value generally applicable?
a) office building,
b) the sports palace,
c) both properties?
2. The company acquired a land plot worth $ 2,000 five years ago. e. and built a warehouse on it. The construction of the warehouse then cost the company $ 25,000. e. Currently, similar warehouses with similar sites in this area are sold for an average of 40,000 USD. e., and vacant (undeveloped) plots - for 3000 USD. e. What is the market value of the warehouse (with the site), built by the company at the present time?
a) 40,000 USD e.,
b) 28000 USD e.,
c) $ 27,000 e.
3. The evaluator identified three elements of comparison: location, dynamics of transactions in the market (date of sale) and terms of sale (frequency of transactions). In what sequence should he make adjustments to comparable objects for these elements?
a) location, dynamics of transactions on the market, terms of sale,
b) conditions of sale, price dynamics in the market, location,
c) dynamics of transactions on the market, terms of sale, location,
d) in any order.
4. What requirements should the sold real estate objects meet in order to be suitable for a comparative approach to determining the value of the appraised object?
a) the property must be of the same type,
b) the participants in the transactions had an objective understanding of this market segment,
c) the participants in the transactions did not have any relationship that could affect the prices of the transactions,
d) market data on transaction prices were obtained from a person interested in distorting them,
e) transactions are geographically "tied" (made in one zone, district),
f) all of the above.
5. To assess which of the listed types of real estate is the most suitable method of comparative sales:
b) warehouses,
c) factories,
6. What is the most appropriate unit of comparison when evaluating land for the construction of an apartment building?
a) the total area of \u200b\u200bthe land plot, the number of acres,
b) the length of the street facade, m,
c) the number of apartments that can be built, rubles / apartment,
d) price per square meter of land, rubles / m2.
7. What is the most appropriate unit of comparison when evaluating the value of an automobile store?
a) price for a place for a car, rubles / m2,
b) the price per square meter of the total area of \u200b\u200bthe building, rubles / m2,
c) price per cubic meter of warehouse, RUB / m3,
d) the price per square meter of the total area occupied by the store, rubles / m2.
8. Adjustment for comparison elements is made using the method of comparative analysis of sales:
a) from comparable objects to the evaluated one,
b) from assessed to comparable.
Comparison of the characteristics of analogs and the evaluated object allows you to identify differences that affect the price and, therefore, require its change. To correctly model the value of the appraisal object, it is necessary to identify the type of adjustment, calculate its value and correct the prices of analogs correctly. The type of amendment applied affects the order of its calculation and the adjustment process. Adjustments are made based on the comparison items listed above. To the extent that the property being valued differs from the comparable property, the price of the latter needs to be adjusted in order to determine at what price it could be sold if it had the same characteristics as the property being valued. The basic rule for making adjustments is that when adjusting the actual sales prices of comparable objects, adjustments are made from the object of comparison (OS) to the object being evaluated (OO):
OS → OO.
The amendment form can be: - in absolute terms (rubles, dollars, euros); - percentage of the cost of compared objects; - fractions of a unit (used less often). Cash adjustments, or cash adjustments, are amounts added (deducted) from the selling price of each comparable property. Monetary absolute adjustments change the price of the analogue as a whole by a specified amount. This is a cost correction, the magnitude of which does not depend on the number of comparison units. This adjustment is made to the price of the analogue as a whole. An example of absolute monetary adjustments: adjustments for the presence or absence of additional improvements (garage, pool, parking, etc.). Monetary relative adjustments change by a specified amount the price of a comparable unit of comparison. The total amount (sum) of adjustments applied to the comparison unit price for the object as a whole depends on the number of comparison units. An example of relative monetary adjustments is: a cosmetic adjustment; corrections calculated by the method of correlation-regression analysis. Percentage adjustments change the price of real estate by a certain coefficient and are introduced by multiplying the corrected price of the analogue by this coefficient. The percentage adjustment can be made both to the price of an analogue as a whole, and to the price of a unit of comparison of an analogue. The total value of the correction to the object as a whole does not depend on the number of comparison units. Percentage adjustments are usually converted into monetary values \u200b\u200bthat are added to or subtracted from the price of the analogue object. Percentage adjustments are made for location, depreciation, time of sale. Percentage adjustments are used when it is difficult to determine the exact amount of money, but market data suggests that there are percentage differences. Pay special attention to the signs. For example, when a comparable item is inferior to the item being assessed, the actual selling price of the former should be increased to the value it would sell for if it had higher characteristics of the item being valued. The amount of adjustment is based on how the differences between the compared items will be assessed by a typical buyer in the market. Therefore, any specific feature of an object is not worth as much as it was spent on its creation or liquidation, but as much as it adds to the total market value of the property, that is, its contribution is estimated. Thus, the amount of the adjustment is a characteristic of the market reaction to the contribution of the considered component to the value of the property. The amendment process consists of the following steps: 1) identification (definition) of comparison elements that affect the value of the subject of assessment; 2) comparison of comparison elements in each specific case and measurement of the difference between each comparison object and the evaluation object (for example, in percentage); 3) determination of the net (total) amendment for each object of comparison and adjustment of its selling price; 4) analysis of the adjusted values \u200b\u200bof all objects of comparison and a conclusion regarding the market value of the object of assessment. When carrying out the analysis in clause 4, the following concepts of the theory and practice of statistical methods are used: - the arithmetic mean of the sample; - median - the median value of the increasing sequence of sample values; - fashion is the most common value among indicators. So, on a cumulative basis, adjustments are made if the evaluator determines that each amendment affects others. The sequence of actions in this case: - the percentage corrections are determined for each characteristic; - each correction is added (subtracted) from 100% and divided by 100%; - the obtained correction factors are multiplied among themselves; - the selling price of the comparable property is multiplied by the final correction factor. On an independent (plus / minus) basis, adjustments are made when it is precisely established that buyers in the market will evaluate the adjustment characteristics independently of each other. The sequence of actions in this case: - the percentage corrections for each characteristic are determined; - their percentage values \u200b\u200bare summed up (taking into account signs); - the selling price of a comparable property is multiplied by the total percentage; - the selling price of a comparable object is adjusted by the resulting value, taking into account the sign by addition or subtraction. All methods for calculating adjustments can be divided into two categories: 1) quantitative; 2) high quality. One of the signs of separation is the ratio of the number of pricing factors and the number of analogues used for assessment. If the number of analogues k is greater than or equal to the number n of pricing factors increased by one (k ≥ n + 1), then quantitative methods are used for the assessment. If the number of analogs k is less than the number n of pricing factors increased by one (k< п + 1), то для оценки используются качественные методы. Quantitative methods include: 1) analysis of paired sales - two market sales are compared to determine the adjustment for one comparison element and its contribution to the value (two sales differing in only one comparison element); 2) statistical analysis - when a large amount of data makes it possible to calculate the value of the adjustment; 3) graphical analysis - for example, calculating the cost of land plots when approaching a city line; 4) trend (Trend is an identified long-term trend analysis - identification of market trends based on an analysis of a large amount of market information; tracking market trends by any parameters; 5) analysis of secondary (indirect) data describing not comparable transactions, but general market data with indication of the source of information; 6) analysis of sensitivity, costs, capitalization of rental differences, etc. Qualitative methods include: 1) relative comparative analysis - a qualitative classification analysis of the relative similarity of compared objects without calculating precise adjustments, but using standard quality terms, for example, a qualitative scale of the form: - much better, - much better, - a little better, - equal, - slightly worse, - much worse, much worse. Qualitative classification this kind is often used in combination with quantitative methods; 2) general grouping method - when in an active market there are many similar sales with a narrow range of prices, for example, plots in horticulture. The appraiser does not make individual adjustments, but compares the property as a whole to determine whether it is better or worse than each of the comparable properties. Then, within the selected group, an aggregate grouping is performed. Thus, there is no need to consider each feature separately; 3) the method of personal interviews - it is used for an active market and simple objects and consists in conversations with specialists (lawyers, district architects, managers, etc.); 4) the method of expert assessments (rank analysis), etc. When making adjustments, follow the following rules. - if the total correction is less than 5%, then it can be neglected; - if the total correction is more than 25%, then this object of comparison should be excluded from consideration and a more comparable one should be selected if it is possible. The method of analysis of paired sales allows you to calculate an amendment based on a comparison of the prices of objects that have a given difference in characteristics. A pair sale is a sale of two objects that are similar in parameters in all but one characteristic for which an adjustment must be calculated. Comparison of prices allows you to calculate the amount of adjustment and apply it to other objects in a particular market segment.
Median is the median value of a monotonic sample-1500, 2000, 2000 (median), 2300, 3000.
Fashion is the most common meaning. Equal to 2000 dollars. Thus, the adjustment for the presence of a garage is $ 2,000.
Define:
1) correction for the difference in area;
2) adjustment for the presence of a garden;
3) adjustment for the presence of a garage.
Example 12.4. Based on the results obtained, determine the market value of the villa "At Three Stones" with an area of \u200b\u200b250 m 2, with a garage, but without a garden.
1) OO differs from OS2 only in area:
250 - 150 \u003d 100 m 2;
2) determine the amount of correction for the difference in area:
260x 100 \u003d 26,000 dollars;
3) Adjusted selling price of OS2:
30,000 + 26,000 - 56,000 USD
Consequently, the market value of the Three Stones Villa is $ 56,000.
Consider the use of one of the qualitative methods - relative comparative analysis.
Relative comparative analysis consists in dividing all objects of comparison into two groups. The first group includes objects that are superior in their characteristics to the object of assessment, and the second group includes objects that have lower quality characteristics than the object of assessment. Thus, the price range of the probable value of the appraised object is highlighted.
The method is used in conditions where it is impossible to analyze a paired data set.
As follows from the definition, the method is used to compare only the characteristics of objects; adjustments for the first group of comparison elements must have already been made.
Thus, in order to evaluate an object, it is necessary to compare its qualitative characteristics and the characteristics of analogs. For this, it is necessary to assess the qualitative characteristics of the objects.
Assessment of the quality of objects is a measurement process (assigning numbers to the qualitative characteristics of an object in accordance with certain rules), which can be defined as a procedure for comparing characteristics for selected indicators (features). This definition includes three concepts - characteristic, indicator and comparison procedure.
If the factor levels can be expressed quantitatively (in rubles, dollars, percentages, square meters, etc.), then such a factor is called quantitative, but if the factor levels cannot be expressed in a specific number, then such a factor is called qualitative.
An example of a quantitative factor is such a property of real estate as the area of \u200b\u200ban object, and a qualitative factor is its condition. Of course, the condition of a building can be expressed as a percentage of depreciation according to technical inventory data, but a number of objects, for example, land plots, from the point of view of assessment, do not wear out, however, they can differ in quality in form, accessibility, etc.
Factors can also be conditionally divided into discrete and continuous. Discrete factors are understood as factors with a certain (most often small) number of levels. Factors whose levels form a continuous set are called continuous.
The area of \u200b\u200bthe object in this gradation looks like a continuous factor. Discrete factors include the presence of a balcony in the apartment (no, one, two).
All this leads to the allocation of certain general principles, universal scales by which the levels of factors can be classified.
The following types of scales are most commonly used in measurement practice:
Nominal (naming or classification scales);
Ordinal;
Interval;
Relationship scales;
Nominal scales are used to describe the belonging of objects to certain classes. All objects of the same class are assigned the same number. The factors in this case are formalized in the form of binary estimates of two levels: 0 and 1. This scale is also called binary.
Ordinal scales make it possible to establish equivalence and dominance. Numbers (codes) only allow you to determine the order of objects and do not make it possible to say how much or how many times one object is preferable to another. The simplest example of coding on such a scale: better, worse, equivalent.
Interval scales allow you to reflect the amount of difference between the properties of objects. The simplest example is measuring the percentage of depreciation of a building. The main property of such a scale is the equality of the intervals. The interval scale can have arbitrary reference points and scales. The main advantage of the scale is that it allows you to fix the relationship "how much better" and "how much worse."
Relationship scale - a special case of the scale of intervals, when 0 is taken as the reference point. With this coding, the ratio of any two points of the scale does not depend on the unit of measurement. Consequently, this scale allows you to determine the relationship "how many times better" or "how many times worse."
Less commonly used scales include variations of the interval scale such as the difference scale (unit scale) and absolute scale (zero point and unit scale).
It should be noted that as a result of this or that assessment, it becomes necessary to compare the factors qualitatively and quantitatively with each other. The incommensurability of factors among themselves is explained, as a rule, not only and not so much by different units of measurement, but also by the fact that each factor, expressing a certain property, is at the same time an assessment of the attitude of experts to this property.
If it is necessary to make a decision taking into account many factors, then all their diversity, as a rule, leads to an unambiguous complex assessment, and the most common and convenient is the monetary assessment.
Price range: $ 43 to $ 50 for 1 m 2 of the site (extreme values \u200b\u200bare discarded).
Assessment using ranks. The company's employees conducted an expert survey on the influence of various factors on the cost of 1 m 2 of land
plot. A total of 16 experts were interviewed. For plots of land, the NEI of which is the construction of a typical apartment building of series 600.11, the following answers were received:
The price range for 1 m 2 is the same: from 43 to 50 dollars, but it can be seen that in terms of its quality characteristics, the object of assessment is closer to analogue 2.
The quality scale used here with the missing steps restored:
Better - 618,000 dollars;
A bit better -
Equal (OO) -
Slightly worse - 612,000 dollars;
Worse - 610,000 dollars.
It is easy to see that the correction for one level of quality is $ 2,000, therefore, the value of the object being evaluated is $ 614,000.
Quite often, market statistics data analysis is used in appraisal practice. The most commonly used is correlation and regression analysis. If you use it, you can get good results with a good database. At the same time, the effectiveness of the method is largely related to the number of comparison elements: the more factors affect the price of a property, the more representative the database should be.
The expert method is based on the appraiser's subjective decision about how the analyzed parameter affects the price in percentage terms. As a rule, those objects are analyzed, the discrepancy of the parameters of which with the object being evaluated does not lead to a deviation of the cost by more than 30%.
The sequence in which adjustments are made to comparable items is determined based on an analysis of market information on transactions. Table 12.2 provides an example of an amendment sequence where percentage adjustments are applied to the price of a comparable property to take into account how much it outperforms (inferior) property rights, financing terms, terms of sale, market conditions, location, economic characteristics, type of use, and other components.
There is one important point to make. Determining market value as one of its conditions presupposes an open and competitive market. Since the real estate market in Russian reality is not such, and the information market for some segments of the real estate market is not only opaque, but completely closed, the appraiser is forced to use not only information on transactions, but also data on the prices of offers for sale.
However, sales prices and offer prices, as is known from pricing, differ in terms of bargaining, trade margins, intermediary margins, etc. Often, the aggregate value of these markups is known as a percentage of the selling price from market analysis (and realtors know it), or the appraiser can track the listing data change. Therefore, you should take this difference into account before making any subsequent adjustments, since all price characteristics must have a homogeneous structure to make adjustments.
It is methodologically incorrect to refer this procedure to amendments to the terms of sale or market conditions, since it does not express either the specifics of the motivation for the transaction, or the change in market conditions over time that determine these amendments.
