Correction of the values of units of comparison for analog objects for each element of comparison. Introduction and justification of the scale of adjustments
1) Adjustment for "bargaining" allows you to bring the offer price to the selling price. As a result of a survey of participants in the residential real estate market in Simferopol (Real estate agencies "Russian Crimea", "Orion", "Rielkom", "Veta", "Crimean Terem", "Real Estate Parade", "VIP Chance"), it was revealed that a discount on bargaining for the sale of such residential real estate is on average 10%.
2. Adjustment for "real estate services" allows you to adjust the offer prices from real estate agencies to the cost without taking into account the cost of their services. As a result of the analysis of average prices for real estate services (Real Estate Agencies "Infoservice", "Business Crimea", "Crimea Plus", "RIO", "World of Real Estate", "Dom-Plus"), the appraiser found that the average cost of services of real estate agencies is 5%.
3. The adjustment for "location" for all analogous properties was 0%, since the object of assessment and these analogs are comparable for this factor.
4. The correction for “wall material” for all analogous objects was 0%, since the object of assessment and analogs are located in panel houses.
5. Adjustment for "year of construction". All other things being equal, the price of an apartment in inverse proportion depends on the year of construction of the house due to the increasing physical wear and tear of the building. This adjustment was not applied because the subject of assessment and analogous objects are comparable by this criterion.
6. Correction to "floor". Apartments located on the outer floors of residential buildings, all other things being equal, have a lower one in terms of 1 sq. M. cost compared to apartments located on the middle floors. This adjustment was not applied, since the subject of assessment and similar properties are located on the top floor of five-storey buildings.
7. The correction for the "number of rooms" of all analogue objects is identical, therefore the correction was not applied.
8. Correction for the condition (availability of equipment and furniture). Based on the market analysis carried out in section 3, it was revealed that the cost of 1 sq. M. apartments with furniture and built-in appliances are on average 12% higher than in apartments without such equipment. Therefore, the appraiser applied a downward adjustment by this amount
Table 13
Thus, the sample is homogeneous and can be used to determine the value of the property being valued. In addition, the value of the offer of the selected analogs is in the mid-market range.
Head of the Appraisal Department of Eurasia Service LLC,
full member of SRO ROO (registration number 0003083)
When preparing reports on the appraisal of apartments, the specialists of our company use various methods and approaches. The application of the methods of the comparative approach is not complete without the use of adjustments in determining the value of the appraised object.
The application of adjustments (amendments) depends on many characteristics of the assessed object (date of sale, bargaining and the terms of a future transaction, legal registration of ownership of the object and the presence or absence of restrictions on ownership, location and distance from public transport stops, floor, type of house, interior decoration premises, the ratio of the total area to the living area and to the kitchen area in the apartment, the presence of a separate or shared bathroom, the presence of balconies or loggias, the view from the windows of the apartment - to the outer part of the street or to the courtyard).
Of course, all adjustments require proper justification and explanation. Therefore, below we will try to bring together and justify the size of one or another adjustment (amendment) when assessing and determining the market value of the object.
1. Adjustment for bargaining
When examining the current situation on the market at the present time, as well as based on the experience of evaluating many objects, the value of the adjustment for bargaining is 7%. In quite rare cases, the transaction price and the offer price coincide. Please note that when making adjustments to the auction, the difference between the price of the transaction being concluded and the price of the existing offer is taken into account. How is this difference detected? In the course of mutual negotiations on the price, i.e. in the process of bargaining. The initial price in most cases is significantly higher than the real value of the object. This markup, according to our calculations, is the above 7%.
2. Adjustment at the date of sale (offer)
In many cases, some time has passed since the date of sale of the appraisal object (for example, more than a month), respectively, there have been changes in the market that have affected, first of all, the price level. The adjustment to the date of sale takes into account these changes, namely the time period that took place before the publication of the information on the sale price.
An adjustment at the date of sale means that changes in market price increases have been taken into account and accounted for. This point is very important to consider when assessing and making amendments.
3. Adjustment for the terms of the deal
When evaluating an object in relation to which the subjects intend to conclude a transaction, the terms of the transaction itself are also taken into account. If the object of assessment is free from the rights of third parties (for example, no one is registered in the apartment), i.e. is free both legally and physically, then an adjustment to the terms of the transaction is applied - 10% more expensive. This is the average correction rate. In order to clarify, let's give an example - if you want to evaluate an apartment for sale with a simultaneous purchase (exchange), then the cost of the apartment will be less by the amount of the specified adjustment. The rationale for this is the waste of time looking for an exchange option that would satisfy the wishes of both parties to the transaction.
4. Adjustment of ownership
The cost of an object is influenced by many factors. In this case, it is necessary to take into account the parameters that reduce its cost. An adjustment to the right of ownership is understood as the difference between the price of the object in the presence of the right of ownership, formalized in accordance with legal norms and requirements.
If the state registration of ownership of the appraised object has not been carried out, then the adjustment is 5-10% for a decrease in value. A similar amendment applies if there are various restrictions on ownership or other encumbrances. In such cases, the value of the object decreases and, accordingly, the transaction price decreases.
5. Correction for location
Such a characteristic of the assessed object, such as location, is the most common, as well as one of the most significant in determining the value of an apartment in the conditions of existing market relations. The need to correct for location arises when the location of an object differs from similar objects. If an apartment is located far from a metro station or other public transport stop, then this directly affects its value downward. Conversely, the proximity of an apartment to the stops of trams, trolleybuses, buses and metro stations increases the price of an apartment.
The adjustment is up to 15% if the apartment (object of appraisal) is removed from the bus (trolleybus, tram) stop or, in order to get to the apartment from the metro station, you need to use surface transport, this reduces its price. Moreover, every 200 meters from the public transport station to the apartment, namely every two minutes that you need to walk to get to the house, also affect its price downward by 1% (for every 200 meters).
6. Adjustment per floor
When evaluating an apartment, the floor on which it is located is taken into account. The factor that affects the cost is on which floor the apartment is located - on the first floor, on the last or between them. If the floor is first, then this entails humidity and low air temperature in the apartment, and, as a rule, there is not enough natural daylight in apartments on the ground floor due to trees or bushes planted around the house. As for the last floor, there is a high probability of a roof leak and strong heating of the windows in the summer. The problem with the water pressure due to the upper floor is not excluded. Therefore, apartments on higher floors will cost more than apartments on lower floors.
The adjustment for the floor is 15% for the first floor and 10% for the last.
7. Adjustment for the quality class of finishing
Renovation and quality of finishing affect the cost of an apartment in the most direct way. A flawless and high quality finish increases the price by 10%.
The adjustment for the quality class of finishing is calculated by analogy with a similar apartment.
In this case, there are four types of finishes:
- unfinished - there are no interior doorways, windows have been installed, walls, floor and ceiling have not been finished. This is a primary finish that requires renovation work.
- simple decoration - the walls and ceilings of the apartment are whitewashed or covered with wallpaper, the floor is covered with tiles, linoleum or parquet, the bathroom and the kitchen are equipped with plumbing fixtures.
- improved decoration - walls and ceiling are covered with acrylic paint or wallpaper, on the floor - tiles, linoleum or parquet, bathroom and kitchen are equipped with high quality fixtures.
- high-quality finishing - the apartment has undergone high-quality repairs, while using modern construction technologies and high-quality materials. The available surfaces are perfectly leveled, the apartment is equipped with the latest electrical wiring and plumbing. It is allowed to carry out redevelopment according to an individual project using structures of a complex composite configuration.
8. Adjustment for the type of house
When determining the market value of an apartment in the appraisal process, such characteristics of the object as the type of house in which this apartment is located are taken into account. Based on the general appraisal practice and our experience, in particular, the appraisal object located in a block or panel house is 10-15% cheaper.
But this amendment does not apply if the apartment is located in a brick or brick-monolithic building. At the same time, analogous apartments are compared, which in all other respects, except for the type of house, have similar characteristics. As can be seen from the essence of the applied adjustment, more modern and environmentally friendly materials increase the value of the property being assessed.
9. Adjustment for total area, living area and kitchen area.
When evaluating an apartment, the fact that a large area of the object reduces the cost per square meter is taken into account. As well as the living area and kitchen area also play an important role when applying the adjustment. Thus, apartments in which the living area and kitchen area are larger have a higher cost than their counterparts with a smaller living area and kitchen area.
When evaluating an apartment, the following area adjustment is applied - every 5 sq. M. reduce the cost of one square meter by 1%. When comparing with a similar apartment, which differs only in area, appraisers apply this adjustment.
In addition, amendments are often made depending on the area of the kitchen, because its size affects the total cost of an apartment in the housing market. The correction is applied at the rate of 0.5% for the difference of 1 sq. M. kitchens.
10. Adjustment to the view from the windows
The view from the window in most cases greatly affects the value of the apartment. This can be explained simply - when making a deal and purchasing an apartment, the new owners get not just a view from the window, but an ecological characteristic. Apartments that are located with windows overlooking the outer part of the street, on roads or highways - are significantly cheaper than those apartments with windows overlooking the courtyard. But, the most expensive will be apartments that have windows on both sides - both to the street and to the courtyard. In general, the adjustment to the view from the windows is 10-15% of the value of the property being appraised.
11. Correction for the presence of a balcony / loggia
An essential factor in determining the market value of an apartment is the presence of a balcony and (or) loggia in it. In addition, there can be several balconies (and / or loggias) and this increases the price of the object. If the apartment has a balcony (and / or) loggia, then this is taken as a positive characteristic and is considered an improvement. This parameter is taken into account when evaluating almost any apartment. The amount of correction (correction) is from 0 to 5%. As you can see, the gap between the lower and upper thresholds of the amendment is very significant, and is applied in each case individually, but in comparison with an analogue apartment.
12. Correction for the bathroom
When assessing and determining the market value of an apartment, special attention is paid to the layout of the sanitary-technical unit in the apartment. In addition to the above, in some cases, the number of bathrooms is also taken into account (not always there is only one bathroom in an apartment). An apartment in which the toilet is separated from the bathroom claims to be more expensive than a similar apartment with similar descriptive characteristics, but with a shared bathroom. In this case, the adjustment is on average 5% of the value of the property being appraised.
13. Adjustment for liquidity of a share in an apartment
There are often cases when an assessment is required in relation to not an apartment, but a part of it, i.e. share. At the same time, making adjustments is inevitable, since the market value of a share in an apartment is influenced by many factors.
At the same time, all those parameters are taken into account that would be taken into account when assessing the apartment as a whole, and not just its share. And also, you need to take into account the fact that a share in an apartment is much more difficult to sell or buy than an apartment as an independent solid object. This point also affects the determination of the value of the share.
When adjusting for the liquidity of a stake in an apartment, it ranges from 10 to 40%. This is a fairly large gap between the lower and upper threshold, therefore, the characteristics of the allocated share, as well as the characteristics of the entire apartment, must be taken into account.
Methods for calculating the cost of an apartment quite widely covered and theoretically developed, as evidenced by a huge amount of literature and methodological recommendations for assessment.
The developed real estate market also contributes to this. Moreover, the number of offers is equally diverse in the primary and secondary housing market.
The current legislation and federal valuation standards establish the requirement to use three main approaches to valuation: comparative, cost and income approaches. However, in the case of real estate appraisal, which is an apartment, the cost and income approach is of little use. The appraisal of the market value of an apartment is carried out using a comparative approach. The algorithm is as follows: 7-10 analogs of real estate are selected that correspond to the object of assessment according to the main characteristics. In case of discrepancy or differences from the object of assessment, correction factors are introduced. As practice shows, the main adjustments are:
- To the location of the object
- Correction for physical characteristics (area of the apartment, the ratio of the usable area to the total, the presence of furniture, the type of finish, the size of the kitchen, the type of bathroom, the floor of the apartment in the building, the presence of a balcony / loggia)
- For the availability and type of car park
Further, after applying the appropriate adjustments, the average market value of 1 sq.m. apartments. Moreover, it should be noted that there is a difference between the concepts of "market value" and "sale price". The appraiser determines the market value of the object, which means "the most probable price at which the appraisal object can be alienated on the date of appraisal in the open market in a competitive environment" (Federal appraisal standard No. 2 Appraisal purpose and types of value). This means that all participants in transactions are aware of the terms and conditions and are free in their decisions. The market value is the subject of the Appraiser's research and calculations. The selling price, on the other hand, can be dictated by factors that do not fall under these restrictions, which fundamentally distinguishes the economic meaning of these definitions.
This difference is evident in the example of assessing the share of an apartment. Meanwhile, a large number of citizens are convinced of the need for such an assessment: this is the inheritance, which is sometimes part of the apartment, and judicial procedures for the division of property, for example, in a divorce and, ultimately, transactions for the sale and purchase of the corresponding shares of the apartment. ...
In appraisal practice, there is no single point of view among specialists. The main discussion arises around the need to apply adjustments, discounts for 1 sq. M. share of the apartment compared to 1 sq. m. apartments as a single real estate object. This confusion is also facilitated by the lack of a full-fledged market for transactions in the purchase and sale of shares in an apartment.
First of all, you need to have a clear understanding of the context and legal nuances in which the need for assessment arises. The first thing that needs to be determined is what the estimated share of the apartment is - whether it can be allocated in kind, in the form of a room. If the answer is yes, then the classical methods of assessing the share as a separate room, room work here.
Acquisition of a share in an apartment is fraught with a number of difficulties, which obliges to reduce the cost per square meter when assessing the share of an apartment, but it should be noted that these problems and inconveniences are difficult to translate into monetary terms.
Each co-owner has equal rights to the share in the apartment that is assigned to him. When the appraisal of a share in an apartment increases the cost per square meter compared to the cost per square meter in the entire apartment, the Appraiser puts the co-owners in a somewhat unequal position, since the buying party must pay more for the ownership of the entire apartment than in the case of purchasing a similar apartment on the open market ... If the assessment of the share in the apartment reduces the cost per square meter compared to the cost per square meter in the entire apartment, the selling party is not able to purchase an equivalent property for the proceeds.
In this case, one should proceed from the essence of the transaction with the corresponding share. For example, in the case of buying out the remaining share of an apartment from other owners - the value of the share may increase, because in this situation, a part of the apartment is bought, which ensures the unity of ownership, i.e. there is a synergistic effect - i.e. more than a part of the apartment is being bought. When it comes to buying a stake from third parties, then, perhaps, the use of downward adjustments.
But neither the increase in the cost of a unit of area of the share of an apartment, nor a decrease in relation to the cost of a unit of area of the entire apartment can be accurately calculated, but can only be assumed. It should be noted that the price of the transaction may differ significantly from the market value of the share of the apartment.
Thus, the Appraisers should use the cost of 1 sq.m. share of an apartment of the corresponding value of 1 sq.m. apartments in general, subject to Art. 250 "Preemptive right to purchase" of the Civil Code of the Russian Federation, which states the following: "when selling a share in common ownership to an outsider, the rest of the participants in shared ownership have the preemptive right to purchase the sold share at the price for which it is sold and on other equal terms, except in the case of sale with public auction ", which means the mandatory observance of the legal procedure for granting the right of apartment co-owners to acquire this share in preferential treatment.
Is it possible to increase the price of an apartment in Tyumen if you are going to leave furniture and household appliances in it? Evaluators' response O PA "AGA T-Ocen en ka " - Yes and no. Read more in our analytical material.
Of course, every buyer is free to do as he wants, but market statistics tell us that raising the price of an apartment if you are going to leave interior items in it is not always justified.
Let's start with what has already become a market practice. In almost all apartments of the new stock, upon sale, built-in furniture and a kitchen set, sometimes with built-in household appliances, remain.
Price statistics show that this is no longer considered a reason to add extra tens of thousands to the price of an apartment. But the advantage when choosing built-in furniture will be (if it is in good condition, of course).
But how to assess the situation when the seller is going to leave in the apartment all furniture, and even household appliances ? Alas, the times of total shortage have already passed, and second-hand can be of interest only to those who buy an apartment for rent. And such buyers are few during the crisis.
To understand whether furniture affects, we analyzed the segment of secondary real estate in 1,2,3 Microdistricts in Tyumen, considering offers of comparable apartments with and without furniture.
The analysis made it possible to divide comparable groups into several segments. In the first there were apartments from the category of low prices (from 44.5 to 50 thousand rubles / sq. M), in the second - average supply prices (50-60.5 thousand rubles / sq. M), in the third - apartments with high prices (from 70.0 to 80.5 thousand rubles per square meter).
Recall that the average cost of a proposal in the area at the time of the study is 54,824 rubles / sq. M.
The study has shown that the correction for the presence of furniture in an apartment depends on the price segment in which the offer falls. The results are summarized in the table:
Thus, the following conclusions can be drawn:
- In the lower price segment, in most cases, the situation is valid when the seller does not raise the price of the apartment. Rather, the furniture remains as a "load", and its condition is such that no one will pay extra for it.
- In the middle price segment, there are situations in which they do not pay extra for furniture, and situations when furniture is a reason for the seller to raise the price (and, moreover, quite significantly). It all depends on the state of the furniture and / or equipment. Modern models in good condition can just raise the price by the same + 15%, and old furniture and appliances will no longer become a factor in the increase.
- The high price segment shows small but stable adjustments for the availability of furniture and household appliances when selling an apartment. Of course, here a priori it is understood that things are in good condition, these are imported and modern models.
O PA "AGA T-Ocen en ka ”offers consulting services for calculating the possible cost of selling your property, taking into account all factors of the formation of the market price. Consultation fees are listed in our