What is real estate valuation is one of the popular questions asked by the company’s clients. It is necessary to carry out an assessment when making various transactions and operations with real estate - buying, selling, or when applying for a mortgage loan from a financial institution.
If you need help buying an apartment in Sochi with an appraisal, contact the specialists of Vincent Real Estate! We are ready to offer you a wide range of options in various areas of the city: from Adler to Lazarevsky!
Apartment appraisal - what is it?
An assessment means determining the value of a property - an apartment, house, land or commercial property. This procedure is regulated at the legislative level, so only accredited organizations and professional appraisers can carry out it.
Theoretically, you can evaluate the property yourself. However, for this you will need certain knowledge and experience. The surest and simplest solution is to use the comparative method. See how much similar apartments cost in your area and find the average.
Please note that self-assessment is not taken into account by government agencies. This relates to the question of why an apartment appraisal is needed and what it affects. When applying for a mortgage, submitting documents to Rosreestr or the courts, only the official document will be taken into account!
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Indication of knowingly false information
Since the transaction amounts when drawing up a purchase and sale agreement are impressive, unscrupulous sellers are always tempted to circumvent the current legislation. One of the possible methods of fraud is to artificially lower the final cost. This is done to reduce the tax base. Such a scheme is primarily dangerous for the buyer, because in the event of litigation, only the amount specified in the purchase and sale agreement can be returned. In addition, the court may even recognize such transactions as enslaving if a significant deviation in price from the market average is revealed.
Agreement for the donation of a share of an apartment: rules for registering the transaction
Professional appraisers may also be involved in scams, so you should choose an organization very carefully. Small private banks providing mortgage loans are interested in inflating the value of real estate.
In such fraud schemes, contracts always specify a non-alternative appraiser, who cannot be replaced. It is not recommended to sign such documents.
Today, the task of assessing and selecting specialists has been significantly simplified. Despite the fact that scammers are becoming more common, you can identify unreliable sellers by searching for information on the Internet. The registration date, reviews, and the number of transactions completed can speak volumes. Saving a small amount and agreeing to services of dubious quality is not worth it.
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Why do you need a real estate appraisal?
Real estate appraisals are required quite often. The most common situations are:
- Registration of a mortgage loan;
- Purchase and sale of an apartment;
- Housing exchange;
- Litigation;
- Reorganization of the enterprise.
In the situation with mortgage lending, everything is quite simple. The assessment certificate is needed, first of all, by the bank. It is important for a financial institution to understand how much funds can be issued to a borrower. Is an apartment appraisal necessary when refinancing a mortgage? Yes, but only if the refinancing procedure takes place in a third-party bank.
As for the purchase and sale, the seller needs to understand at what price the apartment can be sold, and the buyer needs to make sure that the price is not artificially inflated and corresponds to the market price.
If two people decide to exchange apartments with additional payment conditions, then an assessment is needed in order to adequately assess the cost of the objects and so that one of the parties does not remain at a big disadvantage.
An apartment appraisal will also be required to resolve legal disputes. An example is a situation where an heir must compensate other heirs who have not assumed their rights for their legal share. In this case, the assessment will help you not to overpay and not disadvantage anyone in the funds they are entitled to.
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Factors influencing price
The urgency of the sale has a big impact on the final price. If the owner indicates in the advertisement the need for the transaction to be completed as quickly as possible, then you need to prepare for a significant reduction in price. Most likely, the final amount will be lower than the market average. Other factors may also have a significant influence:
- Location. As a rule, apartments in the city center are much more expensive compared to residential areas. In addition, buyers always pay attention to the availability of walking areas and distance from large factories and factories.
- Infrastructure. Two completely identical apartments (in terms of square footage, renovation, distance from the center) can differ significantly in price due to the presence of shops, kindergartens, schools, clinics, transport interchanges and other important infrastructure elements nearby.
- Specifications. This paragraph refers to the floor on which the apartment is located, the presence of an elevator, loggias, balconies, materials used in the construction of the walls, their thickness. Buyers can pay attention to non-standard layouts and the exact area of each individual room.
- The year the house was built and its type. It's no secret that real estate in older buildings will cost less. It is extremely difficult to determine exactly how an apartment in a very old building is assessed. Especially if there are simply no similar offers on the market.
- Repair. In this case, we mean a major overhaul of the entire house and the condition of the wiring, pipes and windows in the apartment itself. Such factors can have a greater impact on the price than new wallpaper or parquet.
- Home infrastructure. In addition to the year of construction, the availability of parking, security, concierge, and landscaped territory plays an important role.
- Developer reputation. This paragraph applies to new buildings that have not yet been put into operation. In this case, the price may fluctuate significantly depending on the name of the developer. Proven large organizations will help the owner increase the price. But in some cases, it is better to wait until construction is completed, when the buyer can sign the purchase and sale agreement without additional risk.
- Encumbrance of the object. We are talking about a mortgage. In some cases, the bank gives permission to sell an apartment that is under collateral. This scheme is unconventional and is used quite rarely. This is why most buyers are put off by offers of this type. Because of this, the seller is forced to significantly reduce the price.
Cadastral value of real estate
It is important to understand that even a person who has extensive experience in determining value, who thoroughly knows how to evaluate an apartment, will not be able to take into account all the nuances. Many factors depend on the subjectivity of buyers.
For example, clients may evaluate the view from the window, the presence of a nearby gym or swimming pool. Therefore, the main task when setting prices is to target the widest possible range of people.
Types of assessment
There are several types of real estate valuation - cadastral, market, liquidation and investment.
- Cadastral valuation is the price of a property, established as part of a state valuation. It directly affects the amount of taxation. The price may be close to the market price, but in essence it is not;
- The assessment of the market value of real estate is, in simple terms, the price at which you can sell an apartment or house that you own. It is determined by analyzing the market and comparing it with similar offers in a particular area;
- A liquidation valuation allows you to determine the price of real estate at which it can be sold as quickly as possible. As practice shows, the liquidation value is always 10-15% less than the market value;
- Investment valuation of real estate is relevant for entrepreneurs and people who want to invest their funds profitably. It is important that the investment price must be higher than the market price - this is a guarantee of profit.
There is another type of assessment - restorative. It is used extremely rarely and only in cases where it is necessary to clarify the amount for repair or restoration of an object.
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Types of real estate values and their characteristics
Experts distinguish three main categories of value of real estate: in exchange, in use, as well as special types of value.
Most often, our company's clients are interested in the first type of research - this includes assessment of the market value of real estate, liquidation and disposal assessment.
Market value refers to the price of an object upon alienation of property - for example, sale. This indicator is calculated taking into account the situation on the real estate market, taking into account the competitiveness of the property.
The investment value is usually determined for an individual or legal entity who would like to use a specific object for investment purposes (renting out housing or living space, making a profit from the increase in the value of a certain structure, etc.).
The need for a liquidation assessment often arises for a property owner when there is a need to sell property urgently.
There are also special categories of assessment, such as determining the cost of reproduction or replacement of an object, the price of property in a limited market, and other types. In our company you can order any type of research - we work in accordance with regulatory documents (the main one is the Federal Law “On Valuation Activities in the Russian Federation”), and the real estate valuation report prepared by our employees has legal force.
Real estate valuation methods
According to Federal Law No. 135 “On Valuation Activities on the Territory of the Russian Federation,” appraisers can use the following methods in their work:
- Comparative;
- Profitable;
- Expensive.
The comparative method is most often used to assess the market and investment value of a property. Its essence lies in the name. The expert needs to study an impressive amount of information, compare several similar objects and make a verdict. The main task is to make sure that the buyer does not buy the property at an inflated price.
The income method is used to assess investment potential. The appraiser determines how much profit a particular property will generate. In addition, the income method takes into account possible risks. The key idea behind income valuation is to not overpay for a property if it doesn't pay for itself properly.
As for the costly method, its essence is as follows: the object should not cost more than the amount that will have to be spent on its construction or restoration. Most often used to evaluate houses and land for development.
According to experts, the most accurate results can only be expected when the appraiser uses all three methods together.
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How is the assessment done?
The real estate valuation procedure consists of five stages. Deadlines may vary. It all depends on the region. In some places you can get assessment results the very next day, and in others in 2 weeks.
- The first stage is setting the task for a specialist appraiser. Here it is important to determine the purpose of the assessment and the type of value. If an apartment is appraised in order to obtain approval for a mortgage loan, then you need to calculate not only the market value, but also the liquidation value. It is important that it is at the first stage that the customer must provide the representative of the appraisal company with all the documentation he has;
- At the second stage, you will have to enter into an agreement with the appraiser and pay for his services. It is important to indicate in the contract the cost of services, deadlines for completing work, the rights and obligations of the parties;
- The third stage is collecting information about the property. The appraiser goes to the site, checks all the documentation, records existing defects and shortcomings;
- The fourth stage is one of the most important. Here the cost of the object is directly calculated. All methods that the appraiser used during the calculations are necessarily displayed in the final report;
- Generating a report is the final stage. According to the current legislation of the Russian Federation, a report issued by an appraisal company must be numbered and bound.
Once again, let us draw your attention to the fact that courts and financial organizations take into account only official papers! The best solution is to contact a trusted appraisal company.
If you want to buy an apartment in Sochi and want to do it with maximum benefit for yourself, contact the specialists!
We know everything about the market, monitor price changes and will help you buy a home on the most favorable terms! Back to Contents
