Adjusting the values of comparison units for analogue objects for each comparison element. Introduction and justification of the adjustment scale. Valuation of an apartment using the income approach Adjustment per floor
Head of the assessment department of Eurasia Service LLC,
full member of SRO ROO (registration No. 0003083)
When preparing apartment assessment reports, our company’s specialists use various methods and approaches. The use of comparative approach methods is not complete without the use of adjustments when determining the value of the valued object.
The application of adjustments (amendments) depends on many characteristics of the property being valued (date of sale, auction and terms of the future transaction, legal registration of ownership of the property and the presence or absence of restrictions on ownership, location and distance from bus stops public transport, floor, type of house, interior decoration, 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 conducting an assessment and determining the market value of an object.
1. Adjustment for bargaining
When studying the current situation on the market at present, as well as based on the experience of assessing many objects, the value of the adjustment for bargaining is 7%. In fairly rare cases, the transaction price and the offer price are the same. Please note that when making adjustments to the auction, the difference between the price of the transaction and the price is taken into account existing offer. How is this difference detected? During mutual negotiations on price, i.e. during the bidding process. The initial price in most cases is significantly higher than the actual cost of the property. This premium, according to our calculations, is the above 7%.
2. Adjustment to date of sale (offer)
In many cases, some time has passed from the date of sale of the property being assessed (for example, more than a month); accordingly, changes have occurred in the market that affected, first of all, the price level. The adjustment to the date of sale takes into account these changes, namely the time period that occurred before the publication of information about the sale price.
Making an adjustment to the date of sale means that changes in market price increases have been taken into account and taken into account. This point is very important to take into account when assessing and make adjustments.
3. Adjustment to the terms of the transaction
When assessing an object in relation to which the subjects intend to make a transaction, the conditions 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. In order to clarify, let us give an example - if you need 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 to waste time searching for an exchange option that would satisfy the wishes of the two parties to the transaction.
4. Adjustment to ownership
The value of an object is influenced by many factors. At the same time, it is necessary to take into account parameters that reduce its cost. The title adjustment refers to the difference between the price of an object in the presence of title, formalized in accordance with legal norms and requirements.
If state registration of ownership of the property 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 the right of ownership or other encumbrances. In such cases, the value of the object decreases and, accordingly, the transaction price decreases.
5. Adjustment for location
Such a characteristic of the property being valued as location is the most common, as well as one of the most significant in determining the cost of an apartment under existing conditions. market relations. The need to correct for location arises when the location of an object differs from similar objects. If the apartment is located far from a metro station or other public transport stop, then this directly affects its price downwards. Conversely, the proximity of the apartment to tram, trolleybus, bus and metro stops increases the price of the apartment.
The adjustment is up to 15% if the apartment (assessment object) is remote from a bus (trolleybus, tram) stop or, in order to get to the apartment from the metro station you need to use by land 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 affects its price downward by 1% (for every 200 meters).
6. Adjustment to floor
When evaluating an apartment, the floor on which it is located is taken into account. The factor that affects the cost is which floor the apartment is located on - on the first floor, on the last floor or between them. If the floor is the first, then this entails humidity and low air temperature in the apartment, and also, as a rule, in apartments on the first floor there is not enough natural daylight 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 summer period. A problem with water pressure due to the upper floor cannot be ruled out. Therefore, apartments on higher floors will cost more than apartments on lower floors
The adjustment per floor is 15% for the first floor and 10% for the last.
7. Adjustment for finishing quality class
Repairs and quality of finishing affect the cost of the apartment most directly. Flawless and high-quality finishing increases the price by 10%.
The adjustment for the finishing quality class is calculated by analogy with a similar apartment.
There are four types of finishes:
- without finishing - no interior doorways, windows installed, walls, floor and ceiling not exposed finishing works. This is a primary finish that requires repair work.
- simple finishing - the walls and ceilings of the apartment are whitewashed or covered with wallpaper, the floor is tiled, linoleum or parquet, the bathroom and kitchen are equipped with plumbing.
- improved finishing - walls and ceiling covered acrylic paint or wallpaper, on the floor - tiles, linoleum or parquet, the bathroom and kitchen are equipped with high-quality sanitary ware.
- high-quality finishing - the apartment has undergone high-quality renovations, using modern construction technologies and high-quality materials. The existing surfaces are perfectly leveled, the apartment is equipped with the latest electrical wiring and plumbing. Redevelopment is allowed according to individual project using structures of complex composite configuration.
8. Adjustment for the type of house
When determining the market value of an apartment, the assessment process takes into account such characteristics of the property as the type of building in which the apartment is located. Based on general appraisal practice and our experience, in particular, an appraisal object located in a block or panel type house is 10-15% cheaper.
But such an amendment does not apply if the apartment is located in a brick or brick-monolithic building. At the same time, analogue 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 property reduces the cost is taken into account square meter. And also the living area and kitchen area also plays an important role when applying the adjustment. Thus, apartments with a larger living area and kitchen area have a higher cost than their counterparts with a smaller living area and kitchen area.
When evaluating an apartment, the following adjustment is applied to the area - every 5 sq.m. reduce the cost of one square meter by 1%. When comparing with a similar apartment that differs only in area, appraisers apply this adjustment.
In addition, adjustments are often made depending on the area of the kitchen, because... its size affects the overall cost of the apartment on the housing market. The adjustment is applied at the rate of 0.5% per difference of 1 sq.m. kitchens.
10. Adjustment for the view from the windows
The view from the window in most cases greatly influences the cost of the apartment. This is explained simply - when making a transaction and purchasing an apartment, the new owners receive not just a view from the window, but an environmental characteristic. Apartments that are located with windows facing the outer part of the street, roads or highways are significantly cheaper than those apartments whose windows overlook the inner courtyard. But the most expensive apartments will be those that have windows on both sides - both on the street and on the courtyard. In general, the adjustment for the view from the windows is 10-15% of the value of the property being assessed.
11. Adjustment 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 addition, there may be several balconies (and/or loggias) and this increases the price of the property. If the apartment has a balcony (and/or) loggia, then this is taken as positive characterization and is considered an improvement. This parameter is taken into account when assessing almost any apartment. The amount of correction (correction) ranges from 0 to 5%. As you can see, the gap between the lower and upper threshold of the amendment is very significant, and is applied in each case individually, but in comparison with a similar apartment.
12. Adjustment for the bathroom
When assessing and determining the market value of an apartment, Special attention attention is paid to the layout of the sanitary facilities in the apartment. In addition to the above, in some cases the number of bathrooms is also taken into account (there is not always only one bathroom in an apartment). An apartment in which the toilet is separated from the bathroom will command a higher price than a similar apartment with similar descriptive characteristics, but with a shared bathroom. IN in this case the adjustment averages 5% of the value of the property being assessed.
13. Adjustment for liquidity of the share in the apartment
There are often cases when an assessment is required in relation not to an apartment, but to part of it, i.e. shares. At the same time, making adjustments is inevitable, because 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 integral object. This point also affects the determination of the value of the share.
When applying the liquidity adjustment for the share in the apartment, it ranges from 10 to 40%. This is a fairly large gap between the lower and upper threshold, so you need to take into account the characteristics of the allocated share, as well as the characteristics of the entire apartment.
Is it possible to increase the price of an apartment in Tyumen if you are going to leave furniture and household appliances in it? Appraisers' response ABOUT OO "AGA T-Ets 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 increasing 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 market practice. Almost all apartments of the new stock will have built-in furniture and kitchen units when sold, sometimes with built-in appliances.
Price statistics show that this is no longer considered a reason to add extra tens of thousands to the price of an apartment. But built-in furniture will be an advantage when choosing (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 the furniture, and even household appliances ? Alas, the times of total shortages have already passed, and used ones may only be of interest to those who are buying an apartment for rent. And there are few such buyers 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 low price category (from 44.5 to 50 thousand rubles/sq.m), in the second - average prices for supply (50 -60.5 thousand rubles/sq.m), in the third – apartments with high prices (from 70.0 to 80.5 thousand rubles per sq.m.).
Let us remind you that average cost offers in the area at the time of the study - 54,824 rubles/sq.m.
As the study showed, the adjustment for the availability 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, for most cases, the situation is valid when the seller does not increase 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 both situations in which they do not pay extra for furniture, and situations where the furniture is a reason for the seller to raise the price (and quite significantly). It all depends on the condition of the furniture and/or equipment. Modern models in good condition they can raise the price by that 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 it is a priori understood that the items are in good condition, these are imported and modern models.
ABOUT OO "AGA T-Ets en" KA" offers consulting services on calculating the possible cost of selling your property, taking into account all the factors determining the market price. Prices for consulting services are given in our
When applying this approach, the ability of the property to generate a certain income is analyzed, which is usually expressed in the form of income from operation (rental) and income from sale.
To estimate the value of income-producing real estate, capitalization and discounting methods are used.
Discounting method is used to bring the flow of income and costs distributed over time to one point in time to obtain the current value of the cash flow as the value of the income-generating Valuation Object. Discounting method cash flows assumes that a potential investor will not pay more for the property than the present value of future income from this property, and the owner will not sell the property for less than the current value of future income from this property. As a result, the seller and buyer come to an agreement on a market price that corresponds to the present value of the amount of future income.
Direct capitalization method allows, based on data on income and capitalization rate at the time of valuation or in the future, to draw a conclusion about the value of the Valuation Object. The profit capitalization method is based on the fact that the value of the property (the Object of Valuation) is equal to the current value of the future cash income that this property will bring, and is expressed by formula 4:
The capitalization method is most used when valuing real estate, which over a long period brings approximately the same amount of profit or the rate of profit growth is constant. The method is more often used when valuing real estate objects than when valuing businesses and does not require long-term forecasts.
To assess the cost of an apartment using the direct capitalization method, it is necessary to determine the capitalization coefficient based on market data, which reflects the relationship between annual income and the cost of the apartment. Using method comparative analysis sales of similar objects, with a known declared sale price and estimated potential gross income, the estimated capitalization rate (capitalization rate) is determined.
The information used on analogues is presented in table. 10. For comparison, 3-room apartments of similar area in panel houses were selected.
Table 10
| Comparison elements | Object of assessment | Objects of comparison (analogues) | |||
| Location, address | Biryulevskaya, 1, bldg. 3 | 115404, Moscow, st. Lipetskaya, 36/20 | 115404, Moscow, st. Yagodnaya, 8 | 115404 Moscow, st. Zagoryevskaya, 21 | 115404, Moscow, st. Zagoryevskaya, 23 |
| Listed price | 54 000 | 55 000 | 50 000 | 50 000 | |
| Total area, m 2 | 59.3 | 57.8 | 55.2 | ||
| Market conditions (time) | similar | similar | similar | similar | |
| Distance to Moscow metro station, min | |||||
| No | No | No | No | ||
| House type | Panel | Panel | Panel | Panel | Panel |
| Floor | Laminate | Parquet | n/a | Laminate | n/a |
| Bathroom | Separated | Separated | Separated | Separated | Separated |
| Availability: | |||||
| - furniture | Available | Available | Available | Available | Available |
| - kitchens | Available | Available | Available | Available | Available |
| - telephone, | Available | Available | n/a | n/a | Available |
| - Internet | Available | Available | Available | Available | No |
| - intercom | Available | Available | Available | Available | Available |
| - steel door | Available | Available | Available | Available | Available |
| Balcony and loggia | available | No balcony Loggia | No balcony Loggia | No balcony Loggia | Balcony no loggia |
| Condition of the apartment | After European-quality renovation | After European-quality renovation | Good condition | ||
| Potential Gross Income | 608 597 | 679 140 | 581 767 | 561 450 | |
| Capitalization rate | 0,051 | 0,055 | 0,049 | 0,047 |
Potential gross income is calculated at the market rental rate that is most representative of a typical comparable property. The capitalization ratio is determined for each analogue by dividing the potential gross income to the proposed (declared) sale price.
If the deviation range of the capitalization ratio is small, the arithmetic average capitalization ratio is calculated and then used in the formula
If there is a significant difference in the calculated capitalization ratios for individual analogues, an analysis is carried out to identify the reasons for these deviations (incorrect selection of analogues, lack of additional information on similar objects, etc.).
Potential gross income is calculated based on adjusted rent. To calculate it, an adjustment to the market rent of a typical analogue is necessary.
This adjustment is carried out in the same way as in the comparative approach, and the following elements are used as comparison elements:
Distance to center municipality;
Availability of furniture, kitchen set, telephone, metal door;
Condition of the apartment (need for repair work).
The calculation of the adjusted market fee is given in table. eleven.
The applied adjustments are shown in table. 12
Table 11
| Comparison elements | Object of assessment | Objects of comparison (analogues) | |||
| Location, address | Biryulevskaya, 1, bldg. 3 | Elevatornaya st. | Lipetskaya st. | Yerevan street | Lebedyanskaya st. |
| Listed price | 42 000 | 35 000 | 34 000 | 50 000 | |
| Market rent, rub/m2 | 705,13 | 694,44 | 666,67 | ||
| Availability of metro station, min | |||||
| Adjustment for metro station accessibility | -4% | 0% | 0% | +1,5% | |
| 691,20 | 705,13 | 694,44 | 676,67 | ||
| Total area, m 2 | 59.3 | 57,8 | 55,2 | ||
| 2% | -3% | 1% | -4% | ||
| Adjusted rent | 705,02 | 683,98 | 701,38 | 649,60 | |
| Utilities included in rental price | No | No | No | No | |
| House type | Panel | Panel | Panel | Panel | Panel |
| Adjustment for house type | 0% | 0% | 0% | 0% | |
| Adjusted rent | 715,13 | 755,38 | 692,43 | 633,65 | |
| Floor | Laminate | Parquet | n/a | Laminate | n/a |
| Adjustment for floor type | -5% | 0% | 0% | 0% | |
| Adjusted rent | 679,37 | 755,38 | 692,43 | 633,65 | |
| Bathroom | Separated | Separated | Separated | Separated | Separated |
| Adjustment for the bathroom | 0% | 0% | 0% | 0% | |
| Adjusted rent | 679,37 | 755,38 | 692,43 | 633,65 | |
| Availability: | |||||
| - furniture | Available | Available | Available | Available | Available |
| - kitchens | Available | Available | Available | Available | Available |
| - telephone, | Available | Available | n/a | n/a | Available |
| - Internet | Available | Available | Available | Available | n/a |
| - intercom | Available | Available | Available | Available | Available |
| - steel door | Available | Available | Available | Available | Available |
| Adjustment for staffing | 0% | 0% | 0% | 0% | |
| Adjusted rent | 679,37 | 755,38 | 692,43 | 633,65 | |
| Balcony and loggia | Available | No balcony | No balcony | No balcony | Balcony |
| Loggia | Loggia | Loggia | There is no loggia | ||
| Adjustment for balcony, loggia | 2% | 2% | 2% | 5% | |
| Adjusted rent | 692,96 | 770,49 | 706,28 | 665,33 | |
| Condition of the apartment | After cosmetic repairs | After European-quality renovation | After cosmetic repairs | After European-quality renovation | After cosmetic repairs |
| Adjustment for the condition of the apartment | -3% | 0% | -3% | 0% | |
| Adjusted rent | 672,17 | 770,49 | 685,09 | 665,33 | |
| Number of adjustments | |||||
| Overall net correction | -47,83 | 65,36 | -9,35 | -1,34 | |
| (the same, as a percentage) | -7% | 9% | -1% | 0% | |
| Overall gross adjustment | 57,60 | 7,05 | 0,00 | 16,67 | |
| (the same, as a percentage) | 8% | 1% | 0% | 3% |
Table 12 – Justification for adjustments
| Type of adjustment | Description of the nature of the adjustment | Introduced adjustments |
| Adjustment for location | The adjustment depends on the prestige of the area, the distance to the nearest metro station | 0.5% for every minute |
| Adjustment for total area | An adjustment is made if the total area of the property being assessed deviates from the area of its analogue by more than 1 m2 | 1% for each m2. |
| Adjustment for the presence of a balcony | The presence of a balcony and loggia increases the value of the property being assessed | 2% - presence of a balcony 5% - presence of a loggia |
| Adjustment for gender | High-quality floor covering increases the value of the property being appraised | Parquet: -5% Linoleum: +2% |
| Adjustment for the bathroom | A separate bathroom is more convenient, as a result of which the value of the property increases | Combined: +2% |
| Adjustment for condition and quality of finish | Good condition and decoration of the apartment have a positive effect on the value of the property being assessed | After cosmetic renovation:0% After European-quality renovation: +3% |
Analogue No. 3 has the smallest gross correction. Analogue No. 2 has a slightly larger gross correction than analogue No. 3. The highest gross correction is for analogue No. 1. Let's choose weighting coefficients based on the conclusions drawn:
For analogue No. 1 – 0.1, for No. 2 – 0.3, No. 3 – 0.4; No. 4 – 0.2, therefore:
Thus, the cost of 1 m 2 of the assessed object will be:
672.17*0.1+770.49*0.3+685.09*0.4+665.33*0.2 = 705.466 rub./m2
In table Figure 13 shows the calculation of the capitalization ratio. Since the sales prices of the comparison objects were not indicated, they were determined using the website www.irn.ru.
Table 13 -
Then the value of the valuation object using the income approach will be:
With O.O. = 705.466 *59.3*12/0.041= RUB 12,244,136
1) Adjustment for “bargaining” allows you to bring the offer price to the sale price. As a result of a survey of participants in the residential real estate market in Simferopol (Real Estate Agencies “Russian Crimea”, “Orion”, “Rielcom”, “Veta”, “Crimean Terem”, “Real Estate Parade”, “VIP Chance”), it was revealed that the discount on The bargaining price 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 costs of their services. As a result of the analysis of the 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 real estate agency services is 5%.
3. The adjustment for “location” for all analogous objects was 0%, since the object of assessment and these analogues are comparable in this factor.
4. The adjustment for “wall material” for all analogue objects was 0%, since the assessed object and analogues are located in panel houses.
5. Adjustment for “year of construction”. All other things being equal, the price of an apartment depends in inverse proportion on the year the house was built due to the increasing physical wear and tear of the building. This adjustment was not applied since the object of assessment and analogous objects are comparable according to this criterion.
6. Adjustment to the “floor”. Apartments located on the extreme floors of residential buildings, all other things being equal, have a lower cost per 1 sq.m. cost compared to apartments located on middle floors. This adjustment was not applied since the property being assessed and its analogues are located on the top floor of five-story buildings.
7. The adjustment for the “number of rooms” of all analogue objects is identical, so no adjustment was applied.
8. Adjustment for 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 valuation object. In addition, the supply costs of the selected analogues are in the average market range.