Assessment of buildings and structures: documents, rules and methods

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Evaluation of buildings and structures can be carried out for many reasons. Most often this concerns the payment of property taxes, the amount of which depends on the cadastral value of the object. In order to revise this figure and make a smaller amount of money as tax payments, owners order an independent property valuation from a specialized organization. The article will provide a list of necessary documents for the procedure, as well as the rules and methods by which this action is carried out.

Why do you need it?

In addition to the reason regarding the revision of the cadastral value of the object, there are a number of other circumstances that require an assessment of the condition of buildings and structures:

• Pre-sale preparation with the identification of the market value on a specific date. The procedure is necessary in order to complete any type of transaction (purchase and sale, exchange, lease, registration of shares, etc.).
• By order of the court or for consideration of proceedings in the court.
• To calculate damage due to damage to property.
• For the purpose of obtaining a loan or mortgage.
• Formaking an object in the authorized capital of the organization.

Who to entrust with an independent assessment

Experts advise you to follow the following rules when choosing a suitable company:

• Ask a question in a search engine, for example, in Yandex, indicating your region. This will be much more productive than looking for ads in print media or interviewing friends and relatives.
• Study the advertisements of several companies. The more information on the Internet, the more reliable the company, but the more expensive its services will be.
• You should find the site of the selected company and study it in terms of the level of design, content, presence on the contact page and information on your question.
• It is necessary to check the placement on the site of scanned copies of permits, certificates confirming the legality of the company's activities, as well as a certificate of professional liability insurance.
• Recommended to look for reviews on the Internet. Of course, if there are only two or three of them, then this will not be of decisive importance, but the presence of negative customer opinions should alert the owner of the property.
• Having found a suitable option, you should call the company, introduce yourself and talk about the topic that interests you. Clear and concise answers will help you make the right choice. Inability to get through, getting on an answering machine, switching from one employee to another should alert the client.

Documents for evaluation of buildings and structures

Usually the owner hasseveral documents for the real estate object. To find out which of them are necessary for the procedure, you should contact the selected appraisal company. As a rule, at the first meeting or in a telephone conversation, an employee of the company will explain what needs to be provided to a customer service specialist. The main documents that allow assessing the market value of buildings and structures owned by a legal entity are:

• Certificate of registration of ownership of property.
• Documents on restrictions on the use of the object.
• Confirmed boundaries of a building or structure, showing location.
• Inventory card issued according to accounting data.
• Reference on the initial (replacement) cost and the amount of accrued depreciation.

Documents relating to the right to land under the object:

• Technical passport issued by the Bureau of Technical Inventory, with drawings for the object.
• The absence of documents from the BTI implies the provision of technical specifications according to accounting data.
• List of fixed assets of the company located inside the building or as part of the structure, as well as their book value.
• Project documents with an explanatory note.
• Commission acts of actual depreciation of property.

Certificate of state registration

This document was legal until June 2016 and was issued for allreal estate objects. In the event of a change in the owner, address, technical characteristics (for example, due to reconstruction) or when the necessary adjustments were made to the Unified State Register of Rights (EGRP), a new certificate was immediately issued.

Since the summer of 2016, the document has not been issued, and you can confirm ownership by receiving an extract from the USRR, which is valid for one month.

Object restrictions

Here information is provided on the presence of encumbrances, tenants, contracts, agreements and any restrictions that undoubtedly affect the final price of the object as a result of the assessment of buildings and structures. Of particular importance are various litigations considered in the courts at the time of the procedure for determining the value of the object by a specialist of a hired company.

Location

The address of the property can be confirmed by a certificate of ownership, an extract from the USRR, a geodetic plan, technical or project documentation. You should also provide the specialist providing valuation services with the cadastral number of the building, structure and land on which the facility is located.

Accounting data

Accounting for fixed assets at the enterprise is always kept. In accordance with the requirements of PBU 6/01, property is placed on the balance sheet. Further, an inventory card is necessarily started on it. It can be filled out by hand, which is typical for small firms. In this case, all changes about the object are alsoentered manually. But most enterprises use 1C. Here, the data about the object is entered into the program, and the account is kept automatically.

In order to assess the replacement cost of a building and structure, a copy of the inventory card, filled out manually and certified by the signature of an authorized person, is provided to the specialist of the company conducting the work.

Documents for land

It is necessary to provide the appraiser with information about the condition of the land plot under the building or structure. In addition to the cadastral number, there is a list of documents, which includes:

• cadastral passport or plan;
• certificate of ownership (if it was issued before 2016) or the right to permanent perpetual use, and from 2016 - an extract from the USRR;
• contract (in case of lease).

If there are encumbrances on the site, then they must also be reported when concluding an agreement with the company for the implementation of work on the assessment of buildings and structures.

Technical data sheet

Such a document is usually made before the procedure for registration of ownership of the object. If the property belongs to a legal entity, which is confirmed by an extract from the USRR, and there have been no changes in terms of technical characteristics since registration, then it is quite possible for the appraiser to provide a registration certificate for a building or structure made by BTI earlier. You do not need to order a new document. Even in the case when it is not available from the owner, you can contact the specialiststechnical inventory at the location of the object in order to obtain a duplicate. This procedure will cost several times cheaper than issuing a new property passport.

If the object was transferred to the property under the sale and purchase agreement, and the technical documentation was not transferred to the new owner, the appraiser should draw up a brief description according to the accounting data and sign the authorized representative of the owner.

Other documents

Undoubtedly, in order for the process of assessing the cost of buildings and structures to proceed without a hitch, you should provide all the information on the property to the specialists of the hired company. This applies to the case when it is required to evaluate the building along with the filling, for example, equipment that is difficult to dismantle. You can additionally give a look at the project documentation. If the object is partially destroyed, then commission certificates should be issued confirming the actual wear and tear of the property.

For individuals

The layman most often needs to use appraisal services to determine the market value of an apartment, house or land owned. In this case, the list of documents is small and comes down to three points:

• property document;
• cadastral passport (for land);
• technical passport (for building or apartment).

Evaluation methods used

There are three methods by which a specialist can determine the value:

• Analogue, when using whichcompare recent prices of property sold. This method is suitable for home appraisal. The appraiser studies the sales of the current year, summing up the sold property with the help of coefficients to the one that is currently evaluating. Thus, at first he finds information on the sold housing and adjusts their price, taking into account the available characteristics for the estimated analogue. It then compares several similar properties in the same segment and outputs the average price.
• Expensive, which takes into account all the costs of building a building or structure. Most often this applies to newly built housing with small areas. This refers to the amount of funds that will be needed in the present time to recreate exactly the same object from identical materials of similar quality of installation and even with similar architectural solutions.

Profitable, in which the market value can be determined with accuracy, taking into account the profitability in case of investment. This method is good for determining the price of commercial space. First, set the period for which profitability will be calculated. Secondly, the amount of expected income is estimated. Thirdly, the profit that the owner will receive after the billing period is calculated. Fourth, the sum of all income in the foreseeable future is calculated

Depreciation of property

All real estate objects are subject to aging. In accounting, this concept is defined as depreciation, the percentage of which can be estimated based on the accrued depreciation. Methodsassessments of the physical deterioration of buildings and structures are also used by companies involved in determining the market value of property. Currently, preference is given to the calculation, in which the wear of each structural element is determined, and then all indicators are summarized. With this method, the replacement cost of the real estate object is necessarily taken into account.

How specialists work

There are a number of rules that are followed when concluding an agreement for the assessment of buildings and structures:

• Analysis of the object offered by the customer to determine the cost.
• Identification of easements, encumbrances, mortgages.
• Clear definition of the type of property with verification of the availability of calculation methods.
• Finding out restrictions that may interfere with work.
• Analysis of the information provided by the customer with the determination of the sufficiency of the information.

In his work, the appraiser adheres to the following principles:

• Independence from the people and circumstances involved.
• Objectivity of assessment.
• No conflict of interest between the contractor and the customer.
• Mandatory conclusion of a work contract.
• Establishing clear agreements on the timing and subject of the survey.

Thus, when assessing property, the customer must provide the contractor with all the required documents for use. The term for determining the market value of real estate will depend on this. Also followsprovide a representative of the appraisal company with access to the facility, which is a prerequisite for fulfilling the obligations of the contractor under the concluded work contract.