Test with answers for the land management course part 2

First of all, it is worth saying that the valuation of real estate (and other types of property) can be divided into:

• individual assessment • mass assessment

Mass assessment

is carried out for large sets of objects and usually takes into account the individual characteristics of each of the objects being assessed to a relatively small extent. An example of mass valuation is cadastral valuation, when all real estate (all land plots or all buildings or all apartments, etc.) of the region is simultaneously assessed.

Individual assessment

is carried out for each object separately or for relatively small sets of objects and takes into account to a greater extent the characteristics inherent in each object being assessed. This is especially important when valuing real estate, since unlike, say, mass-produced equipment, each piece of real estate has unique characteristics to one degree or another - at least location. Even two completely identical apartments in a standard building with identical renovations from the developer, located in the same entrance on the same floor, will have a slightly different location in space, which already creates uniqueness for each of them. In this case, this uniqueness most likely will not affect their cost, and yet they cannot be called absolutely identical. The same can be said about land plots - each of them is unique to one degree or another.

Let's consider how and why an individual assessment of the market value is carried out (there are different types of values, but the most common is the assessment of the market value) of land plots.

Why a land valuation may be needed

From the point of view of the question “Why?”
the valuation of land plots does not differ from the valuation of other real estate. The most common cases when such an assessment is carried out are: - concluding purchase and sale transactions, including transactions in which government agencies are involved as a seller or buyer; — conclusion of a lease agreement - in this case, both regular rent (per month, quarter or year) and a one-time payment for the right to conclude a lease agreement can be assessed; - challenging the cadastral value - to reduce the tax base (formally, we can say that it can also be increased - but such a service is not in demand on the market); — various legal disputes; — adjustment of book value; — determination of the price of withdrawal, payment for easement or temporary occupation of a land plot and other cases.

State cadastral valuation

1. Making a decision to conduct a state cadastral valuation.

State cadastral valuation is carried out by decision of the executive body of state power of a constituent entity of the Russian Federation no more than once every three years (in federal cities - no more than once every two years) and at least once every five years, with the exception of extraordinary state cadastral valuation . The specified period is determined from the date of adoption of the act on approval of the results of determining the cadastral value until the day of adoption of the act on approval of the following results of determining the cadastral value.

The state cadastral valuation can be carried out simultaneously in relation to all types of real estate, as well as all categories of land located on the territory of a constituent entity of the Russian Federation, if an appropriate decision is made, subject to the established frequency of conducting the state cadastral valuation.

To determine the cadastral value, preparation is carried out, including, among other things, the collection and processing of information necessary to determine the cadastral value.

Preparations for the state cadastral valuation are carried out before January 1 of the year in which the cadastral value is determined.

The collection and processing of information necessary to determine the cadastral value is carried out by a budgetary institution created by a constituent entity of the Russian Federation.

Rosreestr generates a list of real estate objects subject to state cadastral valuation based on the decision to conduct a state cadastral valuation and provides it to the authorized body of the constituent entity of the Russian Federation upon its request.

The authorized body of the constituent entity of the Russian Federation within three working days from the date of receipt of the list sends it to the budgetary institution.

The list includes information from the Unified State Register of Real Estate current as of January 1 of the year of determination of the cadastral value (with the exception of an extraordinary state cadastral valuation on a different date) about all real estate objects specified in the decision to conduct a state cadastral valuation.

2. Determining the cadastral value and drawing up a report on the results of the state cadastral valuation.

The determination of cadastral value is carried out by a budgetary institution created by a constituent entity of the Russian Federation, in accordance with the methodological instructions on state cadastral valuation.

Based on the results of determining the cadastral value, with the exception of an extraordinary state cadastral valuation, the budgetary institution, in accordance with the requirements for the report, draws up interim reporting documents in the form of an electronic document, which are a draft report.

The budgetary institution, within three working days from the date of preparation of interim reporting documents, posts them on its official website and sends them to Rosreestr on electronic media in the form of an electronic document.

Rosreestr, within ten working days from the date of receipt of the interim reporting documents, checks them for compliance with the reporting requirements and, within three working days from the date of completion of the inspection, sends a notification to the budgetary institution and the authorized body of the constituent entity of the Russian Federation about the compliance or non-compliance of the interim reporting documents with the reporting requirements .

The budgetary institution eliminates the identified discrepancy within seven working days from the date of receipt of the notification and submits corrected interim reporting documents to Rosreestr for re-verification.

If the interim reporting documents comply with the reporting requirements, Rosreestr, within three working days from the date of completion of their verification, places in the state cadastral valuation data fund the information and materials contained in the interim reporting documents for sixty days for the submission of comments related to the determination of the cadastral value, and information on the procedure and deadlines for submitting comments on interim reporting documents.

Comments are submitted within fifty days from the date of placement of the specified information and materials by any interested parties to a budgetary institution or a multifunctional center for the provision of state and municipal services.

The budgetary institution at least once every five days during the period for posting interim reporting documents publishes on its official website:

• updated interim reporting documents;
• information on cadastral numbers of real estate objects, the cadastral value of which has been recalculated;
• a description of the recalculation of the cadastral value of each property with the rationale for taking into account the comments;
• information about comments that were not taken into account, with appropriate justification for refusing to take them into account.

The budgetary institution makes changes to the interim reporting documents based on the results of consideration of comments to them no later than the end of the period for posting information and materials in the data fund and, within ten days after the expiration of the specified period, draws up a report that includes a certificate with information about taken into account and unaccounted comments to the interim reporting documents with justification for their recording, refusal to record or absence of comments, as well as correction of violations of reporting requirements identified by Rosreestr.

Within three working days from the date of drawing up the report, the budgetary institution sends it on electronic media in the form of an electronic document to Rosreestr.

Within twenty working days, Rosreestr checks the report for compliance with the requirements for the report and sends an order to eliminate the identified violations or a notification of the absence of violations to the budgetary institution and the authorized body of the constituent entity of the Russian Federation.

If violations of the reporting requirements are detected, the budgetary institution, within ten working days from the date of receipt of the order, eliminates them and within three working days sends a report on electronic media in the form of an electronic document to Rosreestr for a repeat inspection.

If no violations are detected, the budgetary institution, within three working days from the date of receipt of the notification of the absence of violations, sends to the authorized body of the constituent entity of the Russian Federation three copies of the report on electronic media in the form of an electronic document and one copy of the report on paper.

3. Approval of the results of determining the cadastral value.

The authorized body of the constituent entity of the Russian Federation, within twenty working days from the date of receipt of the report, approves the results of determining the cadastral value contained in such a report by adopting the corresponding act on approval of the results of determining the cadastral value and, within thirty working days from the date of adoption of such an act, ensures its official publication and information about its acceptance.

The act on approval of the results of determining the cadastral value comes into force on January 1 of the year following the year of the state cadastral valuation, but not earlier than one month from the date of its promulgation (official publication).

The authorized body of the constituent entity of the Russian Federation, within three working days from the date of official publication of the act approving the results of determining the cadastral value, but no later than December 1 of the year of the state cadastral valuation, sends a copy of it and a copy of the report compiled on electronic media in the form of an electronic document to Rosreestr for entering information about the cadastral value into the Unified State Register of Real Estate and placing it in the state cadastral valuation data fund.

How land plots are assessed

To conduct an assessment, it is necessary to conclude an agreement with an appraisal company, including an assessment assignment - a document that will record the main characteristics of the land plot being assessed, the purpose of the assessment, assumptions or special conditions that the appraiser must take into account, and other factors required by law.
To conclude an agreement and formulate an assessment assignment, the assessment customer must provide documents on the object, a specific list of which is advisable to determine when contacting the appraisal company, taking into account the purposes for which the assessment is being carried out and what the assessed object is. The minimum set will be a current extract from the Unified State Register for the plot or another title or title document and a cadastral passport, but you should be prepared for the fact that other documents may be required. After studying the documents, the appraiser will inspect the property and begin the assessment.

There are three approaches to assessment:

• Comparative • Profitable • Costly

Within each of them there are different methods. And the approaches and methods used within each of them are chosen by the appraiser, justifying his choice and describing the calculations carried out in the appraisal report, which is a document recording the result of determining the market value of the land plot.

What is an assessment of the value of land for seizure?

The assessment of the market value of a land plot for seizure is carried out in relation to the seized plot, which currently belongs to a citizen of the Russian Federation. In addition, any other rights to this land may be assessed. The appraiser relies on the rules of Law No. 135-FZ, excluding the features specified in land legislation.

After the amendments were adopted, information appeared in the acts on how to evaluate terminated rights. For example, if we talk about the market value of an organization’s rights to perpetual use, here the market value is determined based on the right to lease the plot for 49 years. Regarding the market value of the rights to free use of land on the basis of an agreement, the value of the site is assessed based on the value of the lease right until such an agreement expires.

On a note! The most controversial and difficult situations when carrying out work as an appraiser occur in cases where it is necessary to determine the date of these events.

If we take into account Federal Law No. 499, it will not be possible to find answers to all questions that arise during the assessment process. But the specific amount of compensation payments will depend on the decisions made at this stage.

Comparative approach to assessment

The comparative approach to valuation is based on comparing the object being valued with similar objects for which their value is known - either the price of the transaction or the offer price.
Such objects of comparison are called analogues. As mentioned above, there are no 100% identical real estate properties, so analogues should always be similar to the property being valued in some key characteristics, but will always differ from it to one degree or another. To take into account the impact of these differences, the appraiser introduces so-called adjustments to the prices of analogues, and after making all the necessary adjustments based on the adjusted prices of analogues, he comes to a conclusion about the value of the property being appraised. The key criterion for choosing an analogue is that it belongs to the same market segment as the land plot being assessed (you should not consider a plot of arable land in the suburbs as an analogue for a land plot for commercial development in the center of a million-plus city). In assessment practice, this is called the most effective use - for analogues it should correspond to that for the object of assessment. Next in importance is location; then the provision of engineering communications, area and other factors, the set and relative importance of which depend on the market segment to which a particular object belongs. The appraiser must describe the criteria for selecting analogues in the report, and show from which objects and why exactly the analogues involved in the calculation were selected.

For land plots free from development, the unit of comparison for which adjustments are made is most often the cost of a unit of area (per 1 sq. m, per 1 hectare). Sometimes other units of comparison are chosen - for plots for commercial development or multi-apartment residential buildings, this may be the cost of 1 sq. m. m of selling area of ​​a building that can be erected on the site. In the case of valuation of a built-up site, comparison can be made based on the price per unit area of ​​buildings, or, as it is commonly called, improvements. In this case, the appraiser first receives the value of the entire object - the land plot along with the improvements located on it, and from it already allocates the value of the site either by subtracting the cost of buildings, which is then calculated separately, or through information about the average market share of the cost of the land plot in the cost of a single property in this market segment.

At the same time, a building located on a plot will not always be a factor that increases the cost of a single object compared to the cost of an empty plot of land (although it will still be called an improvement). An abandoned or unfinished building that cannot be used and will have to be demolished will not increase, but on the contrary, reduce the value of the site by at least the cost of demolition. In this case, it is advisable to choose the cost per unit area of ​​the plot as a unit of comparison.

The comparative approach in theory is the most market-based. In practice, it also has weaknesses, expressed in the limited number of analogues, incomplete information on them, the difficulty of justifying the values ​​​​of the applied adjustments, the subjectivity of pricing the offers of analogues and the opacity of information about transactions.

Procedure for cadastral land valuation

To implement state powers in the field of tax law, a cadastral valuation of land is carried out. This procedure is a state function and is subject to strictly regulated rules. At the moment, the cadastral valuation is regulated by Decree of the Government of the Russian Federation dated 04/08/2000 No. 316, which approved the Rules for the state cadastral valuation of land.

The customer of the work for conducting a cadastral valuation of land is the authorized government bodies of the constituent entity of the Russian Federation. The selection of the provider of these services occurs within the framework of the contract system for placing orders for the performance of services for government needs and is regulated by the provisions of 44-FZ. The process of selecting a contractor is open and public; the results of the procedure for selecting a contractor are available on the official government procurement website.

After selecting the contractor, the appraiser is given a technical assignment indicating specific areas of land in respect of which an assessment is required.

The procedure for carrying out measures to determine the cadastral value of land is carried out within the framework of the Federal Valuation Standard, approved by Order of the Ministry of Economic Development dated October 22, 2010 No. 508. To conduct a cadastral valuation of a certain object, it is required that information about this object be entered into the State Real Estate Cadastre.

To carry out cadastral valuation of a specific land plot, the appraiser must be guided by the basic valuation methods (income, comparative, cost). The choice of one of the methods is the right of the appraiser, but requires mandatory justification in the final document on the assessment.

The appraiser is obliged to prove the validity of the choice of valuation methodology based on the type of use or purpose that corresponds to the property being valued, as well as taking into account the completeness and reliability of the data obtained on the market for land transactions.

If the appraiser does not indicate the rationale for choosing the assessment method, the final result of the work performed cannot be accepted by the customer.

Of the three indicated methods, preference is given to the comparative approach, since it allows us to take into account the current state of the market for transactions and proposals, depending on the territorial conditions of the location of the site being assessed. In the comparative approach, it is possible to give an assessment of the cadastral value of land that is as close as possible to the real conditions of the research region.

In the case when a group of objects (land plots) is being assessed, the appraiser can use a mass approach to valuation, which allows objects to be grouped based on the presence of similar characteristics.

The cadastral valuation procedure begins with the conclusion of an agreement with the customer, which defines the terms of reference for the work carried out. As part of the execution of this agreement, the appraiser is obliged to conduct a full analysis of information on the territorial market of objects similar to the one being valued, to collect data on the main values ​​and factors influencing the determination of the value of land plots.

Pricing factors are selected based on characteristics appropriate to the specific property being appraised and must be consistent with the method and model the appraiser has chosen to work with.

After selecting the model and valuation methods, the cadastral value of the land plot is calculated, the results of which are documented in the final document - a report on determining the cadastral value of the object.

Income approach

The income approach is used to evaluate objects that can generate income.
For land plots this could be:

• income from their rental; • income that can be received by building an object on the site that will be sold or leased; • income from other activities – agriculture, parking, etc.

If there are no analogues on the market to carry out a comparative approach, or if the differences between the found analogues and the valuation object are too large, the income approach is more preferable and, if used correctly, often allows for a more complete take into account the commercial potential of the object.

At the same time, the income approach also has many disadvantages. The appraiser must predict the property's cash flows - both income and expenses - and how they will change in the future. If it is income from rentals or from the sale of future improvements, the same comparative approach methods, with their inherent disadvantages, will have to be applied to determine the income. Next, you need to correctly predict expenses and correctly determine the capitalization rate or discount rate - the first is used to convert constant cash flows into the value of the object, the second - variable ones (if we take a simplified approach to the definitions of these two rates from the point of view of the practice of their application).

In the case of assessing a built-up land plot using the income approach methods, the general concept remains unchanged - the total cash flow from the entire object is determined, after which the share of the flow attributable to the land plot is allocated, and on its basis - the value of the site, or the value of the entire object is determined, and from it is allocated a share of the cost of the site.

To most accurately determine the cost, if such a possibility exists, it is advisable to use both approaches to valuation.

However, it must be taken into account that this is not always possible, and sometimes, due to certain factors, the calculation error of one of the approaches is such that its use will not lead to an increase in the accuracy of the final result, which means it is better to abandon the use of this approach altogether.

The question remains, where did the third approach go?

Cost-effective approach

The cost approach determines the market value from the perspective of how much it costs to reproduce an object similar to the object being valued.
Since, in relation to land plots, an object can only be “reproduced” by purchasing something similar to it, the cost approach for valuing land plots is not used. This issue may be debatable in some cases, including such as the creation of artificial alluvial territories, where we can really talk about the costs of creating land plots, but in the general case the position is clear - the cost approach to the valuation of land plots is not applicable.