The section"market Analysis" in the valuation report of the property

In the regulations on assessment not specified mandatory placement in the valuation report of the real property section "market Analysis" (hereinafter section "AR"). At the same time, the need of the market analysis referred to in the provisions of the National standard No. 1 (НС_1) and National standard №2 (НС_2):
  • p. 15. Methods of evaluation used in determining the market value of the object of evaluation in the case of using the comparative approach should be based on the results of the analysis of sale prices (offers) for such property;
  • p. 52...appraiser must analyze all sources of information related to the object of evaluation, trends in the market for such property, information on transactions concerning similar assets that are used in the case of using the comparative approach, and any other relevant information. In the case of the incompleteness of such information or the lack of it in General in the evaluation report of the property noted the negative impact of this fact on the results of the evaluation...;
  • p. 56...the Report on the assessment of property drawn up in full form, shall contain:...a description and analysis collected and used output data and other information during the evaluation.
National standard # 2 (НС_2):

  • 19. The comparative approach involves the following sequence of assessment procedures: the collection and analysis of information about the sale or supply of such immovable property...

Thus, the results of the analysis of real estate market normally present in our valuation reports.

However, it should be remembered that the evaluation report is a document of evident value, respectively, each section of the report should "work" on the confirmation of the result of the value of the assessment.

The main task of the section "AR" is the justification used information from other sections. The table below labeled "spheres of influence and interaction section within the assessment report.

Section of the report Communication with the section of "AR"
Assumptions and limiting
According to the results of the conducted research of the market segment to whom the object of evaluation, in the absence of/limited information on the offers of market sales/rentals arises the necessity of making the section "Assumptions and limiting conditions" additional information about the impact of this fact on the evaluation result.
Analysis of NEV Analysis NEUVE the object of evaluation needs to take into account the information set out in "AR" in turn in the section of "AR" should be characteristic of that segment of the real estate market, which corresponds to the NEV of the object of evaluation.

Selection and justification of choice
approaches to
The coordination of the evaluation results.

It is based on the information in this section is "AR" installed capability/limitation/impossibility of application of approaches to determine the market value of the subject property. For example, to segment, the object of evaluation, information provision of offers of sale and lease are sufficient to implement the comparative and income approaches. However, in the quantitative and qualitative composition is dominated by information about the lease offer. This means that with the concurrence of the results, it is logical to give preference to the result obtained under the income approach.

Also, be aware that all three sections of the report, "Selection...", "Harmonization" and "AR" have a direct logical dependence, therefore, need to be careful to avoid contradictions.

A comparative approach

The calculations are made taking into account information section of "AR" - the statistical characteristics of the sample (generalized analysis indicators value indicators, price trends, number of proposals, bargaining, exposure time).

Additionally. Information about the number of offers of sale and rent specified in section "AR" will help to avoid comments "about the insufficient of the comparison objects selected by the evaluator to implement the approaches." Vodnochas, for example, during the analyzed period the market recorded 4, while the appraiser for further calculations selected 3 counterparts, that remark unfair. Well, if you choose the same 3 objects of comparison with sample 40, it certainly is not the right appraiser.

The income approach
Conclusion value Judgments about the total value of accepted with the necessary given information of the section "AR". Listed in "AR" generalized analysis indicators value indicators must confirm the correctness specified in the conclusions of the increased market value of the assessment

Unfortunately, very often the function of section "AR" evaluators of their own hands to change super acute (the results of calculations are "out" indicators and information referred to in the text "AR").

As this metamorphosis by an artist very often goes unnoticed, here is a list of the MOST common MISTAKES in the DESIGN SECTION of "AR" related to the reproduction and transformation into the category of "AR":

  • materials professional marketing studies and analyses of the real estate market in Ukraine in General;
  • interviews and articles;
  • information on the trends of the real estate market other locality;
  • information on the trends of the real estate market in previous years;
  • information on the trends of the real estate market other real estate segments.

Of course, the appraiser must SUPPLEMENT their own knowledge of the situation on the real estate market through constant monitoring and compilation of information contained in the publications of the participants and market analysts.

The error is FORMALLY copied and converted into the category of "AR" text.

For example, the evaluation object is located in Kharkiv region, and market analysis is provided for M. Kharkov.

Or it is the object of office real estate, and the appraiser found and posted in the report an analysis of residential real estate. Also highly inappropriate "analyze" the market of office real estate of class "A" and "b" to determine the guidance value of adapted premises (class "C.."). In General, I found 5 minutes in the online resource and placed in the report.

ANY information not related to the object of evaluation used in the report usually has a negative effect. All of these mistakes in the registration section of "AR" indicate a lack of professionalism and desire to understand the subject of the evaluation.

As examples of filling in the "AR", read the two options that are available in the report layouts of the group of companies "UVECON" and generated from the GIS service "UVECON":

1. An example of topic "market Analysis of residential real estate in the area of the object of evaluation" Report on the valuation of the property - 1 bedroom apartmentss in the city of Balakleya in Kharkiv region. Valuation date 15.07.2019. (Section is formed by the GIS service "UVECON" (Mal.1)

The information sources used were:
Study period: Jan-Jun 2019
The selected polygon of the study: m. Balakliya Kharkiv region

2. An example of the section "Analysis of the market of commercial
real estate in the area of the object of valuation" the valuation Report of the property – non-residential premises with an area of 120 sq m at: s. Staroe Village, Pustomyty district, Lviv region. Valuation date 15.07.2019. (Section is formed by the GIS service "UVECON" (Mal.2, Fig.3)

The information sources used were:
Study period: Jan-Jun 2019
The selected polygon of the study: Pustomitivskiy district, Lviv region