Evaluation of Real Estate 2024

What is that all about:

1. How much does the real estate evaluation cost?

2. What documents must be provided?

3. What is the result of real estate evaluation?

3.1. How long is the evaluation report valid

4. What is real estate evaluation

4.1. Who can order real estate evaluation

5. When you need real estate evaluation

5.1. In which situations real estate valuation is not required

5.2. Who does the real estate evaluation

6. If the owner disagrees with the evaluation results

7. Evaluation of real estate in Kyiv – features

7.1. Cost of real estate evaluation in Kyiv in different areas of the city

8. Real Estate Cost Calculation

8.1. Price and cost of real estate: what is the difference

8.2. How to determine the cost of real estate

This section of our site provides information on the evaluation of all types of real estate. Procedures of apartment’s evaluation, evaluation of houses and land evaluation are described separately and in detail on the relevant pages of the site.

How much does the real estate evaluation cost?

Below are the estimated values for the evaluation of non-residential real estate:

The main characteristics that affect the complexity, duration and cost of work are:

• The purpose for which real estate is evaluated.
• Property type: built-in or separate building (building, communications).
• Functional use of the object: office, shop, warehouse, production, etc.
• Form of ownership: public, communal or private.
• Location of object of evaluation.

What documents must be provided?

If the property is in private property, the following documents are required for its valuation:

1. A title document, which means a document on the basis of which the object belongs to the owner. This may be a certificate of ownership, a contract of sale (mena, gifts), a court decision or other documents provided by law.
2. Technical passport of BTI.
3. Passport of the owner (co-owner) or certificate of registration (extract) for the legal entity.

If you need an evaluation of real estate in communal or state property for its lease, the following documents are required:

1. Letter from the balance owner of any form indicating the address of the object, its area, floor, future functional use, as well as the name of the potential tenant. For example, «Municipal enterprise «Х» informs you, that the room №16 total area of 16.5 sq.m., located on the second floor of the administrative building at the address: Kyiv city, M. Raskova street, 19, is planned for lease LLC «У» with the purpose of making office on this location».
2. Plan of the floor where the built-in room is located, or technical passport BTI.
3. Certificate of registration (extract) of the future tenant.

What is the result of real estate evaluation?

– What will I gain from your work?

This is probably the most common question from our new respected clients-customers.

First of all, we would like to draw your attention to the fact that the result of property evaluation of any type is an evaluation report. And it is not just a reference, and documents with a rather large number of pages, the number of which depends on the complexity of the specific object of the assessment, and the form and content are defined by legislation. We recommend you to watch our video about how the real estate valuation report looks like.

As mentioned above, evaluation of non-residential real estate usually has a large number of features and nuances depending on different factors. This is especially true for renting properties in the city or with the state. So we will be happy to advise you by phone or in person. You are welcome to contact us!

In everyday life, it is rather infrequent to have to think about how much real estate valuation is necessary. However, any action with such property must be evaluated. Below we consider the questions, which affect the procedure of real estate valuation, work of appraisers, and also all necessary documents for this.

Everyone who is going to sell the real estate without intermediaries, it is especially important to understand all the intricacies of paperwork at a notary. The issue of re-registration of the property is quite simple, so it can easily understand every seller and buyer.

How long is the evaluation report valid

Real estate evaluation report has limitations on the period of validity. We have written about this in detail here. When preparing documents for a notary, the time during which such a conclusion is valid is indicated by the appraiser. The period of validity may not exceed six months from the date of signature. When the specified time expires, the evaluation report becomes invalid. Therefore, in case the document is needed again, real estate valuation will be required again.

What is real estate evaluation

Real estate valuation consists of determining the value of the real estate or a separate part thereof (if the object belongs to several owners). Evaluation is mandatory for most types of transactions and is carried out by a specialist of the relevant organization (authorized body) or subject of evaluation activities.

According to the results of the evaluation issued a document of a special form or a special report, in which the market value of the object is specified. Appraiser signs the conclusion and the head of appraisal company stamps on it. In accordance with the current legislation of Ukraine, the report on the valuation of any type of property should specify the purpose of this procedure. This means that a new conclusion will be required for each purpose or real estate transaction. After all, purposes other than those specified in the treaty and the report, you can not use the document.

Any real estate object can be valued, including:

• private houses, cottages, apartments, summer houses;
• commercial real estate;
• unfinished construction objects;
• land plots for different purposes.

Who can order real estate evaluation

Real estate valuation can be ordered by the owner to whom the object is legally owned. This is a direct requirement of the legislation, which is not known by all customers. Not only sellers and buyers of real estate, but even professional lawyers and attorneys.

In addition, persons acting on behalf of the owner on the basis of a power of attorney may order an evaluation. The procedure may also be carried out at the request of specialized services or public authorities.

When you need real estate evaluation

There can be many cases when it is necessary to evaluate the real estate. Most often this procedure is needed for such cases:

• privatization process;
• real estate lease in case if the object is owned by the State or a communal enterprise;
• sale or purchase of real estate (evaluation from 2021 does under the new rules);
• exchange or counter sale;
• at the request of a notary to calculate the tax fees;
• registration of the contract of lifelong maintenance;
• all types of real estate property transactions that are taxable;
• presentation in court in all types of proceedings.

In which situations real estate valuation is not required

In accordance with the current legislation of Ukraine, sometimes you do not have to do evaluation of real estate. Among the permitted situations include:

• in the case of division of property in the event of divorce – here it should be noted that despite the absence of mandatory evaluation procedure, the work is for such purposes are ordered very often;
• entry into inheritance rights – although in some situations it is still impossible to do without real estate evaluation;
• in the case of transfer of an object on bail, the evaluation is carried out at the request of the bank;
• granting of gifts (relatives of the first and second line of kinship are exempt from tax);
• leasing of private property;
• real estate insurance to determine compensation.

It is worth noting that the owner can at any time at his own request to evaluate own real estate. We are often contacted to order advice on the amount of rent or conduct valuation of the cost of rent, which income can generate a premise or a building. This is especially true for real estate in Kyiv, the prices of which change frequently and significantly.

A special place takes by so-called retrospective real estate valuation, when it is necessary to determine the value of property as of one year or several years ago.

Who does the real estate evaluation

Evaluation of immovable property, as well as issue a written opinion on this have the right:

• independent real estate appraisers;
• state property fund appraisers;
• forensic experts, but this is a separate topic and a completely different story.

Currently there are many companies that can carry out real estate evaluation. In order to ensure that the appraiser is working legally and that his opinion is valid, it is necessary to make sure that such an expert has the following documents:

• certificate of the State Property Fund entity;
• certificate of examination for the relevant qualification level;
• certificates for advanced training courses;
• official registration in the state register of evaluation experts.

To make sure that the real estate appraiser really works on legal grounds can be tested on the official resource of the State Property Fund of Ukraine. In addition, if you use this service, you can find and authorized types of property with which a specialist is entitled to work.

If the owner disagrees with the evaluation results

There are cases when the owner does not agree with the results of the already completed evaluation. In such a situation, you can order a review of the report of an independent real estate appraiser. The review is made according to the rules of the Law «About the evaluation of property, property rights and professional valuation activity in Ukraine». You can order an unlimited number of times and different appraisers, but this service, obviously, is paid.

It is not uncommon that the estimated value of real estate is higher or lower than the real market price. How to be in such a situation described in detail in this article.

It is for this reason that you should carefully and very responsible to the choice of the company that will evaluate the real estate. Appraiser must have impeccable business reputation and good customer reviews.

Evaluation of real estate in Kyiv – features

More attention is paid here to the influence of the location of the property on the procedure and cost of our services. Let’s consider, on what depends the cost of work of the appraiser. We should start with that property evaluation of any type can be carried out using three approaches: comparative, income and cost.

1. The logic of a comparative approach is that the value of your property is about the same as the value of a similar property with similar parameters: first, of course, the location, then the area, the functional purpose, architectural and planning solutions and so on. Of course, this is a rather simplistic description of an approach that can only be used for a common understanding of the issue.
2. The income approach is guided by the same principles as the comparative one, only analyzed on the prices of similar real estate, and rental rates on it. There are mechanisms for determining the value of real property if the rent is known. This model is similar to a bank deposit: knowing the interest it brings can determine its amount. Here comes the question of determining the rate on this deposit (or in the case of real estate evaluation – discount rates), but again we will not go into detail within this article.
3. The cost approach assumes that the value of the property is equal to the cost of creating it minus all types of wear and tear. By the way, not many people know that the assessment takes into account three types of wear: physical, functional and external. The simplest kind of wear – physical – is determined by the condition of the property (excellent, good, satisfactory, old, unsuitable). Functional wear is the loss of value of an object because of its irrelevance (example from life – a grandma’s tape recorder, which even a new one today no one needs). External wear and tear is a loss of value due to external factors, for example, making all real estate in Donbas many times cheaper after the outbreak of hostilities.

There is a legal prohibition on the use of a cost-based approach for real estate valuation in Kyiv. Rather, ban the use of this approach where there is a developed market for the sale and lease of such property. Practice shows that the real value of construction and the market value of real estate are often unrelated. For example, in Kyiv, the value of real estate is usually significantly higher than the cost of its construction, and in depressed regions of Ukraine, conversely, the cost of construction is often much higher than the market value of real estate. With regard to the income approach, the main problem is the correct determination of the discount rate mentioned above.

Therefore, in the absolute majority of cases, a comparative approach is used when evaluating the real estate of Kyiv.

Cost of real estate evaluation in Kyiv in different areas of the city

So what is the difference between the evaluation of the real estate of Kyiv on Khreshchatyk and on Troyeshchina? It is clear that Khreshchatyk’s real estate will cost more, but what does the cost of the evaluation have to do with it? So there is a difference, and it is very significant. The fact is that the complexity of the evaluation work often depends on factors whose influence becomes clear only after their detailed consideration. In particular, the cost of the evaluator’s work is affected by how easy it is to find the right objects of comparison in this particular case.

Example 1. Evaluation of apartment. One of the most difficult areas of Kyiv in terms of evaluation of apartments is the area of Artem Street (this is subjective, of course, but my task is to convey the essence of the question). The difficulty is that the development of the streets is so heterogeneous that for each object of comparison you need to look for additional information to understand whether it is suitable for us as an analogue.

Example 2. Non-residential premises. One of the directions of real estate valuation in Kiev is the evaluation of communal property with the purpose of determining the rent. The cost of such work depends more on how typical the evaluated real estate object is for the area of Kiev in which it is located. Therefore, to estimate the warehouse in the center of Kyiv, much more difficult than on Vydubychy, and the store on the same Vydubychy – much more difficult than in the center. Detailed information on the valuation of real estate for rent in Kyiv you can read here.

Our appraisal company specializes in real estate evaluation in Kyiv and Kyiv region. However, our appraisers, if necessary, travel to facilities throughout Ukraine.

Real Estate Cost Calculation

We would like to inform you that the tariffs for our services – property valuation of all types – are given on the main page of our website. Detailed information about features of real estate valuation and different types of property can be found in the relevant sections: evaluation of the apartments, land evalation, evaluation of houses, real estate valuation (non-residential property, etc.)

In this article we will try to answer in detail one of the most frequently asked questions from new customers: «How do you do the real estate valuation» or «What are you guided by in determining the value of real estate?»

Price and cost of real estate: what is the difference

For the absolute majority of people, the concept of price and cost are synonymous, but in fact it is not at all true. These concepts are fundamentally different, and in order to understand how the process of real estate valuation, you need to clearly understand these differences.

The price is the actual amount of money that is paid for a particular property. That is, the price does not reflect the value of the property as such, but merely indicates that the seller and the buyer agreed that the transfer of the property to the new owner in this particular case would take place for a certain amount of money.

The cost is the estimated amount that determines the sum of money for which a good can be sold. There are more than a dozen different types of cost, which are described in detail in National and International Valuation Standards. However, in the absolute majority of cases the word «cost» means the so-called «market value». The exact market value is defined in the same National Standards, and its meaning is that this value is called the maximum amount of money the buyer is willing to pay and the minimum amount for which the seller is willing to sell the real estate, if they both act knowingly, without coercion and do not rush anything (which means that the sale is not urgent).

Let’s try to give an example that came to mind first. Let’s say a friend decided to give you a knife for your birthday. For this he went shopping and determined for himself that such a knife costs about 100 UAH. In one of the shops he bought a liked knife for 100 UAH. There is a sign that knives cannot be given, so they are usually sold for some symbolic price, for example, one hryvnia. So it turns out that the cost of such a gift is 100 UAH, and the price = 1 UAH.

How to determine the cost of real estate

There are only three approaches to determining the cost of any property, including real estate. The first one – comparative – is based on the assumption that our property costs about the same as you can buy a similar one. The second approach, the income one, proceeds from the assumption that the value of the property is determined by the amount of income it can bring to its owner. The third approach – the costly one – suggests that the value of the property can be defined as the cost of its construction plus the value of the land plot that belongs to it. Of course, this description of the methodological approaches to evaluation is rather simplistic, and is given here only to give the reader a glimpse of the essence of the question.

To use or to not use any of approaches is chosen by the appraisers on the basis of the specific evaluation situation. For example, it is only appropriate to use a costly approach to value real estate where there is no market for the sale or lease of such property. It is clear that evaluate the apartment in Kyiv through the expenses of building a residential building is unacceptable. Nevertheless, there are estimated situations where the use of a costly approach is both justified and necessary, but we will not describe these situations under this article, because to fully understand them we need to focus on the description of such concepts, as physical, functional (moral) and external (economic) wear and tear, specialized equipment, etc.

During the real estate valuations in Kyiv its market value is determined by using income and comparative approaches. At the same time, the evaluation of the most common and typical real estate: apartments, garages, land and residential buildings, as well as evaluation of cars, is conducted exclusively using a comparative approach. With a large number of offers of such property is really logical to focus on the prices of similar facilities. So, as a matter of fact, not only appraisers, but also all common people who decide to sell or buy a property or a car also use comparative approach.

It is more interesting to determine the cost of commercial real estate: premises, offices, shops, separate non-residential buildings. Such objects are in a sense unique, that is, to determine the cost of a stand-alone building, we are unlikely to find several more similar real estate objects with exactly the same characteristics. It is important to understand that the cost of the same building is influenced by a lot at first glance not too significant factors, for example, the presence of a basement or the ratio of useful area to common, etc. In such situations, the valuation of the real estate takes place using a profitable approach according to the following algorithm:

1. making a list of premises, which can be rented;
2. these premises are grouped according to a number of characteristics: the purpose (for office, shop, warehouse, production, garage); the area of the premises; their physical condition; the location in the building (floor, the presence of a showcase and a separate entrance);
3. for each group of premises, the likely rental rate is determined, after which the potential gross income that our building can generate;
4. potential gross income is reduced by taking into account various real estate operating costs, space underutilization and so on, resulting in net operating income from leasing;
5. knowing the income that brings the real estate, it is easy to calculate its cost by analogy with a bank deposit: knowing the income from this deposit, it is not difficult to estimate its size.

This will be the market value of the real estate, calculated using the income approach.