Basic concepts and principles. The concept of real estate in civil law

Real estate is physical objects with a fixed location in space and everything that is inseparably connected with them, both below the surface and above the surface of the earth, or everything that is a service item, as well as the rights, interests and benefits arising from the ownership of objects. Physical objects are inextricably linked land plots and buildings located on them.

Differences in the concept of real estate as an object of assessment and in the definition of the Civil Code are reflected in Figure 1.1.

real estate

Figure - 1 The concept of real estate as an object of assessment and in the definition of the Civil Code

Therefore, a real estate object is understood, firstly, as an enterprise as a whole as a property complex, and secondly, a land plot, an integral part of which may be:

5) A building (structure) or a group of buildings (structures) located on this site, underground structures related to this site;

6) Isolated water bodies, perennial plantings;

7) Engineering structures and networks that connect the land plot and the buildings (structures) located on it to the infrastructure facilities of the quarter or city;

8) Stationary facilities for the improvement of the territory of the site;

9) Elements of economic, transport and engineering support related to this property, but located outside the boundaries of its land plot;

10) Other objects that, together with the above components of real estate, constitute an indissoluble constructive or functional whole.

Real estate appraisal is necessary for:

1) purchase and sale or lease transactions;

2) corporatization of enterprises and redistribution of property shares;

3) attraction of new shareholders and additional issue of shares;

4) cadastral valuation for the purposes of taxation of real estate objects: buildings and land plots;

5) insurance of real estate objects;

6) lending secured by real estate;

7) making real estate objects as a contribution to the authorized capital of enterprises and organizations;

8) development of investment projects and attraction of investors;

9) liquidation of real estate objects;

10) execution of inheritance rights, court sentence, resolution of property claims;

11) other transactions related to the sale of property rights to real estate.

The value of real estate, like any commodity, has two forms of manifestation - use value and exchange value.

Use value is due to the totality of natural and social properties and processes of the property from the point of view of a particular user, who proceeds from the prevailing variant of its use, as well as the natural and social properties of the product, which are determined by the level of technical development and social needs.

Exchange value arises in the process of exchanging real estate objects. At the same time, money is the universal equivalent of measurement in the commodity economy. In a competitive market, price, as a monetary expression of value, is a factor that balances the forces of supply and demand. The form of manifestation of exchange value is the price, which reflects the total effect of all market factors.

Utility is a form of expression of use value.

Costs are the monetary costs of creating or renovating a property. First of all, they represent a measure of the costs required to reproduce an exact copy of an object or an object similar in utility to the object of evaluation.

The location, which largely determines the value of operating costs, especially transport costs, often acts as a necessary element of technology, and finally, an element of convenience for the buyer.

Supply and demand. With a decrease in demand, the probable selling price of an object may fall below the cost of its reproduction.

Being in civil circulation is a permitted possibility of transferring ownership of a property. If the object is not in civil circulation, then it cannot be transferred in exchange for any equivalent. It will only have a use value for its user.

Price is the monetary value of the value of a property, from the point of view of typical market participants, at a specific date of sale, based on its best use option. The price as a form of manifestation of value, expressing the result, inevitably deviates from the cost of concluding a transaction between a buyer and a seller in specific market conditions under the influence of various factors.

The task of practicing appraisers is to assess the value of an object as a fundamental basis for valuation.

To do this, practicing appraisers need to choose the right type of value to be determined, corresponding to the goals and conditions of the assessment, taking into account:

1) international valuation standards;

2) the transition of the Russian economy to international accounting and auditing requirements;

3) principles of financial management and investment design.

Depending on the purpose of the assessment, the completeness of the rights to real estate being assessed, various types of value can be combined into two main groups:

1) value in exchange as an expression of exchange value;

2) value in use as an expression of use value.

Value in exchange characterizes the ability of a property to be exchanged for money or other goods, is objective in nature and underlies real estate transactions on the market: buying and selling, pledging, including under loans, leasing, putting into statutory funds of enterprises.

Forms of manifestation of value in exchange:

1) market;

2) liquidation;

Figure 2 - Real estate value groups

3) mortgage;

4) insurance;

5) rental:

6) recycled.

Market value is the most probable price at which this object of assessment can be alienated on the open market in a competitive environment, when the parties to the transaction act reasonably, having all the necessary information, and any extraordinary circumstances are not reflected in the value of the transaction price, i.e. When:

1) one of the parties to the transaction is not obliged to alienate the object of valuation, and the other is not obliged to accept performance;

2) the parties to the transaction are well aware of the subject of the transaction and act in their own interests;

3) the object of assessment is presented on the open market in the form of a public offer;

4) the transaction price is a reasonable consideration for the object of appraisal;

5) the payment for the appraisal object is expressed in monetary terms.

Liquidation value - the amount of money in the form of the difference between the income from the liquidation of the property and the costs of its holding. This is the cost that the seller has to agree to when forced to sell real estate in a limited period of time, which does not allow a significant number of potential buyers to get acquainted with the object and the terms of sale.

Collateral value - the value of the property that secures the mortgage loan, which the lender hopes to receive in the event of a forced sale on the market of this property in the event of the borrower's insolvency. The value of the collateral value serves as the upper limit of the loan, which is granted against the security of the property. The collateral value is less than the market value by the value of the risk component, as well as the credit institution's income from this operation.

Insured value - the amount of money for which destructible elements of real estate can be insured, calculated in accordance with the methods used in the field of public and private insurance. It is based on the principle of replacement or reproduction, taking into account the accumulated depreciation of real estate objects at risk of destruction. Calculated as residual replacement cost. Replacement cost is an estimate of the total cost of restoring a property under prevailing market conditions.

The market value of the lease is the amount of rent for which the property can be leased at the valuation date under typical market conditions, i.e. If:

1) as of the valuation date, the property is unoccupied and ready to be leased on a competitive market, and the landlord and tenant are sufficiently aware of the properties of the property and act reasonably and without coercion;

2) the exposure period of the property is sufficient for the bank to be available to potential tenants, as well as to agreeing on the amount of the rent, concluding a lease agreement and other conditions necessary for the lease of the object;

3) the state of the market, the dynamics of rental rates and other conditions are typical at the date of valuation of the rental value, i.e. are not unduly burdensome or advantageous for the type and type of property to be rented;

4) when determining the cost of rent, offers of inflated rental rates are not taken into account by a potential tenant who has a special interest in this property, as well as being in family or business ties with the lessor.

Investment value - the value of a property for a particular investor, based on his investment requirements and preferences. The calculation of the value is based on a subjective assessment of the discounted costs and income of the investor expected from the use of this property in a promising investment project.

Book value - the value of the object, reflected in the balance sheet of an enterprise or organization. It consists of the initial value of the property at the time of commissioning, adjusted for all revaluations of fixed assets, less accounting depreciation, as well as less the cost of improvements made during the period of operation.

The value for taxation purposes is established on the basis of normative documents related to the taxation of real estate. In countries with economies in transition, this value usually does not correspond to the market value. So, in the Russian Federation, the law establishes that tax be calculated from the book value, i.e. the value of assets included in certain balance sheet items of enterprises and organizations.

The principles of real estate valuation are the fundamental provisions of the theory of valuation and the rules for determining the value of real estate. The valuation principles are divided into principles that reflect the user's point of view, the relationship of individual parts of the valuation object, the market point of view, and the principle of the most efficient use of the valuation object. The theoretical foundation of the valuation process is a system of valuation principles on which the calculation of the value of real estate is based. Valuation principles form the initial views of market participants on the value of the value of the property.

The theoretical basis of the evaluation process is a system of evaluation principles. In world practice, it is customary to distinguish four groups of evaluation principles:

1st group: principles based on the ideas of the potential owner;

2nd group: principles arising from the process of real estate operation;

3rd group: principles determined by the action of the market environment;

4th group: the principle of the best and most effective use.

The first group of evaluation principles. The initial principle of assessing the value of real estate is the principle of utility, which means that the more a property is able to satisfy the needs of the owner, the higher its utility and value.

Three approaches to real estate valuation reveal different aspects of utility.

From the point of view of the comparative approach, a rational buyer will not pay more for a property than the price of a comparable property with the same utility.

From the standpoint of the cost approach, it is inappropriate to pay more for a real estate object being sold than it would cost to build a new object of similar usefulness within an acceptable time frame.

From the point of view of the income approach, the value of a real estate object is determined by the possibilities of investing in other objects of similar utility, i.e. into properties that generate roughly the same revenue stream.

For some types of real estate, the greatest utility is achieved if the objects are valued as separate elements, others may be more useful as part of a group (for example, mixed-use centers).

The principle of substitution means that in the presence of a certain number of homogeneous (in terms of utility or profitability) real estate objects, the objects with the lowest price will be in the highest demand. This principle is based on the possibility of an alternative choice for the buyer, i.e. The value of a property depends on whether similar or replacement properties are available on the market. The substitution principle is most fully implemented in new construction, in areas of mass residential or summer cottage development, when the same type of land plots prevail and the level of standardization of architectural and urban planning projects of buildings is high.

The second group of valuation principles is determined by the process of real estate operation and includes the principles of contribution, residual productivity, balance, division.

The principle of contribution - in order to assess the value of a property, it is necessary to determine the contribution of each factor and its most important elements to formation of usefulness and value of the object. In other words, the contribution is the addition to the value of real estate, which is the result of the presence of a particular factor or its elements.

Residual productivity is defined as the residual income attributed to a property after the costs of labor, equipment and facilities, and management have been paid.

The principle of balance - for each type of land use, certain components of the object are required, the optimal combination of which ensures the maximum value of real estate. In other words, any type of real estate corresponds to the optimal combination of interacting elements in the structure of a real estate object, real estate classes on a district or city (settlement) scale, in which an equilibrium state is reached that ensures the maximum value of the entire object. The balance is broken if the building on the land is characterized by insufficient improvements or, conversely, has excessive improvements in relation to this land, for example, its size.

When considering possible options for improving the efficiency of using a real estate object, it is necessary to take into account the principle of separating real estate elements and property rights to them.

The principle of separation means that the physical elements of real estate and property rights to them can be divided and combined in such a way as to achieve the maximum value of the object.

The third group of principles of evaluation, due to the action of the market environment, includes supply and demand, competition, conformity and change in the external environment.

The principle of supply and demand means that the price of real estate changes as a result of the interaction of supply and demand. It expresses the interdependence between the growing need for real estate in the context of the socio-economic development of society and limited supply due to the natural limitedness of land plots, as well as economic costs for the construction (reconstruction) of improvements.

Demand is a solvent need for real estate presented on the market.

Supply is the number of properties that can be put up for sale at the prevailing price level.

The principle of competition means that real estate prices are set through constant competition between market entities that seek to maximize profits. A high rate of return stimulates the attraction of capital to the real estate market and increases competition. The positive role of competition lies in the fact that only in a competitive market can one determine the market value when it equalizes the return on investment in different segments of the real estate market.

The principle of conformity is that the maximum value of a property occurs when there is a reasonable level of architectural uniformity and compatible land use. Compliance of the characteristics of the property with the needs and expectations of the local market provides a high market demand for it, and, consequently, a high cost. First of all, the principle of correspondence is manifested through progression and regression.

The progression effect is the positive impact of the external environment or neighboring properties on the value of real estate.

Regression takes place, firstly, when the property is characterized by excessive improvements that are not in demand by the market, or when the external environment has a negative impact on the operation of the property.

The principle of changing the external environment involves, when evaluating real estate objects, taking into account possible changes in economic, social and legal conditions under which they are used, as well as consideration of the external environment and development prospects of the area. The principle of changing the external environment must be taken into account when writing an appraisal report by indicating the date on which the value of the property is determined.

The fourth group of evaluation principles means that from the possible options for using the property, the one is selected that most fully realizes the functionality of the land plot with improvements. This option is used to assess the value of real estate.
The highest and best use (LEU) is defined as the use of real estate that:

1) is legally permitted, i.e. complies with legal regulations, including zoning and environmental regulations, urban planning restrictions, requirements for the protection of historical monuments of architecture, landscaping of the adjacent territory;

2) is physically feasible, i.e. the size and shape of the land plot, its transport accessibility, existing buildings allow the implementation of the chosen use case;

3) financially justified in terms of return on invested capital, i.e. use provides income in excess of capital costs, operating costs and financial obligations;

4) provides the highest value or profitability of real estate.

The real estate appraisal process includes the following steps:

1st stage. Defining the evaluation task

Purpose of the evaluation

Type of determined value

Establishment of appraised property rights

Valuation Date

2nd stage. Drawing up a plan and contract for the assessment

Evaluation work schedule

Information sources

Choice of assessment methods

Valuation costs

Monetary reward for the assessment

Drafting an appraisal contract

3rd stage. Collection and analysis of information

Inspection of the object and the surrounding area

Legal description of the property

Physical characteristics and location

Economic Information

Validation of the collected information

Analysis and processing of information

4th stage. Analysis of the best and most effective use

Land plot analysis Land plot analysis

as shareware with improvements

Legal validity of the chosen use case

Physical feasibility

Financial feasibility

Highest real estate value

5th stage. Calculation of the appraised value of a property based on three approaches:

1) valuation based on income approach

2) valuation based on a comparative approach

3) cost estimation based on the cost approach

6th stage. Coordination of the results obtained and derivation of the final value of the value of the property

Checking the received data on the value of the value

Assumptions and limiting conditions due to the completeness and reliability of the information used

Derivation of the final value of the cost

7th stage. Compilation of the evaluation report

Various parties may be interested in real estate appraisal:

Sellers and buyers;
- owners of real estate for various purposes;
- investors;
- credit organizations (banks);
- state structures (control and audit and tax);
- management structures of municipalities;
- insurance companies, etc.

All of them, realizing their economic interests, can order an assessment and thereby become customers.

It should be noted that the owner's valuation needs may be the result of third party requirements.

In fact, a third party may itself act as a customer, for example:

Insurance companies want to know the amount of risk they are taking on or confirm compliance with a risk-sharing agreement between the insurer and the insured;
- lending institutions want to know how much they can safely lend for a property and get back in the event of bankruptcy of the borrower;
- government agencies want to know justified for the purchase of real estate in public ownership.

The third party can be manufacturers and intermediaries (dealers and brokers), buyers and sellers, cadastral appraisers and insurers, creditors (banks) and courts, tenants and landlords, accountants and managers, lawyers and consultants, financial and leasing companies, partners and spouses.

It should be noted that sometimes the owner (customer of the valuation) may have several reasons for conducting the valuation. For example, an owner wants to determine the insured value for fire insurance and the salvage value for obtaining a loan from a mortgage bank. This situation is quite possible, and in this case the assessment is multipurpose.

Thus, the target can be set from the point of view of the appraiser, the owner, or third parties such as a bank or a government agency.

From the point of view of such a subject as an appraiser, there is only one goal, namely, to establish the required type of value and prepare a report for the customer on a particular value of value, while acting as an independent, disinterested party in developing an impartial conclusion about the value of the object being valued. But before any assessment acquires meaning in terms of its content or the value of the result, it must have a reason for its appearance, a formulated goal of the customer. The main reason for a client to order a valuation report is to satisfy the business or personal needs of the owner in assessing the value of the property in accordance with the purposes of the intended use. The need of the owner to achieve a certain goal is embodied in the true and legitimate reason for the assessment. The goal pursued by the customer is very important for the content of the report, limiting conditions or any other parameters that facilitate/adequate cost analysis. The appraiser should be familiar with the intended use of the appraisal report, as this determines what theoretical knowledge and appraisal practices, appropriate for the purpose of the appraisal, he should apply in his study to reach a reasonable conclusion. Although the appraiser can choose a certain type of value (for example, market value, investment value, etc.) and apply various research methods, this choice should be determined by knowing how the appraisal report will be used in the future, that is, what the owner needs know the value of your property.

Thus, if the formulation of the purpose of the assessment determines the type of value that needs to be determined, as well as the package of rights being assessed, then the formulation of the assessment function determines its subsequent use.

The purpose for which the assessment is performed (its function, purpose) is the determining factor in choosing an adequate assessment base (type of value) and, accordingly, in choosing specific approaches and methods of assessment.

In FSO-2, the purpose and function of the assessment are set as follows:

The purpose of the appraisal is to determine the value of the appraisal object, the type of which is determined in the assignment for appraisal.
- The result of the assessment is the final value of the value of the object of assessment. The result of the valuation can be used when the parties determine the price for a transaction or other actions with the valuation object.

In accordance with Art. 6 of the Law on Appraisal Activities, subjects of various forms of ownership of the Russian Federation, individuals and legal entities have the right to evaluate their real estate objects. This right is unconditional and does not depend on the established procedure of state statistical and accounting and reporting. Situations in which an assessment is mandatory are defined in Art. 8 of this Law; An appraisal is obligatory in case of Involvement in the transaction of real estate objects owned in whole or in part by the Russian Federation, constituent entities of the Russian Federation or municipalities.

The need to determine the market value of this property arises:

During privatization;
- transfer to trust management or lease;
- when using real estate as a collateral;
- sale or other alienation of real estate objects;
- assignment of debt obligations;
- transfer of real estate objects as a contribution to authorized capitals, funds of legal entities;
- a dispute arises over the value of a property in the course of the nationalization of property, mortgage lending to individuals and legal entities, the preparation of marriage contracts and the division of property of divorcing spouses, the redemption or other seizure of property from owners for state or municipal needs, as well as in order to control the correct payment of taxes and calculation of the taxable base.

These cases of determining the market value of real estate relate to the objects of assessment, representing state property, expressed in various forms.

A complete list of all the reasons why real estate appraisal is necessary is quite large. You can specify the most common ones.

The need to assess real estate in private ownership arises when:

Purchase and sale of real estate objects;
- corporatization of enterprises and redistribution of property shares;
- reorganization of enterprises;
- making real estate objects as a contribution to the authorized capital of enterprises and organizations;
- in case of additional issue of shares or attraction of new shareholders;
- liquidation of real estate objects;
- renting out real estate;
- clarification of the taxable base of real estate objects: buildings and land plots;
- real estate insurance;
- lending secured by real estate;
- development of investment projects and attraction of investors;
- making managerial decisions;
- preparation of financial (accounting) statements;
- enforcement of inheritance rights, court verdict, resolution of property disputes, etc.

Since the type of value depends on the purpose (purpose) of the valuation, the appraiser should explain in detail to the customer the features of the selected type of value being assessed and the need to use this particular type of value in a particular case. That is, when performing an appraisal, the appraiser must agree on the purpose of the appraisal with the customer, and if it is non-standard and not defined by law or current regulations, then its special wording should be reflected in the appraisal contract.

Depending on the purpose and function of the assessment, the number and selection of factors taken into account, the appraiser calculates various types of value.

In international practice, it is possible to formulate the purpose of the assessment in accordance with its intended use (function), for example:

The purpose of the appraisal is to determine the reasonable market value of the real estate object (for example, an unused production building) owned by ABC CJSC, in order to make a decision on the sale of this real estate.

This clarification of the purpose of the valuation is not only appropriate, but also provides some assurance against misuse of the valuation report. However, domestic appraisal practice in the report, appraisal contract and appraisal task, which must comply with the requirements of the Law on appraisal activities and federal appraisal standards, requires separate formulations of the purpose and purpose of the appraisal.

For example, the purpose of the appraisal is to determine the market value of an apartment owned by the customer. Appointment of appraisal - An appraisal is performed to make a decision to sell this property.

Real estate valuation principles

Appraisal is a complex process that requires a highly qualified appraiser, understanding of the principles and methods of Appraisal, free orientation in the real estate market, knowledge of the state and trends of supply and demand in various segments of this market. At the heart of the formation of the theory of evaluation as an applied economic discipline are the principles of evaluation.

The set of evaluative principles is a system of axioms (fundamental postulates that do not require proof) of evaluation. At the same time, one can single out their group features, the relationship between groups of principles and a common goal.

On the basis of the system of evaluation principles, basic concepts are formed that make up the ideological platform of approaches and methods of evaluation. They also make it possible to define the fundamental concepts of valuation theory and describe their properties (for example, such as estimated value, comparable object or valuation date), as well as to identify the relationships between them. Thus, being a reflection of the general laws of economic theory, the valuation principles are such a reflection and such an interpretation that they allow an effective solution of their own problems that arise in valuation practice. This is the general purpose of the valuation principles.

A certain set of valuation principles underlies the valuation of one or another type of value of real estate objects, including land plots. They define the features of valuation procedures and allow justifying the applied approaches and methods of real estate valuation. However, in real life, there are a number of factors that can distort their effect (for example, state intervention, the position of municipal governments, or the imperfection of laws and regulations). In view of this, they reflect only the basic economic patterns, trends in the economic behavior of subjects of market relations, and do not guarantee their certain behavior. At the same time, as market relations develop and strengthen, the influence of valuation principles should increase.

These principles can be grouped into the following four categories:

1. Principles based on user perceptions - principles of utility, substitution, expectations.
2. Principles related to land and its development - the principles of residual productivity, contribution, increasing and decreasing returns, balance, economic size, economic division.
3. Principles related to the market environment - the principles of dependence, conformity, supply and demand, competition, change.
4. The principle of the most effective use (NEI).

Principles based on the views of the user (owner, investor). On the basis of the principles of this group, the basic concepts and models of behavior of the subject (owner / user) in relation to the object of assessment are formed, since they contain the features of the subject's perception of the main cost characteristics of the object, which, of course, is subjective. These basic principles and the analysis of various models of the subject's behavior have found their further development in the theory of utility. In valuation theory, this group of principles underlies the concept of profitability and, accordingly, the income approach, the methods of which are used both to calculate the market value and to determine a number of non-market values (for example, investment value). At the same time, the level of expected income from the object is laid down by the appraiser in the forecast in accordance with the ideas of the investor (owner).

These views are based on:

1) either market requirements for the rate of return for objects of this type (on the assessment of the usefulness of an object by the market - when assessing the market value);
2) or personal requirements of the investor (owner) to the rate of return on invested capital (when assessing the value in use).

Utility - is the ability of real estate to meet the needs of a particular user in a particular place and for a certain period of time. Real estate has value only when it can be useful to the potential owner: producing industrial products or growing crops, collecting rent from those who want to temporarily own this property, etc.

Property can be useful in that it:

Implements a certain economic function;
- is rented out and allows you to receive rent;
- causes a sense of pride in the owner of the rights to real estate. For profitable real estate, utility is measured by the amount of income from its use.

The principle of substitution is that the maximum value of property is limited to the lowest price at which another object with a similar (equivalent) utility can be acquired. This principle assumes that there are choices for the buyer. It shows that a reasonable replacement can always be found for the property being assessed, either in the form of a similar object existing on the market, including a land plot, or a possible new construction of a similar object within an acceptable time frame.

This universal principle underlies each of the three traditional approaches to valuation - cost, market and income.

The principle of expectation means that value is created by the expectation of future benefits that can be obtained from owning this property. Under this principle, value is determined by the present value of future earnings or other projected future benefits.

Principles related to land and its development (improvements). This group of principles makes it possible to evaluate the production (operational) characteristics of an object and factors of production, and their influence on the process of value formation, not only separately, but also through the nature of their mutual relations. Here the object is considered as a part of the production sphere and the basic laws of microeconomics apply to it. The principles of this group allow the appraiser to most fully reflect in the calculations the properties of the appraisal object itself and the environment in which it operates. These principles are focused on a complete analysis of the properties of real estate and the conditions in which it is operated, and without them it is impossible to apply the cost approach. At the same time, the cost approach is based on the principle of substitution (the first group), and the calculation of the market value of real estate in the framework of the cost approach is impossible without the use of the third group of principles.

The principle of residual productivity. The value of a land plot is determined by its productivity (rate of return on invested capital). Productivity is based on the income created by each of the factors of production. Each factor of production has its own form of compensation (payment for attracting it): for a land plot - rent, for labor - wages, for capital - interest, for entrepreneurial efforts - profit. Since the land is physically immovable, the factors of labor, capital and entrepreneurial activity must be attracted to it. And this means that compensation for the use of these factors must first be made and only after that the payment of rent can be made. In this sense, the term “residual value” of land, traditional in Western economics, is used, i.e. land is worth something only when there is a balance after paying for other factors of production.

The principle of residual productivity is the principle according to which net income is attributed to the land only after the involvement of other factors of production has been paid.

For example, a developer, based on real estate monitoring, determines that the market value of a cottage will be 2.5 million rubles. The contractor estimates the construction work at 2 million rubles. Having established that the developer's entrepreneurial income should not be less than 0.3 million rubles, the contractor determines the maximum price that he can spend for a land plot - 0.2 million rubles.

The principle of contribution (marginal productivity). The value of the property depends on the presence or absence of any element of land improvements. Thus, each of the elements of land improvement contributes to the value of the property and, accordingly, the land itself. This addition to the cost of the object (for example, the addition of additional amenities - a fireplace, a swimming pool, a tennis court, etc.) is provided by the introduction of a new factor, the cost of which may be more or less than the value of the contribution. The contribution is the amount by which the value of the property changes, due to the presence or absence of any additional element of land improvements.

The contribution principle shows how much an additional investment in the improvement of a real estate object (land plot) increases its value.

The principle of changing (increasing and decreasing) productivity. The improvements implemented by the user on the land plot have the property of changing productivity (return). This means that, ceteris paribus, as improvements are added to the land, the value of the object increases at an increasing rate up to a certain certain point, from which the value, although increasing, is already slowing down.

According to this principle, subsequent improvements are economically viable until the increase in the value of the object equals the cost of the added improvements. This principle answers the question of the owners: how intensively should their land be built up?

Example: A developer company owns 1 hectare of land. Having collected the relevant information, the appraiser draws up the following table for calculating profits for buildings of various densities.

The principle of balance (proportionality). If not enough factors of production are applied to the land, then it is underdeveloped. If too much - overloaded with buildings. In both cases, the land is used inefficiently and, in accordance with the principle of residual productivity, the value of the land is lost. All factors of production must be in proper proportion, in harmony with each other, so that the total income from land is maximized.

The principle states that for any type of land use, real estate value is maximized with an optimal (balanced) combination of land improvements.

The principle of economic size. The value of real estate increases with the optimal size of the land plot and vice versa. The acceptable scale of land development is determined by competitive market conditions and user requirements.

The principle of economic size determines the amount of land proportionally needed to ensure the optimal scale of land use in accordance with market conditions in a particular place.

The principle of economic size is the same principle of balance, but taken on a different scale and plane. An illustration is the incremental value of a united piece of land.

Let's assume that the land plot at the crossroads is planned to be transferred to a gas station. If the site is small, then there will be problems with parking, maintenance and storage of fuels and lubricants. If the plot is large, then part of the land will not be used and will not bring additional income. In the first case, the owner of the gas station must purchase an additional land plot, in the second case, he must give up the excess land.

The principle of economic division of rights. Property law systems in a number of countries allow property rights to land to be divided and sold separately. The value of real estate increases with the optimal separation (or combination) of property rights to a property and vice versa.

The principle of economic division states that property rights should be divided and combined in such a way as to increase the total value of real estate.

Principles related to the market environment. These principles are related to the market infrastructure and are an interpretation for the applied theory of evaluation of those general economic patterns that are characteristic of the market environment. They underlie the application of the concept of the market and, accordingly, the comparative market approach in valuation. Without taking into account the impact of the principles of this group, it is impossible to correctly determine the market value of a property and any of the estimated values of the market type.

The principle of dependence (from external influences). Location is one of the most important factors influencing the value of real estate. The quality of a location depends on the physical relationship of the land and the type of land use adopted in the county, as well as proximity to a particular economic environment. Together, these characteristics constitute the status, or economic location, of land use. If there are changes in land use patterns in the county, or if the economic environment changes, this will usually affect property values.

For example: building a shopping center nearby, creating an artificial lake, building a school or a waste processing plant. The degree of impact is related to the extent of the new land use and the links between the assessed site and the new one. This expresses the dependency principle: the value of a property is influenced by the external environment and itself in turn affects the use cases and the value of other land uses in the surrounding area.

The principle of conformity. A project that does not meet market standards is likely to fail financially.

The principle of conformity determines the extent to which the architectural style and levels of amenities and services offered by the developer in a particular property meet the needs and expectations of the market.

The principles of regression (decrease) and progression (increase) are connected with the principle of correspondence. Regression is more likely to occur when the applied land use option is overpriced and excessive for the market.

For example, building a house at a cost of 175 thousand dollars. in a quarter where other houses cost from 70 thousand to 80 thousand dollars, it will become unprofitable - they will not give a price for it on the market that can even recoup the costs. And vice versa, if several stores are being reconstructed in a shopping area, a progression is likely: an increase in the value of all stores in this area.

The principle of supply and demand. A property has value if it has utility for a user or group of users. However, it should be relatively scarce. Supply is the number of properties available on the market at a given price. Demand is usually characterized by the number of objects that potential buyers are ready or able to buy during a certain period of time at the prevailing market price at that time. When there is an oversupply or a fall in demand, prices and rents will fall. If demand increases or supply decreases, then in an equilibrium market economy and stable market relations, the value of a property increases. When supply and demand are balanced, the market price tends to reflect cost. The excess of market prices over cost stimulates new construction, and, conversely, if market prices are lower, construction will slow down or stop altogether until the revived demand causes market prices to rise.

Supply is the quantity of goods available at a given price; demand is the quantity of goods desired at a given price. Supply and demand only in interaction determines the value and prices in the market. Demand is generally more elastic than supply and more responsive to prices - this is a characteristic feature of the real estate market.

The principle of competition. If the owners of free capital feel excess or monopoly profits in the real estate market, they will try to penetrate this market. Surplus or monopoly profits are amounts in excess of what is reasonably necessary to compensate for entrepreneurial activity. Higher-than-usual profits stimulate more competition.

The principle of competition reflects the regulatory action of market mechanisms: when the profit in the market exceeds the level necessary to pay for the factors of production; competition intensifies in this market, which in turn leads to a decrease in the average level of income. Surplus profit at a certain stage of market development can play a stimulating role in attracting capital to this sector of the market and creating competitive conditions on it. However, in combination with monopoly, it leads to destructive competition and undermines the market, distorting the real value of market objects.

If the appraiser encounters an income stream that is higher than the market norm, he must exercise caution: for example, treat excess profits as a separate income stream (along with a normal income stream), or define the entire excess income stream as riskier than normal, and capitalize it at a higher rate.

The principle of change. The value of real estate is not constant over time. Real estate objects wear out. New businesses open, others close. The nature of land use is changing under the influence of individuals and public institutions. The money supply and interest rates fluctuate. Economic conditions open up new opportunities. The cost of goods is affected by international events. New technologies and new social standards give rise to new requirements for real estate. Demographic changes dictate the need for different types of housing. People's tastes and moods are changing. These and other factors can change the usefulness of real estate in a particular location. You should also take into account the state and stage of development of the city, district, industry: in the stage of development, maturity, decline or revival. The value of a property in the development stage of a certain area will be higher than the same property in the same area, but in decline.

The principle of change involves taking into account, when evaluating real estate objects, possible changes in the natural and socio-economic conditions in which the object is located.

Thus, change is an indispensable attribute of the value of real estate over time. Therefore, any real estate appraisal is necessarily dated by a specific number.

The Best Use Principle (BWE) is fundamental to real estate valuation theory. This principle synthesizes the principles of all three categories and unifies all the principles of valuation. It is the principle that determines the choice of factors and characteristics of the object that affect its market value.

The NEI principle determines the use of the enterprise that provides the highest value to the property at the valuation date. But this is not its complete formulation. This is forgotten by those who claim that the principle of NEI is not needed at all, because otherwise, instead of kindergartens and schools, casinos and alcoholic beverage factories will be built everywhere.

In fact, the NEI principle states that the most efficient use is the use selected from a range of alternatives that is both:

1) technically (physically) feasible;
2) legally permissible;
3) financially justified;
4) brings the valued property to its highest value, which also applies to the land plot on which the improvements are located. These four conditions are the criteria through which, as if through a sieve, all alternative options that apply for the “nomination” - NEI must be passed (checked).

In the educational and methodological literature of recent years, there has been a tendency to classify NEI in the second group of principles related to the exploitation of property. In the opinion of the authors, this is an unsuccessful methodological "innovation", since when analyzing the NEI, it is necessary to use both market factors necessary to assess the market value, and the owner's motivated and market-calibrated expectations regarding the greatest efficiency of a particular use. As already noted, this principle synthetically reflects the impact of all other groups of principles and, in turn, “tests” their impact through its own criteria.

Based on the fact that the subject of real estate appraisal is the appraiser, and the object of appraisal is real estate belonging to one or another owner, real estate appraisal is a set of actions of appraisers aimed at establishing a market or other value in relation to appraisal objects. Accordingly, the determination of the market or other value of real estate for the purpose of effective management and disposal of it acts as the main purpose of real estate valuation. But the assessment is not an end in itself, its necessity is determined by the fact that a variety of transactions are made with real estate, respectively, an assessment is needed in order to make one or another management decision in relation to real estate. At the same time, in order to make management decisions in this case, it is necessary to involve many other characteristics of real estate: quality properties, production capacity (productivity), operating costs, wear and tear, etc.

The theoretical basis of the evaluation process is a system of evaluation principles. In world practice, it is customary to distinguish four groups of evaluation principles.

The first group - principles based on the ideas of the potential owner.

The principle of utility, which means that the more a property is able to satisfy the needs of the owner, the higher its utility and value.

substitution principle. It means that in the presence of a certain number of homogeneous (in terms of utility or profitability) real estate objects, the objects with the lowest price will be in the highest demand. This principle is based on the possibility of an alternative choice for the buyer, i.e. The value of a property depends on whether similar or replacement properties are available on the market.

The expectation principle, which is determined by what income (taking into account the amount and timing of receipt) or what benefits and conveniences from the use of the property, including proceeds from subsequent resale, the potential owner expects to receive. This principle underlies the valuation of real estate using the income approach and characterizes the potential user's point of view on future income and their current value. For example, the value of a land plot in a settlement allocated for residential development will reflect the capitalized amount of rent (actual or potential) that the owner expects to receive from the operation of a residential building.

The second group - the principles associated with the process of exploitation of real estate.

The principle of contribution - in order to assess the value of a real estate object, it is necessary to determine the contribution of each factor and its most important elements to the formation of the usefulness and value of the object.

The profitability of a property is determined by a combination of four groups of factors: land with buildings (if the site is undeveloped, then only land), equipment and technical means (for an undeveloped site - also buildings and structures), labor and management. At the same time, the cost of each group of factors depends on how much the value of the entire property increases from their use, taking into account the available quantitative and qualitative characteristics.
In other words, the contribution is the addition to the value of real estate, which is the result of the presence of a particular factor or its elements.

If we consider the action of this principle in dynamics, in relation to an expanding object, then the value of each subsequent contribution may not correspond to the specific costs of creating the component in question, since the total value of real estate is not always a simple sum of the costs of individual constituent elements. For example, the cost of installing an underground car park in the amount of $ 150,000. can increase the cost of a multi-storey residential building by $300,000.

The principle of balance - for each type of land use, certain components of the object are required, the optimal combination of which ensures the maximum value of real estate.

In other words, any type of real estate corresponds to the optimal combination of interacting elements in the structure of a real estate object on the scale of a district or city (settlement), in which an equilibrium state is reached that ensures the maximum value of the entire object. The balance is broken if the buildings on the land are characterized by insufficient improvements or, conversely, have excessive improvements in relation to this land, for example, its size.

For real estate objects, balance is characterized by economic indicators of capacity and efficiency. The capacity shows how many real estate objects can be attached to a certain land plot, while local authorities can: regulate real estate parameters (height, building density, efficiency of land use); establish requirements for the preservation of the landscape, historical buildings, protection of historical and cultural monuments, and environmental protection measures. Efficiency is determined by the level of profit that a combination of a land plot with buildings located on it can provide in the implementation of various development projects.

The principle of residual productivity. It means that the owner of a land plot, with minimal costs for its arrangement, can extract the maximum income (satisfy the special needs of the user with a specific property or, by combining the characteristics of the object (favorable location, etc.) to get the maximum income). This principle is used in determining the feasibility of new construction.

The principle of division. Means that the physical elements of real estate and property rights to them can be divided and combined in such a way as to achieve the maximum value of the object. When separating the physical elements of real estate property rights to them, the following options are possible:

Spatial division: division of rights to airspace, to the soil layer of the earth, to underground space with subsoil, to coastal water resources, dividing the land mass into separate sections, dividing the building into a basement, floors, and so on;

Separation by types of property rights: lease, limited use, mortgage, contribution to the authorized capital of enterprises, issue security for the issue of shares;

Division by time of possession or use: short-term and long-term lease, perpetual use, lifelong possession, the right of economic management, operational management.

The third group is the principles determined by the action of the market environment.

The principle of supply and demand. Means that the price of real estate changes as a result of the interaction of supply and demand. It expresses the interdependence between the growing need for real estate in the context of the socio-economic development of society and the limited supply due to the natural limitedness of land, as well as the economic costs of building (reconstructing) improvements.

The principle of competition. It means that prices for real estate objects are set by means of constant rivalry of market participants who seek to obtain maximum profit. A high rate of return stimulates the attraction of capital to the real estate market and increases competition. The positive role of competition lies in the fact that only in a competitive market can one determine the market value when it equalizes the return on investment in different segments of the real estate market. In the presence of monopoly, excess profits create a destructive nature of competition, undermine the operation of market mechanisms and, ultimately, lead to a distorted market value of real estate. This process is especially dangerous at the stage of origin and formation of the real estate market (primarily land), which is typical for our country.

The principle of conformity. This is that the maximum value of a property occurs when there is a reasonable level of architectural uniformity and a compatible land use pattern. Compliance of the characteristics of the property with the needs and expectations of the local market ensures a high market demand for it, and therefore a high cost.

The principle of changing the external environment. It involves, when evaluating real estate, taking into account possible changes in the economic, social and legal conditions under which they are used, as well as taking into account the external environment and prospects for the development of the area. The principle of changing the external environment must be taken into account when writing an appraisal report by indicating the date on which the value of the property is determined.

The fourth group is represented by one principle: the principle of the best and most efficient use. It summarizes the impact of the above three groups of valuation principles.

This principle means that from the possible options for using the property, the one is selected that most fully realizes the functionality of the land plot with improvements. This option is used to assess the value of real estate.

The appraiser makes an allowance for collection losses by analyzing retrospective information on a specific object and then predicting this dynamics and thus can determine the option that brings the maximum possible income from the land plot, regardless of whether the site is built up or not and what buildings are located on it at the date estimates.

All of the above principles of real estate appraisal are closely interrelated and, depending on the type and specifics of the property being appraised, on the appraisal method used, they can play a primary or secondary role.

The considered principles represent the theoretical basis for assessing the value of real estate objects. Three fundamental approaches to real estate valuation are based on them - profitable, comparison and costly.

The concept of real estate includes physical objects with a fixed location in space and everything that is inseparably connected with them both below the surface and above the surface of the earth or is a service item, as well as the rights, interests and benefits arising from the ownership of objects.

A distinctive feature of movable property is the possibility of its movement without damage either to itself or to the property with which they are associated.

The Civil Code (Article 130) provides a clear definition of the term immovable thing. Immovable things (real estate, real estate, including land plots, subsoil plots, isolated water bodies and everything that is firmly connected with the land, that is, objects that cannot be moved without disproportionate damage and their purpose, including forests, perennial plantations, buildings , structures).

In this definition, the concepts (real estate), (real estate), (real estate) are considered as synonyms, which, in our opinion, is quite fair, since they all characterize the same material objects.

Thus, it is necessary to distinguish between the concept of real estate (real estate as a set of physical objects (land and everything that is inextricably linked with it) and real estate property, which includes, in addition to material objects, interests, advantages and rights associated with ownership of these objects.

The theoretical basis of the evaluation process is a system of evaluation principles. In world practice, it is customary to distinguish four groups of evaluation principles:

1st group: principles based on the ideas of the potential owner;
2nd group: principles arising from the process of real estate operation;
3rd group: principles determined by the action of the market environment;
4th group: the principle of the best and most effective use.

The expectation principle is determined by what income (taking into account the amount and timing of receipt) or what benefits and conveniences from the use of the property, including proceeds from subsequent resale, the potential owner expects to receive. This principle underlies the valuation of real estate using the income approach and characterizes the potential user's point of view on future income and their current value. For example, the value of a land plot in a settlement allocated for residential development will reflect the capitalized amount of rent (actual or potential) that the owner expects to receive from the operation of a residential building.

The second group of valuation principles is determined by the process of real estate operation and includes the principles of contribution, residual productivity, balance, division.

In other words, the contribution is the addition to the value of real estate, which is the result of the presence of a particular factor or its elements.

The principle of balance - for each type of land use, certain components of the object are required, the optimal combination of which ensures the maximum value of the property.

The balance is broken if the buildings on the land are characterized by insufficient improvements or, conversely, have excessive improvements in relation to this land, for example, its size.

For real estate objects, balance is characterized by economic indicators of capacity and efficiency.

The capacity shows how many real estate objects can be attached to a certain land plot, while local authorities can: regulate real estate parameters (height, building density, efficiency of land use); establish requirements for the preservation of the landscape, historical buildings, protection of historical and cultural monuments, and environmental protection measures.

Efficiency is determined by the level of profit that a combination of a land plot with buildings located on it can provide in the implementation of various development projects.

The principle of separation means that the physical elements of real estate and property rights to them can be divided and combined in such a way as to achieve the maximum value of the object.

When separating the physical elements of real estate property rights to them, the following options are possible:

- spatial division: division of rights to airspace, to the soil layer of the earth, to underground space with subsoil, to water resources of coastal strips, dividing the land mass into separate sections, dividing the building into a basement, floors, and so on;
- division by types of property rights: lease, limited use, mortgage, contribution to the authorized capital of enterprises, issue security for the issue of shares;
- division according to the time of possession or use: short-term and long-term lease, perpetual use, lifelong possession, the right of economic management, operational management.

The third group of principles of evaluation, due to the action of the market environment, includes supply and demand, competition, conformity and change in the external environment.

The principle of supply and demand means that the price of real estate changes as a result of the interaction of supply and demand. It expresses the interdependence between the growing need for real estate in the context of the socio-economic development of society and the limited supply due to the natural limitedness of land, as well as the economic costs of building (reconstructing) improvements.

The positive role of competition lies in the fact that only in a competitive market can one determine the market value when it equalizes the return on investment in different segments of the real estate market. In the presence of monopoly, excess profits create a destructive nature of competition, undermine the operation of market mechanisms and, ultimately, lead to a distorted market value of real estate. This process is especially dangerous at the stage of origin and formation of the real estate market (primarily land), which is typical for our country.

The matching principle is that the maximum value of a property occurs when there is a reasonable level of architectural uniformity and compatible land use. Compliance of the characteristics of the property with the needs and expectations of the local market ensures a high market demand for it, and therefore a high cost.

The principle of changing the external environment involves, when evaluating real estate, taking into account possible changes in the economic, social and legal conditions under which they are used, as well as taking into account the external environment and prospects for the development of the area.

The principle of changing the external environment must be taken into account when writing an appraisal report by indicating the date on which the value of the property is determined.

The principle summarizing the influence of the previously mentioned three groups of evaluation principles is the best and most effective use (BLEI).

The fourth group of valuation principles (LNEI) means that from the possible options for using the property, the one is selected that most fully realizes the functionality of the land plot with improvements. This option is used to assess the value of real estate.

LNEI is considered in two stages: firstly, the land plot as free, and secondly, the land plot with existing improvements.

These principles represent the theoretical basis for the valuation of real estate objects. Three fundamental approaches to real estate valuation are based on them - profitable, comparison and costly.

real estate cost costly

The concept, goals and principles of real estate valuation

Appraisal is a procedure, as a result of which the market or other value of the object of appraisal is established.

Appraisal activity - entrepreneurial activity carried out by appraisers, aimed at establishing a market or other value for objects of appraisal on a certain date, unless otherwise provided by laws.

Appraiser - a natural or legal person who has a license to carry out appraisal activities and is necessarily a member of one of the chambers of appraisers.

The purpose of real estate appraisal is to determine the market or other value for performing certain actions with the object of appraisal.

Of course, the goals of real estate valuation directly depend on the specific property transaction in each case.

So, what are the purposes of real estate appraisal:

Identification of the value of real estate during privatization activities, transfer to trust management or lease,

Real estate appraisal is required when drawing up various marriage contracts, as well as when dividing property in the event of a divorce, for example, at the request of one of the parties in the event that there is a dispute over the division of property.

If necessary, provide real estate as collateral,

When exercising control over the correctness and legality of paying taxes in the event that there is a dispute about the calculation of the taxable base,

In case of sale or other alienation of immovable property,

When redeeming or in the event that the norms of the law provide for the seizure of real estate from the owner for various state or municipal needs,

With mortgage lending

When assigning debt obligations that are directly related to the objects of assessment - real estate,

In the case when real estate is transferred to the authorized capital of legal entities.

The list is not exhaustive. Obviously, real estate appraisal can be carried out for a variety of purposes, although it becomes clear from appraisal practice that the need usually arises when making various business transactions. The objectives of real estate appraisal directly affect the content of the appraisal - ie. on that set of relations and actions of an economic, legal, technical, research and other nature in connection with the determination of the value of the object of assessment. In each case, setting goals for a specialist is of paramount importance and is put at the forefront.

Approach to valuation - a way to determine the possible market or other value of the object of valuation, using one or more valuation methods.

Appraisal method - a set of actions of a legal, financial, economic, organizational and technical nature used to establish the market or other value of the appraisal object.

Valuation standards - a normative document that establishes for general and repeated use the rules, principles and characteristics in the field of valuation activities.

Appraisal date - a day or period of time for which the possible market or other value of the appraisal object is determined.

Real estate is buildings, structures, land plots and everything that is firmly connected with them, the movement of which is impossible without disproportionate damage.

Separate objects are classified. If the buildings are adjacent to each other and have a common wall, but each is an independent constructive whole, they are considered separate objects. External extensions to a building of independent economic importance, separate boiler house buildings, as well as outbuildings (warehouses, garages, fences, sheds, fences, wells, etc.) are independent objects. Premises built into buildings and intended for shops, canteens, hairdressers, ateliers, rental shops, kindergartens, nurseries, post offices, banks or other organizations are part of the main building.

This also includes communications inside buildings necessary for their operation:

heating systems with equipment, for example, a boiler plant - a boiler room (if the latter is located inside the building);

internal network of water and gas pipelines, sewerage with all devices;

internal network of power and lighting wiring with all lighting fixtures;

internal telephone and signaling networks;

ventilation devices for general sanitary purposes;

lifts and lifts.

Foundations under objects that are not buildings, boilers, generators, machine tools, machines, devices, etc., located inside buildings, are not included in the building, except for the foundations of large-sized equipment. The foundations of these objects are part of the objects in which they are used; the foundations of large-sized equipment constructed simultaneously with the building are part of the building. For this type of facility, the term "specialized buildings" is used.

Structures. Structures include engineering and construction facilities designed to create and perform technical functions (mines, oil wells, roads, dams, overpasses, etc.) or to serve the population (urban amenities, etc.).

The structures include all the devices that make up a single whole with it. For example, when determining the replacement cost of a dam, the structure of the object includes the dam body, filters and drains, spillways and weirs with metal structures, slope support, roads along the dam body, bridges, platforms, fences, etc.

The range of structures includes more than 100 items, and the share of cost in the total volume of construction is more than 25%. The subsection "structures" also includes accessory devices. This group includes all objects of independent importance intended for the transmission of energy and information, such as power lines, heating plants, pipelines for various purposes, radio relay lines, cable communication lines, as well as a number of similar objects with all associated utility networks.

The appraisal activity is understood as the professional activity of the subjects of appraisal activity, aimed at establishing a market or other value in relation to the objects of appraisal.

Appraisal activity is a new type of economic activity for the Republic of Kazakhstan, along with accounting, auditing, and taxation.

Real estate appraisal is the determination of the value of real estate in accordance with the goal, the appraisal procedure and the requirements of the appraiser's ethics.

Accordingly, the main objectives of the assessment are:

reflection in the reporting; purchase and sale;

holding competitions; auctions; trades; rent; leasing; pledge; chapter; inheritance; donation;

insurance; calculation of taxes, duties, fees;

privatization; confiscation; nationalization; liquidation; resolution of property disputes;

transfer of ownership; contribution of property to the authorized capital; determination of the share of property rights; transfer to trust management;

investment design; commercial concession; compensation for damage; storage;

Valuation is a methodologically substantiated opinion of an expert on the value of an appraisal object and the process of its determination.

The theoretical basis of the process of valuation of various property objects is a set of valuation principles formulated as a result of many years of experience. In world practice, market participants have developed a unified set of valuation rules or principles that are combined into groups.

In world practice, it is customary to distinguish four groups of evaluation principles:

1. Principles based on the views of a potential user (owner).
1.1. The principle of utility.

Utility is the ability of a property to meet the needs of a user at a given location and for a given period of time.

It is determined by the amount, timing and nature of income or other benefits from the use of real estate.

1.2. substitution principle.

The principle of substitution states that the maximum value of a property is determined by the lowest price or value at which another property of equivalent utility can be acquired.

1.3. The principle of expectation.

Anticipation is the establishment of the present value of income or other benefits that may be received in the future from owning a property. Expectations can be either positive or negative.

2. Principles arising from the operation of real estate (related to land, buildings and structures).
2.1. Residual productivity is measured as the net income attributed to land after the costs of labor, capital and entrepreneurship have been paid.
2.2. The principle of investment. The contribution is the amount by which the value of an economic object or the net income from it increases or decreases due to the presence or absence of any additional factor of production (resource). The cost of each component depends on how much the value of the entire property increases from its use, taking into account the available quantitative and qualitative characteristics. The value of the contribution is determined by the usefulness of the element from the point of view of the buyer (ie the market).
2.3. The principle of balance (proportionality) states that any type of land use corresponds to the optimal sums of various factors of production (object component), the optimal combination of which achieves the maximum value of the land.
2.4. The principle of economic division and connection of rights. An economic division occurs when real property rights can be divided into two or more property interests, resulting in an increase in the total value of the property.
3. Principles due to the action of the market environment.
3.1. The dependency principle states that the value of a particular property is subject to, and itself affects, the nature and magnitude of the value of other properties in its area.
3.2. The principle of conformity (to the environment) is that the maximum value of a property occurs when there is a reasonable level of architectural uniformity and compatible land use.
3.3. The principle of supply and demand means that the price of real estate is formed as a result of the interaction of supply and demand. Supply refers to the number of properties that can be put up for sale at the prevailing price level. Demand is a solvent need for real estate objects presented on the market.
3.4. The principle of competition: when profits in a market exceed the level required to pay for factors of production, competition intensifies in this market, which, in turn, leads to a decrease in the average level of net income.
3.5. The principle of changing the external environment involves taking into account, when evaluating real estate, possible changes in the economic, social and legal conditions under which they are used, as well as the external environment and prospects for the development of the area.
4. The principle of the best and most efficient use.

These are understood to be such uses that:

a) is legally permitted, i.e. complies with legal regulations, including zoning and environmental regulations, urban planning restrictions, requirements for the protection of historical monuments of architecture, landscaping of the surrounding area, etc.;
b) is physically feasible, i.e. the size and shape of the land plot, its transport accessibility, existing buildings allow the implementation of the chosen use case;
c) financially justified in terms of return on invested capital, i.е. use provides income in excess of capital costs, operating costs and financial obligations;
d) provides the highest value or profitability of real estate.