Real Estate Valuation

Transcription

1 v Českých Budějovicích Strana 1 (celkem 6) Odborný modul: Economy in Civil Engineering Professional module: Ekonomika ve stavebnictví Název tématu: Oceňování nemovitostí Topic name: Real Estate Valuation Tvůrce tématu: Ing. Jan Pečman Název kurzu v anglickém jazyce Real Estate Valuation Tvůrce kurzu v anglickém jazyce: Mgr. Věra Filipová Annotation: Real estate valuation is a branch of the construction industry, when a monetary equivalent is assigned to a particular construction, its part or a group of buildings. Valuation of real estate has many objectives, and considering that orientation in the basic terminology is necessary, particularly regarding the international market. Key words: Price, value, real estate Real Estate Valuation Real estate valuation is not only currently used when buying or selling real estate but It also serves, among other things, for market analysis, purchasing power of the inhabitants and to a wide range of other activities. In most countries there is a role of experts of real estate value. Experts can put value on the property according to legal regulations, or based on experience from previous sales of similar properties in the locality. In some countries there is an official database of prices of the properties sold. However, such a database does not exist in most countries and so the easiest way is that the real estate agent determines the market price on the basis of his own experience.

2 v Českých Budějovicích Strana 2 (celkem 6) Basic Terms Price and Value The term price is usually used for an amount of money which is required, offered or already paid for goods or services. It may or may not be related to the value. The price shows what amount is necessary to give, in order to obtain certain goods or service. Prices are usually expressed in monetary units. Nevertheless, the payment doesn t need to be made in cash. Unlike the price, the value is not the amount of money which is actually paid, required or offered. The value of goods (services) is an economic category that expresses the relationship between people and goods (services) in terms of their interest in the matter. with respect to the people s interest in the goods. In that process, the person's interest in the goods (services) is determined by the degree of the of goods (services ) utility properties for the person in a specific place and time. - In that process, The person's interest in the goods (services) is determined by the degree of the of goods (services ) utility properties ( I wasn t sure how to translate this term, in Czech this economical term expresses the functionality, reliability, maintenance, manoeuvrability, durability, health sanitariness and esthetical impressiveness of the product do you know what I mean?) of the product (or service) for the person in a specific place and time. That implies that the value of goods or services expresses the utility benefit level, which expresses the degree of the benefit/utility, which emerges from the goods (services) in favour of its users. in favour of the user. For the same goods this utility benefit level may be very different for various persons at the same time and place. Therefore, the value of things cannot be expressed with an accurate sum of money, which is reflected in the market price of things and also that s why the value of things can be totally different from the price of the item on the market. Participants on the Real Estate Market: Basic participants on the real estate market are: - the seller, who sells the property - the buyer, who buys the property - the landlord, who leases the property to tenants on the basis of a lease agreement (in this contract both parties agree on the regular rent payment, arranged period of time that the tenant can use the property and other conditions) - the tenant, the person, who the landlord leases the property to on the basis of the conditions regulated in the lease agreement Basic Methods of Real Estate Valuation

3 v Českých Budějovicích Strana 3 (celkem 6) There are three basic valuation methods used - comparative, cost and yield. In practice, all three methods are used independently or combination of the three. The comparative method sets the value of the property by analyzing the sales of comparable properties in recent period of time. The comparative method is based on the premise that an informed buyer would not pay for the property more than for another property with the same utility. The cost method takes into account the costs associated with reproduction or replacement of the valued real estate. From this value potential depreciation or devaluation caused by physical decay and functional or economical deficiencies are deducted, in the case that they exist and are measurable. The cost method is based on the premise that an informed buyer would not pay for the property more than for another property with the same utility. Information about the valued property is used for the determination of the costs of acquisition of a new material property and for determination of the costs of a comparable substitution. The yield method derives the value of the property from the value of a future income which can be obtained from it. Properties that are able to generate income are usually valued on the basis of this fact. When using the yield method the valuation is made on the basis of capitalization of the potential net rental income from the property corresponding with the investment risks contained in its ownership. Important Factors Affecting the Real Estate Value Locality, situation, and placement this factor, probably, affects the value the most. It depends on the position on the local scale (for example, the position in the municipality), regional scale (eg district or region), as well as supra-regional scale (eg state). The size and spatial arrangement - acreage, latitude, longitude, elevation, overall shape and other parameters affect mainly the value of land. As for the buildings, what matters are primarily the internal dimensions, floor area of particular rooms, their orientation considering the cardinal points and the overall concept of property. Technical conditions and age - the task that an assessor or an expert of the valuation of real estate also has to take into account is the overall technical condition of the valued property and its age, if it regarding a building. The attractiveness of the surroundings and the use of neighbouring land - these factors are often ignored and neglected. However, they play a significant role especially in the

4 v Českých Budějovicích Strana 4 (celkem 6) market with buildings for housing. Availability of transport and technical infrastructure - taking account this fact is especially important for the planned realization of constructions. Example basic information about a property designated for sale Type of property: It can be a house, land, building or part of a building with the possibility of commercial use or any other use with the description of the current status or previous use. Location: The basic division according to this criterion is ambiguous, but mostly it can be a town/rural area, village center, the edge of a village etc. The access road, which often might not be well- specified, plays an important role in this case. The exact address of the property, type of surrounding buildings etc. is usually listed in this piece of information. Area The area of the land is usually expressed in units of m2 (square meters) or ha (hectares), although it is possible to come across other area units - for example acre, which may differ from region to region that s why it is recommended to convert it to area units based on the SI system. The areas are further divided into built-up, utility, floor and others - definitions of these terms may differ according to various regulations, so it is recommended to consult the definition with local regulations. Total price In the case of brokering the sale (lease) of the property, there is a note about the price, which defines, whether the price includes or excludes the commission of the real estate agency, fees associated with the transaction or legal services. State of property This item is usually a brief description of the technical conditions of the property. Property This document specifies the profile of the seller (landlord), in other words the type of ownership - private, cooperative, or another type.

5 v Českých Budějovicích Strana 5 (celkem 6) Technical facilities This item usually indicates whether the property is a source of water (or whether it is a local or remote source of water supply) or sewerage. If it is a buildings, there may be defined the type of heating, gas connection, electricity supply, or the accessibility of the public transport in the area (bus, train, heliport etc.). There is often stated the distance between the property and related public service stations. Building energy demand This relatively new figure proceeds from the evaluation of the building energy demand. Dictionary: Výraz,člen/mn.č. Překlad Questions: vzor Why should the construction site be fenced in? Exercises: Cvičení podle uvážení autora, podle výskytu morfologických či lexikálních jevů v textu Mind map: otázky k zamyšlení, moderní trendy, klady a zápory atd. Construction site Safety Machines and tools Ground works

6 v Českých Budějovicích Strana 6 (celkem 6) Solutions: vzor cvičení - 1 Solutions: Exercise 1: Negate following sentences: Example: I am tall. I am not tall. (I am short.) a) The room is separate. b) That is wrong for sure. c) He s comming tomorrow. Solution: a) The room is separate. The room isn t separate. (The room is passable.) b) That is wrong for sure. That s not wrong for sure. (It s certainly right.) c) He s comming tomorrow. He isn t comming tomorrow. (He s comming any other day but tomorrow.) Použité zdroje dle zásad citování, text a obrázky zvlášť