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A new approach to expertise: two in one


In March, the Duma will consider a draft law (it has already been adopted in the first reading) altering the routine of the expertise of evaluation reports. At the moment two kinds of expertise from SRO (Self-Regulatory Organization) are being provided. Normative-methodological expertise determines the correctness of procedure while evaluation expertise determines the rightness of the sum drawn out. Now it is supposed to combine them. Besides, the legislators want to prolong the term of cadastral evaluation expertise procedure from 30 to 45 working days as well as make the cost of expertise transparent and available.    

We have asked the market players to answer some questions. Are proper or improper measures supposed? Will 45 days be enough? How much does the expertise cost now? What does the price depend on? Do you use the available cadastral evaluations reports  as well as the reports which are sometimes published on the popular elaluation websites?

Ekaterina Markovets, managing partner of ZAO (Closed Joint-Stock Company) “UK “Magistr” :

– At contesting cadastral evaluation, normative methodological expertise is practically useless for it doesn’t answer the major question about the market value of an object.  As a rule, the price of expertise depends on the type of object and is determined for each case taken separately. Evaluation expertise is one and a half times more expensive than the normative methodological one. Besides, an additional coefficient for the complexity may be applied, e.g., when  evaluation results and expertise conclusion are intended for legal proceeding. In case the cadastral evaluation of OCC (Object of Capital Construction) is being contested, we deal namely with a complex variant (evaluation expertise, legal proceeding). The expertise will cost more if any monument or large multifunctional centre is being evaluated. Depending on the object, the value of OCC expertise may vary from 40 000 to 120 000 roubles.Cadastral evaluation reports are made by using mass technique. At calculating market value, the evaluator uses the technique of individual evaluation. So, strictly speaking, it is not obligatory for him to study the cadastral evaluation report.   To determine the cadastral cost by a mass evaluation method  special techniques are being developed as well as software products based on them. Generally, without particular programmes and internal data bases, the external evaluator can’t reproduce calculations by analogy with cadastral evaluation. Nevertheless, before contesting cadastral value it is necessary to study cadastral evaluation reports, e.g., in order to understand what the unjustified increase of the value of the object has been caused by and what should be especially contested.  Concerning other reports published on the Internet, they are mostly various case studies and course projects, in practice everything being somewhat more complex. We seldom address such reports as we have a sufficient number of our own methodical elaborations. If we meet something new, we address ourselves to the specialists for specialized assets. 

Natalia Chentsova, the Head of the Expertise Department of the Evaluation Centre  «Peterburgskaya Nedvizhimost»:

– The draft law being debated is intended to clear up the field of expertise application, kinds of expertise as well as to increase information transparency  in this sphere. Extended value expertise provides the examination of the evaluator compliance with RF law. In the first instance, the report must not contain any errors impacting the final value of the object. At a glance, the innovations will considerably improve the situation in the construction industry: the quality and reliability of evaluation reports will increase. It should be noted that today legal regulation of evaluation activities admits the appearance of reports which don’t correspond to the market realities completely, though they fully correspond to the low/legislature.  In our opinion, the prolongation of the expertise term from 30 to 45 days will hurt, first of all, the interests of the customer as the cadastral value contestation has not been a quick process and now it will last for 15 days more. Price formation in the expert field significantly differs in self-regulatory organizations (SRO). As a rule, the value depends on specific features of the object (eg., scale, functional usage), the purpose of the work performed, the number of pages in the report and so forth. Self-regulatory organizations provide a flexible approach in this regard, both reducing and increasing factors being applied to basic cost.  

Igor Kadushkin, Chairman of expert Council of North-Western Society of evaluators:

– 45 days may be the term quite sufficient for a few objects, but it is unlikely to be sufficient for the report evaluating tens and hundreds of thousands of objects. And this is a routine task at cadastral evaluation.The combination of expert kinds is reasonable. The compliance of the report to normative documents often allows confirmation of the cost given by the report, though not always.  It is true that the labour intensity of joined expertise increases and results into the price growth of services of SRO experts. As a rule, the cost of expertise is determined by the time spent to make this expertise. The reports published are useful at contesting cadastral value. In the majority of cases they are necessary for contestation participants only. The reports allows for an understanding of the technique used to determine cadastral value.  
Alexei Vasilchenko, General Director of OAO (Open Joint -Stock Company) «Regionalnoe upravlenie otsenki»:– Value expertise of the report on cadastral value determining is considered as one of the most labour intensive expertises. The expert must examine the correctness of all calculations made by an evaluator, i.e. make the alternative calculations. Taking into account the massive information which the expert must deal with, it is necessary to agree with term prolongation. But, after all, the expert term must be reasonable for both experts and other interested participants. Considering the time-limit and the established procedure of expertise, 45 days will be quite enough.Concerning the price formation in the field of expert work, each SPO performs it independently. The organizations take into account their own expenses and labour intensiveness at giving expertise. As a rule, the cost of expertise depends on the type and characteristics of the object estimated, the kind of property, and the term of its implementation.  I don’t know about any field formal agreements or specifications on the subject.    We don’t use published valuation reports in our work. As a rule, their full content may be interesting only for evaluators-beginners.  In theory, some tasks and techniques may be useful for the experienced market participants as they may provide themselves with them. But nobody publish such reports widely for obvious reasons while current problems are solved by discussing among professionals.   Among the available reports the most interesting are those on cadastral value. They give to evaluators ideas of work defects or initial data that permits the use of this knowledge in practice at contesting cadastral value. Most often, namely the defects cause the discontentment of proprietors and give profit to evaluators.  

Ivan Grigoriev, executive Director of Company “SIG Appraisal”:

– If legislators order, the expertise will be drawn out for 45 working days, no doubt. The question is the quality.   It is unclear how it`s value part will be performed. First, it is necessary for experts to examine the module of value calculation ( determination of objects’ price by the values of price forming factors). Second, it is necessary to examine the compliance of the values of price forming factors with objects being evaluated.  Concerning the first point, we cannot doubt the possibility to confine ourselves to this term. But the second point may cause the necessity to examine, e.g., the proper  assignment of values of 10-20 factors to hundreds of thousands of land plots (if we deal with the lands of housing estates). It is practically unreal. We use all-Russian classifier of standards (ACS) value reports in those regions where contestations occur.   It should be noted that the legal requirement to make reports freely available hasn’t always been followed. Thus, in Petersburg, some parts of the last report on land plot cadastral valuation, in particular, appendixes 7 and 8 containing the information about the analogs used, are not available.   

Dmitry Sinochkin
Weekly newspaper “Real Estate and Construction of Petersburg”, № 7(846) 16.02.2015, р.17

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