Methodical Approaches for Expert Monetary Valuation of Real Estate Objects

Olena Zharikova () and Oksana Pashchenko
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Olena Zharikova: National University of Life and Environmental Sciences of Ukraine, Kyiv, Ukraine
Oksana Pashchenko: National University of Life and Environmental Sciences of Ukraine, Kyiv, Ukraine

Oblik i finansi, 2018, issue 4, 114-123

Abstract: The consequence of economic transformations in Ukraine is the introduction of the institution of private ownership of land and payment for use land, the formation of a land market, land mortgage lending. Under these conditions, there is a growing need for monetary valuation of land and other real estate. The results of land valuation should take into account the real state of the market. Therefore, the appraiser should avoid unrealistic assumptions about changes in the market situation, especially in conditions of economic instability, when there is a risk of overestimation or underestimation of land ownership. The purpose of the article is the theoretical substantiation of expert monetary valuation of real estate on the basis of International and National standards for real estate valuation. The main methodical approaches to expert monetary valuation of real estate objects used in European countries and Ukraine were considered: income approach, cost approach and comparative (market) approach. The features of the application of such valuation methods were disclosed: the method of direct capitalization of income and indirect capitalization of income, methods for calculating the capitalization rate (direct comparison method, method of related investments (equity and debt capital), method of related investments (land and buildings), Elwood method, cumulative method, income capitalization method). The procedure for determining the value of goodwill for the potential owner within the limits of the income and comparative approaches was given. The method of determining the final value of the property by using various methods of adjustment was analyzed. Considerable attention is paid to the issue of determining wear and tear when applying the cost approach to real estate valuation. As the Ukrainian valuation practice shows, the valuation of the value of an enterprise components is usually carried out, that is, the estimated property complex is divided into components, each of which is evaluated separately, and then the value of the entire property complex is determined by summation. Such an assessment should be carried out in accordance with the requirements of international and national standards for evaluation.

Keywords: expert monetary valuation; object of valuation; appraiser; real estate; land; national and international valuation standards; methodical approaches to valuation (search for similar items in EconPapers)
JEL-codes: Q15 (search for similar items in EconPapers)
Date: 2018
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