Real estate appraisal procedure do the easements influence

Real estate appraisal procedure - do the easements influence results? (A country based approach) Kadri Kärson, certified real estate appraiser Uus Maa Ltd Estonia Kaarel Sahk, lecturer Estonian University of Life Sciences June 2010 03/09/2021 ERES & Milan 2010 1

Objective of research n n n To analyze and underline the nature of restriction of use of real estate To concretize how do the restrictions influence the market value of real estate To draw the possible explanation of the restrictions influence during the appraisl procedure 03/09/2021 ERES & Milan 2010 2

Engagement of research n n Interest of real estate appraisers – yes, very actual Attractiveness for real estate market actors, such as brokers, developers etc) Importance for real estate owners Ability to use during the academically studies 03/09/2021 ERES & Milan 2010 3

Real estate usage restrictions – a country based approach Real estate use restriction Court decisions Legally based Private law 03/09/2021 Agreement based Joint ownership Public law ERES & Milan 2010 4

Questionary n How it was done? - n Who were engaged? Number of participants Feedback Percentage of answers - n n n 03/09/2021 Questionary -12 basic questions Basically real estate appraisers - 121 persons 52% 49% ERES & Milan 2010 5

First target Restrictions influence to the market value Agreement founded, Public law – basically legal acts based Roads Likely influence Technical infrastructure Likely influence Water Big influence basically private law based Real easement Likely influence Private easement Big influence Encumbrances Likely influence Building right Big influence Incumbents based Big influence Nature protection Big influence Heritage Likely influence Planning and 03/09/2021 building right Likely ERES & Milan 2010 Big influence Joint ownership influence 6

Second target Restrictions of use don’t affect the market value Agreement founded: Right to buy Do not influence Public law based, founded on laws Restrictions to buy a property Likely influence Private law based, founded on laws Likely influence Allikas: autori koostatud tabel 03/09/2021 ERES & Milan 2010 7

Third target of research Current practice of valuation process of restricted properties Basic information sources Different registers Most used appraisal method Sales comparison approach Use of sales comparison approach Different sales data is in use Influence accounting Restriction is fixed as a separate element of comparison Importance in appraisal procedure Important is to grow the influence accounting 03/09/2021 ERES & Milan 2010 8

Natrual markers that work like retsrictions n n n Environment impact assesment methods supplemented with hedonic price model of environment goods ande services. In this case a lot of common value variables turn into HPM components and should be analyzed trough 3 -D or 4 D models Preliminary analyze gave already some results 03/09/2021 ERES & Milan 2010 9

Basic environment factors that have a restricting influence Roads 2. Forets, alleys 3. Lakes & rivers 4. Farms 5. Other villages 6. Dwelling houses 7. HV electic lines 8. Railway 9. Churches and chemistries In all 28 different parameters 1. 03/09/2021 ERES & Milan 2010 10

Some examples of 3 -D pictures n Always was used a standardized description of traditional one family house 03/09/2021 ERES & Milan 2010 11

Some examples of 3 -D pictures n The buildings typical conditions were worked out according the basic demand requirements 03/09/2021 ERES & Milan 2010 12

Positive influence to value, e. g. n n n Alleys See Rive Piers Churches and chemistries 03/09/2021 n n n +17% +20% +18% +2% +8% ? ? ERES & Milan 2010 13

Negative influence to value, e. g. Roads Indusrty Dwelling houses Wind generators HV electric lines Railway 03/09/2021 -8% -9% -5% -12% -29% ERES & Milan 2010 14

Neutral influence to value, e. g. Forest Farmland 03/09/2021 ERES & Milan 2010 15

Basic results n n n Indication of the restrictions types met during the appraisal procedure Explanation of the restrictions of use in the contest of their influence to the market value (value) Open up the employed appraiser relation to the restrictions existing 03/09/2021 ERES & Milan 2010 16

Some conclusions n n The standardized approach to the restrictions accounting during the appraisal process is needed; The sales data register needs a supplement Types of restrictions q Their use in the sales value formation q n The furtherer researches must Develop forward this preliminary research q Foreign experience should be accounted q 03/09/2021 ERES & Milan 2010 17

Some conclusion n n Natural restrictions have a different influence to the value It is a question about the human being mind and emotions – sensitive value The further research is needed Sensitive values markers are hardly useable during the appraisal procedure 03/09/2021 ERES & Milan 2010 18

n n This presentation is based on the master thesis of Mrs Kadri Karson “Usage constraints of immovable's and their influence on assessment“, supervisor Kaarel Sahk Thesis were defended in June 2009. 03/09/2021 ERES & Milan 2010 19

Additional information n According the current presentation the empirically paper will be compiled. n The paper is in process 03/09/2021 ERES & Milan 2010 20

n The PPT and other information is available Kaarel. Sahk@emu. ee Thank You! 03/09/2021 ERES & Milan 2010 21

Thank you! n Contact adresses for further information: Kadri. Karson@uusmaa. ee Kaarel. Sahk@emu. ee n According the current presentation the empirically paper will be copiled. 03/09/2021 ERES & Milan 2010 22