Appraising an apartment with a mortgage in 2021: what it is, where to go and how to do it. Expert explains

• 1. What is property valuation and why is it carried out?
• 2. What types of property valuation exist - TOP 5 main types
• Type 1. Valuation of real estate
• Type 2. Valuation of movable property
• Type 3. Business valuation
• Type 4. Valuation of enterprise property
• Type 5. Valuation of intellectual property
• How to conduct a property valuation - step-by-step instructions for beginners
• Step 1. Decide on the object and purpose of the assessment
• Step 2. Select an appraisal company
• Step 3. Arrange a meeting and conclude an agreement
• Step 4. We provide the assessment object for inspection
• Step 5. Receive a work report

Apartment appraisal service in a new building

Valuation of an apartment in a new building is a popular service.
It involves work to determine the market value of a residential property. It is ordered by agencies, homeowners (present and future), and banks. Market price is the most objective indicator, and it is the one that appears in many transactions. There are two possible situations when resorting to real estate valuation in a new building:

• An apartment building was built and put into operation, the apartments in it were registered, they were assigned cadastral numbers.
• The house is just being built, and by taking out a mortgage on an apartment in it or buying it with one’s own funds, an individual does not yet become the owner. He is only a co-investor in the construction. In this situation, an assessment is also necessary, since there is no information anywhere about the market value of the apartment and when purchasing it is necessary to be based on specific (and, very important, objective) data.

Cost-effective approach

The cost approach is based on the fact that the costs of creating a similar real estate property are suitable for estimating its value. That is, the market value of a residential building will be equal to the cost of materials and work for its reconstruction.

Within the framework of the approach, two types of cost are distinguished:

• replacement cost is determined by the costs of creating exactly the same object from the same materials, structures, the same quality of work and the nature of the layout - the object is reproduced with all its shortcomings and wear and tear;
• replacement cost is determined by the cost of building an object of the same value, but built using modern materials, design, and layout.

This method allows you to evaluate real estate taking into account the land on which it is located.

Why are there such different prices for real estate in a new building?

The reality is that the cost of approximately identical apartments is different. This is due to the fact that the price of each object depends on many factors:

• Location. If you plan to buy in the city center, then you need to be prepared for the fact that the cost of the apartment will be higher than housing on the outskirts. The higher “price tag” is explained by the fact that land for development is more expensive, the demand for real estate is higher, the cost of connecting to communications is higher, etc.
• Transport accessibility. The cost is affected by the proximity of transport interchanges, train stops, and metro stations.
• Availability of finishing. Practice shows that about 15% of apartments on the primary market are sold fully furnished. They are more expensive, but this difference is lower than the amount that owners would have to spend on renovating an apartment without finishing.
• Square.
• Stage of house construction. Housing in a house under construction costs less than in one that has already been built and put into operation.

We present only a few factors. Independent appraisers evaluating an apartment in a new building take into account dozens of criteria so that the result obtained - the market value of the property - is objective. In their work they use income, cost and comparative methods.

What is the time value of money?

You've probably heard that money gets cheaper over time. This is the time value of money: in a year, a thousand rubles, under the influence of inflation, will “worth” much less. Therefore, when it comes to selling an apartment, it is better to sell it within a reasonable time. Otherwise, relatively speaking, you will receive your desired 5 million for the apartment, but in a year. Accordingly, during this time they will have time to “get cheaper”.

When the apartment is sold at the liquidation price, the bank repays the remaining loan, and the borrower receives what remains after that. Therefore, it is to your advantage that the liquidation price is still quite high. By the way, for inexpensive standard apartments the difference between the liquidation value and the market value is small. Therefore, you can sell them quickly, as discussed above.

Why do you need an apartment appraisal in a new building?

The assessment of an apartment in a new building is carried out for different purposes:

• For a mortgage.
• When registering property rights.
• For the court.
• When buying and selling.
• For insurance.
• When inheriting.
• In case of property disputes, for example, division of property between divorced spouses.
• When receiving a non-targeted loan.

One of the common situations when a real estate appraisal in a new building is necessary is obtaining a mortgage.

What should you know about assessing an apartment in a new building for a mortgage?

Before registering ownership of an apartment purchased with a mortgage, you must register a mortgage on the property with the bank. The document must reflect the market value of the mortgaged (collateralized) apartment. Let us remind you that all these features and the algorithm for registering an apartment in a new building with a mortgage are regulated by the Federal Law “On Mortgages (Pledge of Real Estate)”.

The purpose of assessing an apartment in a new building for a mortgage is to determine the liquidity of the property. The appraiser needs to go to the property to inspect and photograph it and the surrounding area. If a multi-storey residential building has not yet been built, then assessing objects that do not yet exist or are unfinished is a complex procedure. In fact, the market value is determined not of the apartment itself, but of the property right to it. Appraisers carefully select analogue apartments located in similar buildings. In the situation with unfinished apartments, the factors influencing the price that we cited above are partially applied, and the specialist determines the cost taking into account the coefficients. Thus, the market price is determined taking into account inflation risks. The risk of bankruptcy of the developer company does not stand aside either. The year of completion of construction and the period of commissioning also matter.

Who has the right to evaluate an apartment in a new building?

Not every specialist working in the field of appraisal activities can evaluate apartments in a new building and other residential real estate. When ordering an assessment, owners must determine whether the specialist meets the following requirements:

• Listed in SRO.
• His civil liability is insured for the amount of 300,000 rubles.
• Has a higher education and at least one year of work experience in this field.

Only an appraiser who meets these requirements has the right to draw up an official document - an appraisal report, which will be accepted by the credit institution as a source of reliable and objective information. Sometimes banks require approval of the “candidacy” of an appraiser. This is due to the fact that the credit institution and clients expect different results from the assessment. The first one wants to reduce the value of the collateral property, and the second one wants to determine the value of the object as close as possible to the market value. This is one of the important reasons why banks will carefully, meticulously check the appraisal report, so it is very important to contact a professional appraiser. The result of his work will not cause any complaints from interested parties.

What documents are needed when evaluating an apartment in a new building for a mortgage?

The list of documents is quite extensive. It is necessary to, on the one hand, determine the legal status of the property, and on the other, to form a complete picture of the property. The appraiser must provide:

• A document showing how the property in the new building was acquired (for example, an agreement on shared participation, purchase and sale, etc.).
• Copies of the constituent documents of the developer company.
• Cadastral passport of the apartment, extract from the Unified State Register (their copies).
• A copy of the technical passport issued by the BTI (with information about the explication and floor plan).
• Transfer and acceptance certificate (copy).
• Identity card of the customer of the assessment.

This list is approximate and can be supplemented in each specific situation.

Income approach

This approach is based on calculating the income that the new owner will be able to receive from the use of real estate. Therefore, important conditions for its use are the ability of real estate to generate income and the ability to predict it.

Income from real estate includes profit from its rental, a possible increase in the future sale price, etc. Within the framework of the approach, two methods are distinguished:

1. the capitalization method is used if the profit from real estate is the same every year or has the same growth rate;
2. The discounting method is used if profits are not constant but predictable.

When assessing, it is important to consider the risks specific to the type of property and the region in which it is located.

Valuation report as a result of determining the market value of an apartment in a new building

After visiting the site and studying all the documentation, an independent appraiser carries out calculations using one or a set of methods:

• Income approach – takes into account the possibility of increasing the value of the property in the future.
• Cost - the amount of costs for the construction of a similar apartment is determined.
• Comparative – takes into account the experience of selling apartments similar to the property being evaluated.

All calculations, photographs, conclusions are reflected in the assessment report - a document that has legal force and is accepted by the bank as a weighty argument. It is valid for 6 months. Its preparation is paid for by the future owner, that is, the one who takes out the mortgage.

On a note! Often, appraisal companies are asked to evaluate an apartment in a new building that has not yet passed the state commission and therefore has not been put into operation. Such an apartment is not registered in Rosreestr, it is impossible to obtain a certificate of ownership for it, and the bank, in turn, cannot enter a note in the register about the presence of an encumbrance. Does this mean that it is impossible to evaluate such real estate? As practice shows, it is possible. The bank gives a mortgage and receives the right to claim the future property.

Applying for an estimate of the cost of an apartment in a new building in is a guarantee of your profitable deals!

Federal Law “On Valuation Activities in the Russian Federation” (No. 135-FZ)

Federal Law “On State Cadastral Valuation” (No. 237-FZ) dated 07/03/2016

Federal assessment standard “General concepts of assessment, approaches to assessment and requirements for assessment” (FSO No. 1)

Federal Valuation Standard “Purpose of Valuation and Types of Value” (FSO No. 2)

Federal assessment standard “Requirements for an assessment report” (FSO No. 3)

Why you should contact us

Guarantee. Several cooperation options for your convenience. You pay only for the result! The liability of each of our appraisers is insured under an insurance contract.

Efficiency. By calling our company, you get in direct contact with a specialist. You don’t need to explain your problem several times and listen to ringtones on your phone endlessly. At any stage of interaction with the company - from the first call to specialists to the assessment - the Customer can count on a quick and effective solution to their issues.

Convenience. It is you who choose the day and time of inspection of the property being assessed. You don't need to reschedule any business. We will arrive when it is convenient for you.

Quality. In our company, each conclusion - assessment report - before printing, undergoes a two-stage check for compliance with the standards of expert activity - checked by a leading expert and the head of the organization.

Reputation. Why take my word for it? Look at the reviews from our Clients. Maybe your partner is among them?

Professionalism. We employ certified specialists who are members of a self-regulatory organization and have a license.

Good practice. More than 300 won cases.

How to choose a company to evaluate

1. If you select a company yourself, the following algorithm looks reasonable. From the many companies that are presented on the bank’s website (Sberbank, for example, has a list of about 90 companies), you select 10-20.
2. Then monitor their websites, the section on prices, terms and additional services.
3. If necessary, you can call and choose one.

When choosing, you can focus on the following indicators:

1. Estimator visit time: 1-2 days.
2. Report completion time: 3-5 days.
3. Price. May vary. In megacities it starts from 2-3 thousand rubles.