On the use of statistical analysis when valuing office real estate using the gross rental multiplier method. Gross rental multiplier The value of gross rental multipliers of machinery and equipment

3. Real estate valuation

3.5. Approaches to real estate valuation.

3.5.1. Comparative (market) approach

Comparative approach to valuation - this is a set of methods for assessing value, based on comparison of the object of valuation with its analogues, for which there is information on the prices of transactions with them.

Conditions for applying the comparative approach:
1. The object must not be unique.
2. Information must be comprehensive, including the terms of transactions.
3. Factors influencing the cost of comparable analogues of the property being valued must be comparable.

The comparative approach is based on the principles:
- substitutions;
- balance;
- supply and demand.

Stages of the comparative approach:

Stage 1

Market research - an analysis of the state and trends of the market and especially the segment to which the assessed object belongs is carried out; real estate objects are identified that are most comparable to the one being valued and that were sold relatively recently.

Stage 2

Collection and verification of the accuracy of information about analogues of the property being valued that are offered for sale or recently sold; comparison of analogue objects with the object being evaluated.

Stage 3

Adjustment of sales prices of selected analogues in accordance with differences from the object of valuation.

Stage 4

Establishing the value of the valuation object by agreeing on the adjusted prices of analogous objects.

Comparable objects must belong to the same segment and transactions with them must be carried out on conditions typical for this segment:

Exposure period. Exposure period – the time that the object is on the market;

Independence of the subjects of the transaction. Independence means that transactions are not concluded at a market price if the seller and buyer:
· are related;
· are representatives of the holding and an independent subsidiary;
· have other interdependence and mutual interest;
· transactions are carried out with objects burdened with collateral or other obligations;
· engaged in the sale of real estate of deceased persons, etc.;
- investment motivation, which is determined by:
· similar motives of investors;
· similar best and most efficient use of facilities;
· degree of wear and tear of the building.

Main criteria for selecting analogue objects:
1. Ownership rights to real estate.
The title adjustment is the difference between market rent and contract rent because full title is determined at market rent and current financing available.
2. Terms of financing the transaction. If the financing conditions of the transaction are atypical, a thorough analysis is required, as a result of which an amendment is made.
3. Terms of sale and time of sale.
4. Location.
5. Physical characteristics.

An adjustment to comparable sales is required to determine the final value of the subject property. Calculation and adjustments are made based on a logical analysis of previous calculations, taking into account the significance of each indicator. The most important thing is to accurately determine the correction factors (see Fig. 3.2).

Rice. 3.2. Types of adjustments

Percentage adjustments are entered by multiplying the sales price of an analogous object or its unit of comparison by a coefficient reflecting the degree of differences in the characteristics of the analogous object and the object being valued. If the valued object is better than a comparable analogue, then an increasing factor is added to the price of the latter; if worse, a decreasing factor is added.

Cost adjustments:

a) absolute corrections, added to the unit of comparison, change the price of the sold analogue object by a certain amount, which is estimated at the difference in the characteristics of the analogue object and the object being valued. A positive adjustment is made if the valued object is better than a comparable analogue, a negative adjustment if it is worse;

b) monetary adjustments, added to the price of the sold analogue object as a whole, change it by a certain amount, at which differences in characteristics are estimated.

Cumulative interest adjustments are determined by multiplying all individual percentage adjustments.

Amendment in form general grouping usually used in a developed real estate market where there are a large number of sales. The cumulative adjustment is made within the identified group of comparables.

Sequence of amendments:
1. Adjustment for financing terms.
2. Adjustment for special sales conditions.
3. Adjustment for time of sale.
4. Correction for location.
5. Correction for physical characteristics.

Advantages of the comparative approach:
1. The final price reflects the opinion of typical sellers and buyers.
2. Sales prices reflect changes in financial conditions and inflation.
3. Statically justified.
4. Adjustments are made for differences between the objects being compared.
5. Quite easy to use and gives reliable results.

Disadvantages of the comparative approach:
1. Sales differences.
2. Difficulty in collecting information on practical sales prices.
3. The difficulty of collecting information about the specific terms of the transaction.
4. Dependence on market activity.
5. Dependence on market stability.
6. Difficulty in reconciling data on significantly different sales.

3.5.1.1. Paired sales method

One way to determine the amount of adjustment for any characteristic is to analyze paired sales. It consists of comparing and analyzing several pairs of comparable sales. Matched sales, however, are sales of two properties that are nearly identical except for one characteristic that an appraiser must evaluate to use as an adjustment to the actual price of the comparable property.

For example

The following information on market sales is known:

Area, m2
Sale price, $

Define:

1. Adjustment for differences in area.

2. Adjustment for the presence of a garden.

3. Adjustment for the presence of a garage.

Solution

	Evaluable
Area, m2
Adjustment
Adjustment
Adjustment
Sale price, $	29000
Total adjustment
Adjusted price

Expert adjustment methods are used when monetary adjustments cannot be made.

Let the value of the object being valued = X;

Cost of the sold object = 1.0 (100%).

if an object is 15% better than an analogue, then the price of the analogue should increase by 15%

X = (1.0 + 0.15) * 1 = 1.15.

if an object is 15% worse than its analogue, then the price of the analogue should be reduced by 15%

X = (1.0 – 0.15) * 1 = 0.85.

if an analogue is 15% better than the valued object, then the price of the analogue should decrease

1.0 = (1.0 + 0.15) * X; .

if an analogue is 15% worse than the valued object, then the price of the analogue should increase

1.0 = (1.0 – 0.15) * X; .

3.5.1.2. Gross rent multiplier method

Gross rent multiplier (GRM) is the ratio of the selling price to either potential gross income or actual income.

To use this method you must:

1) estimate the market gross income generated by the object;

2) determine the ratio of gross income from the property being valued to the sales price for comparable sales of analogues;

3) multiply the gross income from the valued object by the average value of GRM for analogues.

The probable selling price is calculated using the formula

Example

Calculation of VRM

	Sales price, c.u.
Object of assessment	150000*5,08 =762169		5+5,43+4,81 = 5,08
			800000/160000 = 5,00
			950000/175000 = 5,43
			650000/135000 = 4,81

The role of the GRM can be performed by the general capitalization ratio (CCR).

OKC is the ratio of net operating income to sales price.

In this case

;

Example

Calculation of OKC

	Sales price, c.u.
Object of assessment	375000		0,13
			incomparable
		35000 (last year)	incomparable

In table 3.3 shows an example of using the paired sales method when valuing an apartment.

Table 3.3

Calculation of the cost of an apartment using the paired sales method

Object characteristics	Object of assessment	Mapping Objects
Location
Adjustment
Number of floors of the apartment
Adjustment
Object state
Adjustment
Total area, m 2
Adjustment
Living area, m2
Adjustment
Kitchen area, m2
Adjustment
Adjustment
Apartment price, $
Total adjustment
Apartment price adjusted, $

Previous

Method of gross rent multiplier (gross income multiplier). The gross rental multiplier is the ratio of the sales price to either potential or actual gross income. The method is carried out in three stages: First stage . The market rental income from the property being assessed is estimated. Second phase. The ratio of gross income to sales price based on recent market transactions is determined. Third stage. The probable value of the property being assessed is calculated by multiplying the market rental income from the property being assessed by the gross rental multiplier. V = D r VRM = D r , where V is the probable sale price of the valued object; D r – rental income of the property being valued; GRM – gross rent multiplier; C anal – the selling price of the analogue; PVD anal is the potential gross income of the analogue. Example. It is necessary to value a property with a high-pressure property at $15,000. The data bank contains the following information about recently sold analogues (see table)

	Sale price Sanal

BRM (averaged over analogues) = (5 + 5.43 + 4.8) : 3 = 5.

V= 15000x5= $75000

The gross rental multiplier is not adjusted for differences that exist between the appraised and comparable properties, since the calculation of the GRM is based on actual rental payments and sales prices, which take into account these differences.

4.3 Application of the cost approach

Before moving on to assessing the cost of buildings and structures using a cost approach, the appraiser must not only read the technical documentation, but also inspect the buildings and structures. This will allow him to draw up a detailed description of the assessment object, which will give the characteristics of external and internal structures and engineering systems. The cost approach includes 3 stages: First stage. Determining the value of the land plot on which the building or structures are located. Second phase. An estimate of the replacement or replacement cost of a building or structure as of the effective valuation date. Third stage. Calculation of all types of wear and tear of buildings and structures. Assessment of the replacement cost of buildings and structures. In this approach, the replacement cost or replacement cost is determined based on the following methods:

comparative unit; element-by-element calculation (breakdown into components); index assessment.

Comparative unit method. This method includes several steps:

stage. Based on data on the construction costs of similar facilities, cost standards for construction work are developed (per 1 m², per m³ of building). As a typical structure, it is better to use a recently constructed facility for which the contract price is known. If the appraiser is unable to find a recently built comparable object, then he can use the developments of the Central Research Institute of Economics and Management, the Coinvest company and other companies, which provide specific indicators of the cost of a consumer unit of construction products for characteristic types of buildings and structures in the basic, current and forecast price levels. stage. The unit cost standard is multiplied by the total area or volume of the building being assessed. stage. Amendments are made to the characteristics of the object being assessed.

Cost of building a basic unit

Required area

Construction cost per base unit

Corrections for the characteristics of the object being assessed

Multiplier taking into account local conditions

Full cost estimate

Method of element-by-element calculation of the cost of buildings and structures.

This method is also called the componentization method. The appraiser carries out calculations in the following sequence:

stage. Breaking down a building into individual elements (foundation, walls, frame, roof, etc.). stage. Calculation of the costs required to install a particular element in a building under construction at the date of assessment. To do this, the amount of direct and indirect costs required for the construction of a unit volume is determined.

For example: The unit cost of 1 m² of brick wall consists of the cost of bricks, mortar, workers' wages, and the cost of operating machines and mechanisms. Multiplying the unit cost by the area, we get the total cost of installing the entire element. The entrepreneur’s profit is taken into account either in a unit cost or calculated separately.

stage. Summation of element-by-element costs.

Index method of assessment. It is carried out by multiplying the book value of the object by the corresponding index for the revaluation of fixed assets, approved by the Government of the Russian Federation. This method includes several calculation methods. There are: resource, resource-index, base-index and base-compensation methods. Resource method– this is a calculation in current (forecast) prices and tariffs of resources (cost elements). It is carried out based on the need for materials, products, structures (including auxiliary ones used in the process of work), as well as data on distances and methods of their delivery to the construction site, energy consumption for technological purposes, operating time of construction machines and their composition, labor costs of workers. This method is applied in accordance with the provisions set out in the Methodological Recommendations approved by the letter of the Ministry of Construction of Russia dated November 10, 1992. No. BF-926/12. Resource index method is a combination of the resource method with a system of indexes for resources used in construction. Cost (price, cost) indices are relative indicators determined by the ratio of current (forecast) and basic cost indicators for resources comparable in nomenclature. Of the many possible varieties of this method, it is recommended to use the method of determining the estimated cost of construction based on indicators for individual types of work (PVR), set out in the letter of the State Construction Committee of Russia dated June 4, 1993 No. 12-146. Basis-index method- this is a recalculation of costs according to the terms of the estimate from the base price level to the current price level using indices based on the Methodological recommendations approved by the letter of the State Construction Committee of Russia dated May 31, 1993 No. 12-133. The basic compensation method is the summation of the cost calculated at the basic level of estimated prices and additional costs determined by calculations associated with changes in prices and tariffs for the resources used during the construction process. Until the economic situation in the country stabilizes and the corresponding market structures are formed, the highest priority methods of the index method are the resource and resource-index methods. In practice, the basis-index method is most often used, as it is the simplest. Determination of wear and tear of buildings and structures. After determining the full cost of restoration or replacement, depreciation is subtracted from the resulting value to calculate the residual value of the item. The concept of depreciation used by appraisers and the concept of depreciation used by accountants are different from each other. The term “wear and tear” in valuation theory is understood as the loss of the usefulness of an object, and therefore its value, for various reasons, and not only due to the time factor. This term is used in a different sense in accounting, where wear and tear is understood as a mechanism for transferring costs to the cost of production over the standard service life of an object. In assessment practice, several methods are used to determine the wear and tear of structures:

partitioning method; lifetime method.

Splitting method.

It consists of taking into account all types of wear and tear, which include:

removable physical wear and tear; irreparable physical wear and tear; removable functional wear; irreparable functional wear; economic (external) wear and tear.

Depreciation is considered removable if the cost of eliminating the defect is less than the value added. On the contrary, if the cost of correction is greater than the value added, then the wear and tear is classified as irreparable. Appraisers' clients often require that a list of recoverable items, along with an estimate of restoration costs, be included in the appraisal report. Determination (assessment) of physical wear and tear. Below are tables illustrating the calculation of physical wear and tear, both removable and irreparable.

Determination of impairment due to reversible physical wear and tear

Name of works	Cost, dollars
Site renovation
Repair of water supply network
Interior painting and finishing
Removable physical impairment – ​​total

Determination of impairment caused by irreversible physical wear and tear of short-lived components

Components	Total cost of reproduction	Actual or effective age	Life expectancy		Depreciation, dollars
Ventilation
Sewerage
Heating

Determination of impairment caused by irreversible physical wear and tear of long-lived items

Calculation data	Unit of measurement, dollars
Total cost of reproduction (without developer's profit), dollars.
Removable physical impairment, dollars.
Total cost of reproduction of components with a short lifespan, dollars.
Total cost of reproduction of components with a long life (1-2-3), dollars.
Effective age of the structure, years
Economic life of the structure, years
Wear of long-life components ((5/6) 100), %
Impairment of long-lived components ((4 7)/100), dollars.

Using expert method When calculating physical depreciation, the expert, by inspection, determines the percentage of depreciation of each element of the building, and then the amount of depreciation in monetary terms.

Determination of physical wear and tear

building element	Replacement cost, dollars				Accumulated depreciation, dollars
Foundation
Power system

The percentage of wear of building elements can also be determined as a weighted average value for all elements of the building

Name of the structural element

Specific gravity of a building's structural element

Wear percentage

Share of depreciation in the cost of the building

Determination (assessment) of functional wear. Functional wear, like physical wear, can be removable and irreparable. The criterion for classifying wear as removable or irreparable is the same as in the case of physical wear. Accordingly, the cost of removable functional wear and tear is defined as costs that are reasonable from the point of view of their contribution to future income from the operation of the facility. Removable functional wear is caused by:

shortcomings that require adding elements; deficiencies requiring replacement or modernization of elements.

In the first case, it is equal to the difference between the cost of making the required additions at the time of assessment and the cost of making the same additions if they had been carried out initially during the construction of the assessment object. This is explained by the fact that the reconstruction of part of the object is more expensive if this part was created at the time of construction of the object itself. In the second case, removable functional wear is measured by the cost of replacing obsolete elements. Irremovable functional wear and tear can be caused by both a lack and an excess of the qualitative characteristics of the objects being assessed. If there is a shortage, it is measured, in particular, by losses in the amount of rent when renting out a given object. Irremovable functional wear and tear is calculated as follows: Elements of buildings and structures, the availability of which is currently inadequate to modern requirements of market standards, are classified as “extra improvements”. In this case, we are talking about irreparable functional wear caused by an excess of quality characteristics. Example. The intercom systems added $23,000 to the cost of the property and $30,000 in installation costs. Thus, the installation cost for these items was $7,000. The number of unnecessary items typically increases with the age of the property. Determination (assessment) of economic wear and tear. External (economic) wear and tear is expressed in a decrease in the functional suitability of real estate caused by negative factors external to it: the general decline of the area, the unfortunate location of the property, etc. If physical and, to a certain extent, functional wear and tear can be eliminated by reconstructing or modernizing a building, then wear and tear from external influences is in most cases irreparable. It is traditionally calculated by two methods:

related sales, when two comparable objects are compared, one of which has signs of external wear and tear, and the other does not, the difference in sales prices is interpreted as external wear; capitalization of rental losses using the gross rent multiplier.

This method compares the rental income of comparable properties, where one is exposed to a negative externality and the other is not. Thus, economic depreciation is determined by the formula:

Economic Depreciation = Loss in Rent x Gross Rent Multiplier

Method of calculating lifespan. When applying this method, the following concepts are used:

Economic life– this is the time period during which an object (building) can be used to make a profit. During this period, improvements contribute to the value of the property. The economic life of a property ends when improvements made no longer contribute to its value due to general obsolescence of the property. Physical life span of an object is the period of time during which the building exists. The physical life span ends with the demolition of the building. Effective age(expertly assessed) is based on an assessment of the appearance of the object, taking into account its condition. This is the age that corresponds to his physical condition. Remaining economic life building is the period from the date of valuation until the end of the economic life of the object. Standard service life– this is the service life of buildings and structures determined by regulations.

The relationship between depreciation, replacement cost, effective age and the typical economic life of a building is expressed by the following formula:

I: VS = EV: EJ, where

I – wear; ВС – replacement cost; EV – effective age; EZh – economic life span. This formula can be written as follows:

EV: EJ = Percentage of replacement cost depreciation.

The lifespan method is used both to calculate cumulative depreciation and to calculate any one type of depreciation.

Gross rental multiplier is an indicator reflecting the ratio of the sale price and gross income of a property. This indicator is calculated for similar real estate objects and is used as a multiplier to the adequate indicator of the property being assessed.

Stages of real estate valuation using the gross rental multiplier:

The gross income of the valued object, either potential or actual, is estimated;

At least three analogues of the property being valued are selected, for which there is reliable information about the sales price and the amount of potential or actual income;

Necessary adjustments are made to increase the comparability of analogues with the object being assessed;

For each analogue, the gross rental multiplier is calculated;

The final VRM is determined as the arithmetic average of the calculated VRM for all analogues;

The market value of the valued object is calculated as the product of the average GRM and the estimated adequate gross income of the valued object.

The probable market value of the property being valued is calculated using the formula:

Сн = PVDots (DVDots)xVRMSr (1)

where CH is the estimated market value of the property being valued; PVDots - potential gross income from the assessed object; DVDots - actual gross income from the assessed object VRMsr - gross rental multiplier; Tsa - sale price of a similar property; or by the formula:

Сн = PVDots (DVDots)x (Tsa1/PDV1+ .+Tsan/PVDan):n (2)

where Tsa1 is the sale price of the first similar object; PVD1 - potential gross income from the first similar object; Tan is the sale price of the n-th similar object; PVDan - potential gross income from the n-th similar object; n - number of similar objects. is considered a market method for valuing an income-producing property, since this indicator takes into account sales prices and gross rental income for objects sold on the market. Example: The appraiser must determine the market value of a property whose potential gross income is 30,000 thousand rubles. The information database contains information about recently sold analogues.

We calculate the average gross rental multiplier for analogues and its average value: (105,000: 35,000 + 96,000: 28,000 + 110,000: 31,000): 3 = 3.3257. GRM does not adjust for differences between the subject of valuation and comparable analogues, since the calculation of VRM is based on actual rental payments and sales prices, which already take into account these differences. The market value of the property being valued is 30,000 x 3.3257 = 99,770 (thousand rubles)

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Techniques

On the use of statistical analysis when valuing office real estate using the gross rental multiplier method

The gross rental multiplier method (GRM) is based on the assumption that there is a direct relationship between the sale price of a property, on the one hand, and the potential rental income that can be received when renting out the property, on the other. The probable sale price of the appraised object using this method is calculated using the formula: The probable sale price of the appraised object using this method is calculated using the formula:

C rev = PVD rev * VRM, (1)

where C about is the probable sale price of the property being valued, rub.;
PVD about - potential gross income of the lessor from the property being valued, rub./year;
GRM - gross rent multiplier.

The landlord's potential gross income is determined based on market rental rates and the size of the space that can be leased:

PVD rev = AP *Sgenerally(2)

where AP is the market rental rate for the year, rubles/year;
S total - respectively, the total area of ​​the property suitable for renting, sq.m.

The key problem in determining the VRM is to ensure the comparability of the cost indicators of the compared objects. In the case of office real estate, to ensure comparability, you can use a standardized unit of object size (sq.m. of total area) and standardization by income, which is ensured by calculating the VRM.

The calculation of the VRM value for office real estate is based on the following assumptions:

In accordance with the market value standard, its value corresponds to most likely price, according to which the object can be alienated on the open market. Therefore, to determine the market value based on information on prices for similar objects, it is advisable to use well-known methods of statistical analysis, which make it possible to increase the reliability of the assessment of the calculated indicators. The general population in this case is the prices of all objects in the analyzed market segment, and the data used by the appraiser is a sample consisting of n independent observations.

Since offers to rent and sell the same property are extremely rare, the necessary initial information for analysis is generated in two stages:

1st stage- a list of analogue objects for sale comparable to the object being valued is determined;
2nd stage- for these analogues, corresponding offers for renting office facilities are selected.

The main characteristics of the sample formed in this way are shown in the following table.

Table 1.
Analysis of the “sales price/annual rent” ratio for comparable office properties

No./item	The name of indicators	Offer prices for analogues for sale, rub./sq. m.	Rental rates for properties corresponding to analogues for sale, RUB/sq.m. in year	Ratio “price/annual rental rate” for comparable properties
	Average value
	Minimum value
	Maximum value
	Asymmetry coefficient
	Relation of asymmetry coefficient to estimation error
	Kurtosis coefficient
	Ratio of kurtosis coefficient to estimation error
	Deviation criterion (table value at α=.5% is 2.67)
	Standard deviation (RMS)
	The coefficient of variation

Note: calculated based on a sample of 19 office properties in the central part of Rostov-on-Don, put up for sale in April 2006, and corresponding rental offers.

The statistical homogeneity of the resulting sample was checked using the criterion of outlier observations:

K = max [ YWed - Y (1) ; Y (n) - YWed]/σ (3)

where Y av - average value;
Y (1) and Y (n) are the minimum and maximum values ​​in the sample, respectively;
σ - standard deviation.

The sample can be considered statistically homogeneous if the calculated value of criterion (3) does not exceed the tabulated value at a given significance level. For the resulting sample, the tabular value of the criterion at a significance level of 5% is equal to 2.67, which is greater than the calculated values ​​of this criterion for the distributions of announced sales prices (2.09), rental rates (1.79) and the “sales prices/rental rates” ratios. (2.12). 2.67, which is greater than the calculated values ​​of this criterion for the distributions of announced sales prices (2.09), rental rates (1.79) and sales price/rental rates ratios (2.12).

The value of the asymmetry coefficient (0.97) indicates the presence of a right-sided asymmetry in the distribution of sales prices of objects, in which the average value of the indicator exceeds its modal (most probable) value, and the value of the kurtosis coefficient (0.46) indicates a lower slope of the price distribution compared to standard normal distribution. The last circumstance is very important, because indicates an increased risk of deviation of property sales prices from their average level. However, the calculated values ​​of the reliability coefficients of asymmetry and kurtosis for all indicators (equal to the ratio of the parameter value to the standard error of the estimate) are not sufficient to reject the hypothesis that the resulting sample corresponds to a normal distribution. However, the calculated values ​​of the reliability coefficients of asymmetry and kurtosis for all indicators (equal to the ratio of the parameter value to the standard error of the estimate) are not sufficient to reject the hypothesis that the resulting sample corresponds to a normal distribution.

We also note that for the distribution of the “sales price/annual rent” ratios, the values ​​of the asymmetry coefficient (0.44) and the coefficient of variation (20%), which indicates a higher stability of this indicator. The figure below shows a histogram of this distribution:

The ratio “sales price/annual rental rate” characterizes the actual value of VRM for each pair of comparable analogues of objects for sale and objects for rent. As follows from the results presented, the most probable value of the BPM for the object being evaluated is in the range from 5 to 6, and the average value (mathematical expectation) BPM av = 5.93.

A more reliable value of the VRM value can be obtained by directly assessing the dependence of the sales price (per 1 sq.m.) on the rental rate:

C ed =m*AP sp (4)

where C ed is the selling price of a standard unit of office real estate, rub./sq.m.;
m is the coefficient of dependence of sales prices on rental rates for comparable objects, corresponding to the value of VRM;
AP sp - annual rental rate of a comparable office property, RUB/sq. m..

Dependence (4) is a linear regression equation, the parameters of which are estimated using the least squares method. The calculation results using the standard Microsoft Excel procedure are given in table. 2.

table 2
Results of calculating VRM using the least squares method

The calculation results indicate a very high relationship between sales prices of office real estate and rental rates in this market segment - more than 97% of the variation in sales prices of objects corresponds to changes in rental rates, and the calculated value of the F-criterion is more than two orders of magnitude higher than its tabulated value at 5% level of significance. The schedule of calculated and actual sales prices for office properties is shown in Fig. 2.

BPM value calculated for the regression equation (m=5,84), slightly less than the sample average (BRM av =5.93) and corresponds to the minimum dispersion of residual deviations of actual and calculated BPM values.

The advantage of the BPM indicator, calculated on the basis of statistical analysis of a fairly representative sample, is a higher level of objectivity of the results obtained. At the same time, it is necessary to take into account that the formation of the “sales prices/rental rates” relationship occurs on the basis of the expectations of the majority of market participants and has a certain inertia. This inertia, on the one hand, “filters” unjustified price fluctuations caused by speculative excitement, but, on the other hand, leads to a delay in the reaction of the BPM indicator in case of significant shifts in market conditions. Therefore, it is advisable to use the gross rental multiplier method to assess the market value of real estate for medium-term purposes (for a period of 1 year), taking into account expected changes in the levels of profitability of various market segments.

Real estate valuation.-ed. A.G. Gryaznova; Moscow, “Finance and Statistics”, 2002, sect. 8.3
“The gross income ratio (real estate price/gross annual income) is a measure of value standardized by income. The advantage of this approach is that the income includes differences in scale, quality of construction and location” - A. Damodaran. Investment assessment. Tools and techniques for assessing any assets. M.: Alpina Business Books, 2004, p. 1003.
Civil Code of the Russian Federation, Art. 437.
“In the case of properties in the same location, it can be argued that the growth and risk characteristics of these properties are very similar, so the only difference remains the difference in the ability to generate income” - A. Damodaran. Investment assessment. Tools and techniques for assessing any assets. M.: Alpina Business Books, 2004, p. 1004.
On increasing the reliability of market value assessment using the method of comparative analysis. - Anisimova I.A., Barinov N.P., Gribovsky S.V., - Assessment issues. Professional scientific and practical journal, No. 1, 2002, M.: ROO, pp. 2 - 10.
Likesh I., Lyaga J., Basic tables of mathematical statistics, M., Finance and Statistics, 1985, p. 36.
There, p. 185.
A. Damodaran. Investment assessment. Tools and techniques for assessing any assets. M.: Alpina Business Books, 2004, p. 84-85.
On increasing the reliability of market value assessment using the method of comparative analysis. - Anisimova I.A., Barinov N.P., Gribovsky S.V., - Assessment issues. Professional scientific and practical journal, No. 1, 2002, M.: ROO, p.10.

Gross rent multiplier method (GRM)

The value of land is assessed based on the relationship between sales prices and the potential or actual gross income received from the property. You need to do three things:

• 1. Assess the market rental income from the property being assessed.
• 2. Determine the ratio of gross income to sales price based on recent market transactions.
• 3. Find the value of the assessed plot by multiplying the market rental income from it by the GRM (Table 23).

Table 1. Calculation of the estimated selling price of a land plot using the VRM method

VRM does not adjust for differences between comparable and assessed sites

since they are taken into account in the sales prices and rates of return themselves. You just need

more accurately select analogues for comparison. But at the same time, this method does not take into account possible differences in operating costs for all objects. This shortcoming can be eliminated by replacing gross income with net income in the calculations.

Transfer or Correlation Method- is implemented by determining the ratio between the total cost of the built-up area and the cost of the land. It has been established that there is a stable connection between the cost of land and the cost of structures erected on it. Therefore, the value of a plot can be assessed by distributing the total sales price of a comparable property into its two components - the land plot and buildings (improvements). The resulting ratio coefficients can be applied to the assessed microdistricts to determine the cost of a comparison unit of the base plot for a given area (Table 24).

Table 2. Calculation of the coefficient using the transfer method

So, if in the assessed area a property was sold for 200 thousand rubles, then the cost of the land will be: 200.0 H 0.224 = 44.8 thousand rubles,

where 0.224 is the average value of the coefficient in the table. 24.

Distribution method(method of ratio, correlation) - determination of the component value of a land plot based on a known ratio of the value of land and improvements in the property complex. The method is based on the principle of contribution and the assertion that for each type of property there is a normal relationship between the value of land and buildings. This ratio is most reliable

for new buildings, they are close to the best and most efficient use option.

The older the buildings, the greater the ratio of land value to total property value.

To apply the method, reliable statistical data is required on the relationship between the values ​​of land and all property of a particular type of real estate in a given market. However, the method is rarely used even in developed markets, as it has low reliability. The use of the method is justified in conditions of insufficient information on land sales. The resulting values ​​are considered approximate.

Example. It is necessary to determine the cost of a land plot if an analogue with buildings was recently sold for 1250 thousand rubles.

First, let's calculate the share of the cost of improvements in sales prices:

Therefore, the share of land in the sales price will be on average: 27%: 1.0-0.73 = 0.27.

It can be assumed that a plot similar to the one being assessed was sold for 1250 x 0.27 = 337.5 thousand rubles. After adjustments are made for differences with the subject of assessment, the value of the assessed land plot is determined. real estate cost land multiplier

Problem 13. The entrepreneur believes that in three years he will be able to buy a house for 1,500 thousand.

What starting price, paid today, will allow him to save the amount needed to buy a house, based on the bank's 15% interest rate.

Problem 36. A mortgage loan of CU800 thousand provides for periodic payment only of interest for its use. However, according to the terms of the agreement, the principal amount of the loan is repaid in a lump sum 8 years from the date of its execution. The borrower, an individual, opens a special account in a commercial bank to accumulate funds in order to repay the loan in 8 years. For funds accumulated in the bank, i.e., for the cash balances of the fund, loans are deducted annually at the rate of 10% per annum.