Breakdown method is detailed consideration and taking into account all types of wear, which include (Fig. 2):

removable and irreparable physical wear and tear;
removable and irreparable functional wear;
external wear.

Removable (correctable) wear is wear, the elimination of which is physically possible and economically feasible, i.e. the costs incurred to eliminate one or another type of wear contribute to an increase in the value of the object as a whole.

Irremovable (irreparable) wear is wear, the elimination of which is either physically impossible or economically impractical, i.e. the costs incurred to eliminate one or another type of wear and tear do not contribute to increasing the value of the object as a whole.

Rice. 4 Classification of depreciation of real estate objects

To apply the breakdown method when determining accumulated wear and tear, it is necessary to have data on the cost of new construction, broken down by structural elements, as a calculation base.

Physical deterioration– gradual loss of the technical and operational qualities of the object originally laid down during construction under the influence of natural and climatic factors, as well as human activity. Physical deterioration reflects changes in the physical properties of a property over time (for example, defects in structural elements).

There are four main calculation methods physical wear and tear:

expert (normative);
cost;
method for calculating the life of a building.

Expert method for calculating physical wear and tear is based on creating a defective list and determining the percentage of wear of all structural elements of a building or structure. The expert method is the most accurate, but also the most labor-intensive.

This method involves the use of various regulatory instructions at the intersectoral or departmental level. An example is VSN 53-86, used by the Bureau technical inventory for the purpose of assessing the physical deterioration of residential buildings during technical inventory, planning overhaul housing stock regardless of its departmental affiliation. IN specified rules characteristics of the physical wear and tear of various structural elements of buildings and their assessment are given.

The physical wear and tear of a building is determined as follows:

F f – physical wear and tear of the building, (%);

F i – physical wear of the i-th structural element (%);

L i – coefficient corresponding to the share replacement cost i-th structural element (section) in total cost building;

n – number of structural elements in the building

The shares of the replacement cost of individual structures, elements and systems in the total replacement cost of the building should be taken according to aggregated indicators of the replacement cost of residential buildings, approved in the prescribed manner, and for structures, elements and systems that do not have approved indicators - according to their estimated cost.

Example 30. Determine the physical wear and tear of a residential building if it is known that its inspection revealed physical wear and tear of all structural elements:

foundations – 10%;
walls – 15%;
overlaps – 20%;
roofing – 10%;
floors – 35%;
windows – 40%;
finishing coatings – 30%;
internal plumbing and electrical installations – 50%;
others – 25%.

Solution:

1. Let us determine the specific gravity of structural elements in accordance with Sat. No. 28 UPVS.

2. Results of assessing the physical wear and tear of elements and systems, as well as determining their share in terms of replacement cost:

Name of building elements	Specific gravity of structural elements, %		Specific gravity x wear percentage
foundations
walls
floors
roof
floors
window
finishing coatings
interior plumbing and electrical installations
other
		-

Thus, the physical wear and tear of the building is 23.25%

Cost method calculation of physical wear and tear is based on the assumption that physical deterioration at the time of assessment is expressed by the ratio of the cost of objectively necessary repair measures to eliminate damage to the structure, element or building as a whole, and their replacement cost.

Example 31. Determine the physical wear and tear of a residential building if it is known that the replacement cost of structural elements and the objectively necessary costs for their repair are respectively: foundations - 3,200 thousand rubles, 640 thousand rubles; walls – 4,000 thousand rubles, 1,200 thousand rubles; ceilings - 800 thousand rubles, 160 thousand rubles; other – 8,000 thousand rubles, 2,800 thousand rubles.

Let's determine the amount of physical wear and tear. The results of assessing the physical wear of elements, as well as determining their specific weight at replacement cost:

Name of building elements	Replacement cost of the element, thousand rubles.	Objectively necessary repair costs, thousand rubles.
foundations
walls
floors
other

Thus, the physical wear and tear of the building is 30%

This method allows you to immediately calculate the wear and tear of elements and the building as a whole in cost terms. Since the impairment calculation is based on the reasonable actual costs of bringing worn-out items to “substantially new condition,” the result of this approach can be considered fairly accurate. The disadvantages of the method are the required detail and accuracy in calculating the costs of repairing worn-out building elements.

Method for calculating the life of a building is based on the assumption that the relationship between physical depreciation (PH) and replacement cost (RC) is determined by the relationship between effective age (EA) and typical life economic life(FJ):

Example 32. Determine the physical wear and tear of a residential building if it is known that the replacement cost, actual age and total physical life of its structural elements are respectively: foundations - 1,200 thousand rubles, 10 years, 15 years; walls – 400 thousand rubles, 5 years, 10 years; ceilings – 300 thousand rubles, 6 years, 15 years; others – 900 thousand rubles, 1 year, 10 years.

Let's determine the amount of physical wear and tear. Results of assessing the physical wear of elements:

Name of building elements	Actual age, years	General physical life, years		Depreciation, thousand rubles
roof
floors
window
finishing coatings
		-	-

Thus, the physical wear and tear of the building is 1210 rubles. or 43.2%.

Determining the amount of physical wear consists of several successive steps:

determination of the amount of correctable physical wear;
determination of the amount of irreparable physical wear in short-lived elements;
determination of the amount of irreparable physical wear in long-lived elements.

Determining the amount of correctable physical wear (it is also called deferred repair, since it is assumed that the typical buyer will make immediate repairs to restore the normal operational characteristics of the structure: cosmetic repairs, restoration of areas of leaking roofing, repair of engineering equipment, etc.) is carried out using cost or expert method of calculating physical wear and tear.

Irreparable physical wear and tear corresponds to items for which repair is currently practically impossible or economically impractical. The amount of this type of wear and tear is determined based on the difference between the total replacement (or replacement) cost and the amount of removable physical wear and tear.

For the purpose of calculating wear, elements of a structure that have irreparable physical wear are divided into long-lived and short-lived.

For long-lived elements, the expected residual life coincides with the residual economic life of the entire structure. Short-lived elements have less residual economic life than the entire structure.

To assess irreparable physical wear and tear in short-lived elements, the method of calculating the life of a building is used: the difference between the total replacement (or replacement) cost of the element and the amount of correctable wear of the element is multiplied by the ratio of the actual age to the total physical life of the element.

In this case, the overall physical life of the element is determined from reference data, taking into account periodic repairs and maintaining normal operational characteristics.

To assess irreparable physical wear and tear in long-lived elements, the method of calculating the lifespan of a building is also used: the amount of correctable physical wear and tear and the sum of the replacement cost of short-lived elements with irreparable physical wear are subtracted from the total replacement (or replacement) cost and the result is multiplied by the residual replacement (or replacement) cost ) long-lived elements, as well as the relationship of actual age to the overall physical life of the building.

The overall physical life of a building is determined depending on the type of basic structural elements for various categories buildings in terms of durability. The classification of residential and public buildings by durability is given in the regulatory literature.

Example 33. Determine the physical deterioration of a residential building. We will present the initial data as the calculation progresses.

1. Based on estimate documentation Let's determine the cost of new construction to assess accumulated wear and tear:

Name of building elements	Replacement cost, thousand rubles.
Direct costs (materials and equipment, labor, overhead and contractor's profit),
foundation installation
construction of external walls
floor arrangement
roofing
installation of partitions
installation of suspended ceilings
flooring
interior and exterior decoration
sewerage system
power supply system
heating system
Ventilation and air conditioning
Indirect costs
Entrepreneur's profit
Total replacement cost

2. Determine the amount of correctable physical wear:

Thus, the cost of correctable wear and tear is 3,000 thousand rubles.

2. Let us determine the amount of irreparable physical wear in short-lived elements:

Name of building elements	Replacement cost of the element, thousand rubles.	Actual age, years	General physical life, years	Depreciation, thousand rubles
roof
floors
finishing
sewerage
power supply system
heating system
Ventilation and air conditioning
Total:		-	-

Thus, the cost of irreparable physical wear in short-lived elements is 22,967 thousand rubles, the replacement cost of short-lived elements with irreparable physical wear is 33,000 thousand rubles.

Determining the wear and tear of a property

Depreciation is a decrease in the value of a property due to various reasons. The concept of “wear and tear” used in valuation activities must be distinguished from the concept of “depreciation” used in accounting. Depreciation in accounting is the process of distributing the initial costs associated with the acquisition of an object over its entire service life, without determining the current value. In valuation activities, depreciation is considered as the main factor for determining the current value, regardless of its original cost.

In the cost approach, depreciation is used to account for the differences and characteristics of the new property and the specific property being valued. Accounting for the depreciation of an object is a kind of adjustment to the value of a newly reproduced building (determined using the cost approach) to determine the current value of the valued object,

There are three types of wear and tear: physical, functional and external (or economic).

Physical deterioration reflects changes in the physical properties of a property over time (for example, defects in structural components). Physical wear is of two types: the first occurs under the influence of operational factors, the second - under the influence of natural and natural factors. Physical wear and tear is taken into account in the standards depreciation charges.

There are four main methods for calculating the physical depreciation of buildings: expert, cost, regulatory (or accounting) and the method of calculating the life of the building. The percentage of physical wear and tear, for example, of a residential property, assessed by an expert method, is determined on the basis of the “Rules for assessing the physical wear and tear of residential buildings VSN-53-86 “Gosgrazhdanstroy”.

The service life of buildings as a whole depends on the durability of its components.

Physical wear and tear of building elements (Fike) is calculated using the formula:

where UVke is the specific gravity of the structural element;

PIke is the percentage of wear of a structural element.

It should be noted that in the practice of valuation activities, a distinction is made between removable and irremovable physical wear and tear.

Removable physical deterioration assumes that the cost of ongoing repairs is less than the added value of the object.

Physical deterioration is considered irreparable when the cost of correcting the defect exceeds the value it would add to the property. Any defect in an object can, in principle, be corrected, but the costs of correction should not exceed the expected benefit.

To determine irreparable physical wear and tear, building elements are divided into two categories: long-term and wear-out.

The wear of long-term elements, such as foundations, walls, floors, etc., can be calculated in groups by calculating their effective service life and the remaining physical life under real conditions.

To calculate the physical wear and tear of long-term elements, you can also use the method of determining the costs of reproduction of building elements (or the cost method).

In the more accurate adjusted cost method of calculating physical depreciation, the percentage of deterioration of building elements is determined as a weighted value.

The categories of rapidly wearing elements of a building include elements whose service life is shorter than the estimated economical life of the building. This is roofing, decorative finishing, painting, etc., i.e. elements that can be repaired (restored) using current repairs.

The normative (or accounting) method for determining the physical deterioration of buildings involves the use of the currently existing “Unified norms of depreciation charges for the complete restoration of fixed assets in Russian Federation", approved by Resolution of the Council of Ministers of the USSR of October 22, 1990 No. 1072.

Functional obsolescence (or functional wear and tear of an object) is when the object no longer meets modern standards in terms of its functional usefulness. This type of wear and tear (which, for example, can manifest itself in outdated architecture, layout, building engineering, etc.) is mainly due to the influence scientific and technological progress in the field of architecture and construction. Functional wear in domestic practice is called obsolescence and, just like physical wear and tear, can be borderline and irreparable.

Removable functional wear and tear includes the restoration of built-in cabinets, water and gas meters, technical equipment, floor coverings, etc. The criterion for wear and tear, from the point of view of removability, is a comparison of the amount of repair costs with the amount of additional cost received. If the additional value received exceeds the cost of restoration, then functional wear is removable. The amount of removable functional wear and tear is determined as the difference between the potential value of the building at the time of its assessment with updated elements and its value at the same date without updated elements.

Irremovable functional wear and tear refers to a decrease in the value of a building due to factors associated with both excess and deficiency of the quality characteristics of the building. For example, in the residential real estate rental market, two-room apartments compared to one-room apartments. The amount of irreparable functional wear and tear is calculated as the amount of losses from rent when renting out these apartments, multiplied by the rent multiplier (the ratio of the sale price of the property to the potential rent for her), typical for this type of apartment. Thus, the amount of irreparable functional wear and tear is determined by capitalizing rental losses.

External wear and tear, or external wear and tear, is a decrease in the value of a building due to a negative change in its external environment caused by economic, political or other factors. The reasons for external wear and tear are: the general decline of the area in which the object is located; government action or local administration in the field of taxation, insurance; other changes in the employment, leisure, education, etc. markets.

A significant factor influencing the amount of external wear and tear is the environmental component of the object’s location: close proximity to “unattractive” natural or artificial objects - swamps, wastewater treatment plants, gas stations, railway stations, industrial enterprises, 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 in most cases cannot be eliminated.

A way to measure external wear and tear is to analyze paired sales (when two comparable objects are sold on the real estate market, one of which has signs of external wear and tear, the other does not). The difference in prices allows us to draw a conclusion about the amount of wear and tear from the external influence of the object being evaluated.

Another way to measure the depreciation of external influences is to compare the rental income of two objects similar to the one being assessed, one of which is subject to negative impact. Capitalization of income losses from comparing these two objects will characterize the amount of wear and tear from external influences.

Determining the total value of the property and land plot

At the last stage of the cost approach, the required total cost is determined by summing the cost of the property without wear and tear, obtained at the previous stage and the cost of the land plot, obtained at the first stage, implementing the cost approach.

Stage 3.

Depreciation is a decrease in the value of a property due to various reasons.

The concept of “wear and tear” used in valuation activities must be distinguished from the concept of “depreciation” used in accounting. “Depreciation” in accounting is the process of distributing the initial costs associated with the acquisition of an object over its entire service life, without determining its current value; in valuation activities, “wear and tear” is considered as the main factor for determining the current value, regardless of its original actual cost.

In addition to this distinction, it is also necessary to distinguish between the term "depreciation" used in the cost approach to real estate valuation and the "decline in property value" used by Ellwood in mortgage-investment capitalization.

With the cost approach, depreciation is determined in dollars at the current exchange rate in comparison with the current cost of reproduction of the object, and for Ellwood, with its subsequent resale. Ellwood also makes no attempt to distribute the amount of decline in the value of an object among its individual components.

In the cost approach, depreciation is used to account for differences in the characteristics of the new property and the actual property being valued. Accounting for the depreciation of an object is a kind of adjustment to the cost of a newly reproduced building (reproduced using the cost approach) in order to determine the value of the assessed object.

There are three types of wear and tear: physical, functional (or moral) and external (or economic).

Physical deterioration reflects changes in the physical properties of a property over time. For example, defects in structural elements.

Physical wear is of two types: the first occurs under the influence of operational factors, the second type - under the influence of natural and natural factors.

Physical wear and tear is taken into account in depreciation rates. In case of deviations in the normal operating conditions of the facility (earthquake, flood, etc.), correction factors are used, determined by experts.

There are four methods for calculating the physical depreciation of buildings: expert, cost, regulatory (or accounting) and the method of calculating the life of the building.

The percentage of physical wear and tear, for example, of a residential property, assessed by an expert method, is determined on the basis of the “Rules for assessing the physical wear and tear of residential buildings VSN - 53-86 Gosgrazhdan-Stroy”.

The service life of buildings as a whole depends on the durability of its components. Physical wear and tear of building elements is calculated using the formula:

Specific gravity of structural element i x% element wear i

The physical wear and tear of the entire building is determined as the weighted average of all elements of the building (see Table 3).

Table 3

Calculation of physical deterioration of a building

Based on the age of the building and its condition, the physical deterioration of the building amounted to A% of its replacement cost.

This method of determining the physical deterioration of a building can be called “expert”. It is usually used when taking inventory of real estate.

The appraiser also needs to be aware that there is reparable physical wear and tear and irreparable physical deterioration.

Removable physical deterioration assumes that the cost of ongoing repairs is less than the added value of the object.

Unrecoverable physical deterioration is considered when the cost of correcting the defect exceeds the value that would be added to the object. Any defect of an object can be corrected, but if the costs of correction exceed the benefits received, then the wear and tear is considered irreparable.

To determine irreparable physical wear and tear, building elements are divided into two categories: long-term and wear-and-tear. The wear of long-term elements, such as foundations, walls, floors, etc., can be calculated in groups by calculating their effective service life and the remaining physical life under real conditions.

Another method for calculating the physical wear and tear of long-term elements is to determine the cost of reproduction of building elements (or the cost method), presented in Table 4.

Table 4

Cost method for determining physical wear and tear"

IN in this case, through inspection, the percentage of wear of each element of the building is determined, which is then translated into value terms.

A more accurate adjusted cost method for calculating physical depreciation is obtained when the percentage of depreciation of building elements is determined as a weighted average.

The second category, the category of rapidly wearing elements of a building, includes those elements whose service life is shorter than the estimated economic life of the building. These include roofing, decorative finishing, painting, etc., i.e. those elements that can be repaired (restored) through routine repairs.

Methods for calculating physical deterioration for this category of building elements are similar to those used above for assessing physical wear.

There is also a regulatory (or accounting) method for determining the physical deterioration of buildings. It involves the use of uniform depreciation rates for the complete restoration of fixed assets in the Russian Federation, approved by Resolution of the Council of Ministers of the USSR of October 29, 1990 No. 1072.

Functional wear and tear of the object.

Functional obsolescence is when an object does not meet modern standards in terms of its functional usefulness. Functional obsolescence can manifest itself in the outdated architecture of a building, in the convenience of its layout, volume, engineering support, etc. Functional obsolescence is due to the influence of scientific and technological progress in the field of architecture and construction. Functional wear and tear in domestic practice is called obsolescence.

Functional wear, as well as physical wear, can be removable and irreparable. Removable functional wear can include the restoration of built-in cabinets, water and gas meters, plumbing equipment, floor coverings, etc. The criterion for whether wear is removable or not is a comparison of the amount of repair costs with the amount of additional cost received. If the additionally received cost exceeds the cost of restoration, then functional wear is removable.

The amount of removable wear and tear is determined as the difference between the potential value of the building at the time of its assessment with updated elements and its value at the date of assessment without updated elements.

Irremovable functional wear and tear refers to a decrease in the value of a building due to factors related to the quality characteristics of the building. Moreover, there may be either an excess or a lack of quality characteristics. For example, in the rental market two-room apartments are in great demand compared to one-room apartments. The amount of this type of depreciation is calculated as the amount of losses from rent when renting out these apartments, multiplied by the multiplier of the gross monthly rent typical for this type of apartment (see Table 5). Thus, the amount of irreparable functional wear and tear is determined by capitalizing rental losses.

Table 5

Calculation of irreparable functional wear

This example illustrates a case where there was a lack of quality characteristics, i.e. One room was missing to generate more income than from renting out a one-room apartment.

An example of functional wear and tear, when there are excessive consumer qualities, can be the presence of so-called “excess elements”, when the residents of the house, adapting it “for themselves,” made some changes for their own convenience. For example, the creation of intercom or air conditioning systems. The cost of installing these elements totaled $30,000. And when appraising the house, these elements added only $25,000 to the house’s value. Thus, the loss from installing these elements amounted to $5,000. This loss will amount to the amount of irreparable functional wear and tear associated with excessive consumer qualities of the house.

To approximately calculate the functional wear and tear of an object, you can determine an adjustment factor to the replacement cost of the building.

The correction factor is the ratio of the architectural, design and operational parameters of the object being evaluated to the same parameter of a modern analogue. In the absence of an analogue, the correction factor is determined based on the lifespan of the object.

External (or economic) wear and tear.

External (or economic) wear and tear or external wear is a decrease in the value of a building due to a negative change in its external environment, caused by either economic or political factors. The reasons for external wear and tear are the general decline of the area in which the property is located, the actions of the government or local administration in the field of taxation, insurance and other changes in the market for employment, recreation, education, etc.

Significant factors influencing the amount of external wear and tear are close proximity to “unattractive” natural or artificial objects: swamps, wastewater treatment plants, restaurants, dance floors, gas stations, railway stations, hospitals, schools, enterprises, 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 caused by external influences cannot be eliminated in most cases.

A way to measure external wear and tear is to analyze paired sales, when two comparable objects are sold on the real estate market, one of which has signs of external wear and tear, the other does not.

The difference in prices will allow us to draw a conclusion about the amount of wear and tear from the external influence of the building under evaluation (see Table 6)

Table 6

Calculating External Wear Using Paired Sales Analysis

Another way to measure external wear and tear is to compare the rental income of two properties similar to the property being assessed , one of which is negatively affected. Capitalization of income losses from comparing these two objects will characterize the amount of wear and tear from external influences. Capitalization is carried out using the gross rental multiplier as it is done in table 5.9.

Determining the physical wear and tear of an object by calculating its lifespan.

Economic life is the period of time during which an object can be used for profit. During this period, improvements contribute to the value of the property; The economic life of a property ends when improvements made do not contribute to the value of the property due to its general obsolescence.

The physical life of an object is the period of time during which the building exists and one can live or work in it. The physical life span ends when the object is demolished.

Effective age based on estimate appearance, technical condition, economic factors affecting the cost of the object. Effective age is the age that corresponds to the physical condition of the property and takes into account the possibility of its sale. If after a major overhaul brick house, which is 80 years old, looks as if it were 15 years old, then the effective age of this house would be 15 years.

Chronological age is the period that has passed since the date the object was put into operation.

The remaining economic life of a building is the period from appraisal to the end of the economic life of the property. This period is usually used by the appraiser for valuation. Renovating and upgrading a property increases its remaining economic life. Changes in living standards can significantly reduce the economic life of a property. This phenomenon can be partially observed with “Khrushchev’s” five-story buildings.

Standard service life (or typical physical life) is a certain regulations service life of buildings and structures.

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

I/S- EV/TS E. Zh,

Where AND-wear;

Sun- replacement cost;

EV- effective age;

Tz Zh - typical economic life span.

This formula can be written as follows:

percentage of depreciation from replacement cost = EV/TC EZh.

Sometimes, for approximate calculations of wear and tear, appraisers can use the ratio of the chronological age to the standard service life of the building, expressed as a percentage.

The total (cumulative) wear and tear of an object is determined by summing up all three types of wear: physical, functional and external wear.

The determination of depreciation is necessary in order to take into account differences in the characteristics of the new object and the actual property being valued.

Wear in valuation means loss of utility, and therefore value, of the object of valuation for any reason.

There are two ways to calculate wear:

Lifetime method;

Method of dividing into types of wear.

6.3.1. Calculation of wear and tear using the lifetime method

The cumulative accumulated wear is a function of the age of the object.

When calculating wear and tear using the effective age method, the following concepts are used: physical life of the building, effective age, remaining economic life. Let's consider the life periods of the building and the evaluation indicators that characterize them (see Fig. 6.2.)

Physical life building (FZ) - the period of operation of the building, during which the condition of the load-bearing structural elements of the building meets certain criteria (structural reliability, physical durability, etc.). The physical life of an object is established during construction and depends on the capital group of the building. Physical life ends when the object is demolished.

Chronological age (CA) is the period of time that has passed from the commissioning of an object to the date of assessment.

Economic life (EL) is determined by the operating time during which the object generates income. During this period, improvements made contribute to the value of the property.

Effective age (EA) is calculated based on the chronological age of the building, taking into account its technical condition and the economic factors prevailing on the date of assessment that affect the value of the assessed object. Depending on the operating characteristics of the building, the effective age may differ from the chronological age up or down. In the case of normal (typical) operation of a building, the effective age is usually equal to the chronological age.

The remaining economic life (REL) of a building is the period of time from the date of assessment to the end of its economic life (Fig. 6.2).

Determining the depreciation of buildings using the life-span method is based on an examination of the structures of the object being assessed and the assumption that the effective age of the object is related to the typical period of economic life in the same way as accumulated depreciation is related to the cost of reproduction (replacement) of the building.

Indicators of physical wear and tear, effective age and economic life span are in a certain ratio, which can be expressed by the formula

I = (EV: VF) 100% = [EV: (EV + OSFJ)] 100%, (6.4)

where I is wear, %;

EV – effective age, determined by an expert based on the technical condition of the elements or the building as a whole;

VF – typical period of physical life;

RSF – remaining period of physical life.

I = (HV: VF) 100%, (6.5)

where I is wear, %;

VF is a typical period of physical life.

Application of formula 6.5. It is also relevant when calculating percentage adjustments for wear and tear in compared objects (comparative sales method), when it is not possible for the appraiser to inspect selected analogues to determine the indicators used in formula 6.4.

The percentage of depreciation of elements or the building as a whole calculated in this way can be translated into monetary terms (depreciation):

O = SV (I: 100), (6.6)

where I is wear, %;

SV – cost of reproduction (replacement cost).

Example.

A large industrial property complex is subject to assessment. The assessment date was April 1, 2005.

Let's consider the calculation of wear and tear for several warehouses from a given property complex, built in accordance with the same project, used for storage building materials. In accordance with the documentation for the warehouses being assessed, the physical life span is 75 years (FL = 75 years).

The effective age is determined by the appraiser in accordance with the technical condition of the objects being assessed; data for calculating wear and tear are given in the table.

This method of calculating depreciation is applicable for mass valuation, when valuing real estate objects as part of the assets of an enterprise when valuing an enterprise (business).

The disadvantage of using the lifespan method to estimate accumulated wear is that there is only one factor that determines the amount of wear (the ratio of effective age to physical life). To eliminate this drawback, various types of cost reduction factors are considered and the method of dividing into types of wear is used.

Forex classes are a great way for you to prepare for successful work in the Forex market!

6.3.2. Calculation of wear using the method of dividing into types of wear

The most common is method of dividing into types of wear.

Depending on the factors reducing the value of real estate, wear and tear is divided into physical, functional and external (economic). Physical and functional wear and tear can be removable or irreparable. Economic wear and tear, as a rule, cannot be eliminated.

Wear is considered removable if its elimination is physically possible and economically feasible.

The sum of all possible types of depreciation is the accumulated depreciation of the property.

Physical deterioration reflects changes in the physical properties of a property over time (for example, defects in structural elements). Physical wear and tear can occur under the influence of operational factors or under the influence of natural and natural factors.

There are four main methods for calculating physical depreciation:

Expert;

Regulatory (or accounting);

Cost;

Method for calculating the life of a building.

The most accurate and most time-consuming method is expert. It involves creating a list of defects and determining the percentage of wear of all structural elements of a building or structure.

Example.

Table 6.2 determines the wear of individual structural elements of the building using the expert method.

Normative method calculation of physical wear and tear is based on the use of various regulatory instructions at the intersectoral or departmental level. It is used extremely rarely in valuation practice.

Cost method consists in determining the costs of restoring elements of buildings and structures. Through inspection, the percentage of wear and tear of each element of the building is determined, which is then translated into value terms. The cost method is used to determine removable physical wear and tear.

A conditional example of calculating physical depreciation using the cost method is given in Table. 6.4.

This method allows you to immediately calculate the wear and tear of elements and the building as a whole in cost terms. Since the impairment calculation is based on reasonable actual costs of bringing worn-out items to almost new condition, the result of this approach can be considered fairly accurate. The disadvantages of the method are the required detail and accuracy in calculating the costs of repairing worn-out building elements.

Lifetime method used to calculate physical wear, this method is discussed in detail in section 6.3.1. of this manual.

TO functional wear include a decrease in property value associated with non-compliance of structural and planning solutions, construction standards, design quality, manufacturing materials, modern requirements for these positions.

Causes of functional wear:

Disadvantages that require adding elements;

Disadvantages requiring replacement or modernization of elements;

Super improvements.

Deficiencies requiring addition are elements of the building and equipment that do not exist in the existing environment and without which it cannot meet current operating standards there. Depreciation due to these items is measured by the cost of adding these items, including their installation.

Functional wear can be removable or irreparable. Removable functional wear is most often calculated using the cost method.

Deficiencies that require replacement or modernization of elements are items that still perform their functions, but no longer meet modern standards (water and gas meters and fire-fighting equipment). Depreciation for these items is measured as the cost of existing elements, taking into account their physical wear and tear, minus the cost of returning materials, plus the cost of dismantling existing ones, and plus the cost of installing new elements. The cost of returning materials is calculated as the cost of dismantled materials and equipment when used at other facilities (residual value to be processed).

Superimprovements are positions and elements of a structure, the availability of which is currently inadequate to modern requirements of market standards. Removable functional wear in this case is measured as the cost of reproducing super-improved items minus physical wear, plus the cost of dismantling and minus the salvage value of the dismantled elements.

An example of superimprovements is a situation where the owner of a house, adapting it to his needs, made some changes for his own convenience ( investment cost), not adequate from the point of view of a typical user. These include the redevelopment of the usable area of premises for a specific use, determined by the owner’s hobbies or his occupation. Removable functional wear in such a situation is determined by the current cost of bringing the changed elements to their original state.

In addition, the concept of over-improvement is closely related to the segment of the real estate market, where the same improvements can be considered both appropriate for a specific segment and excessive from the point of view of the typical user.

Table 6.5 provides an example of calculating functional removable wear.

Irremovable functional wear and tear is caused by outdated space-planning and/or structural characteristics of the buildings being assessed relative to modern construction standards. A sign of irreparable functional wear and tear is the economic inexpediency of spending on eliminating these shortcomings. In addition, it is necessary to take into account the prevailing conditions at the date of the assessment. market conditions for adequate architectural compliance of the building with its purpose.

Depending on the specific situation The cost of irreparable functional wear and tear can be determined in two ways:

Capitalization of losses in rent;

Capitalization of excess operating costs.

To determine the necessary calculation indicators (rental rates, capitalization rates, etc.), adjusted data on comparable analogues are used.

In this case, the selected analogues should not have signs of irreparable functional wear identified in the object being assessed. In addition, the total income generated by the property complex as a whole (building and land) and expressed in rent must be divided accordingly into two components. To allocate part of the income attributable to the building, you can use the investment balance method for the building or the method of analyzing the ratio of the cost of the land plot and the total sales price of the property complex. In the example below, the specified procedure is considered to be completed in the process preliminary calculations(Table 6.6).

Determination of impairment caused by irreparable functional wear and tear due to an outdated space-planning solution (specific area, cubic capacity) is carried out by the method of capitalizing losses in rent.

Calculation of irreparable functional wear and tear by capitalizing the excess operating costs required to maintain the building in good condition can be done in a similar way. This approach is preferable for assessing the irreparable functional deterioration of buildings that are distinguished by non-standard architectural solutions and in which, nevertheless, the amount of rent is comparable to the rent for modern analogue facilities, in contrast to the amount of operating costs.

An example of determining the amount of functional wear and tear using the method of capitalizing excess operating costs is presented in Table 6.7.

External (economic) wear and tear– depreciation of an object due to the negative influence of the external environment in relation to the object of assessment: location, market situation, easements imposed on a certain use of real estate, changes in the surrounding infrastructure and legislative decisions in the field of taxation, etc. Although external wear cannot be eliminated in most cases, it can sometimes correct itself due to positive change surrounding market environment.

The following methods can be used to assess external wear:

Method of capitalizing losses in rent;

Method for capitalizing excess operating costs;

Paired sales method;

Lifetime method.

The assessment of external wear by the method of capitalization of losses in rent and the method of capitalization of excess operating losses is carried out similarly to the calculation by these methods of functional wear discussed above. In the case of an external wear assessment, it is necessary to identify losses in rent caused by signs of external wear or excess operating costs caused by signs of external wear.

The paired sales method is based on the analysis of available price information on recently sold similar properties (paired sales). It is assumed that the objects of paired sale differ from each other only by the economic depreciation identified and related to the object of assessment. A similar approach to calculating external wear is shown in table. 6.8.

Example. External wear caused by reduced investment attractiveness office building due to the establishment of a clothing or food market in the immediate vicinity. Let a pair sale of objects A and B of a similar purpose be identified on the real estate market. The cost of land in this area is 30% of the total cost of a typical property.

In some cases the method comparative analysis sales allows you to determine the total accumulated depreciation, as a rule, of a typical valuation object. The average difference between the adjusted replacement cost and the market price of each of the analogues (excluding the cost of the land plot) will be in value terms accumulated wear. In domestic practice, the considered methods for calculating external wear and tear, based on elements of comparative sales analysis, are in many cases inapplicable due to their high labor intensity, as well as the lack of the necessary and reliable information base.

Reasons for demolition:

The need for redevelopment;

Expansion of transport routes.

The technical condition of the buildings being demolished should be taken into account, which in many cases would allow them to be used for a fairly long period of time.

Example. The subject to assessment is a building that was previously removed from the housing stock and is now adapted for administrative needs. The building is in municipal ownership. The physical deterioration of the assessed building, according to the BTI, at the time of assessment is 40%. The technical condition of the building, location and developed infrastructure indicate a fairly high commercial attractiveness of the property from potential investors. However, according to the redevelopment plan, for the reasons stated above, the building is subject to demolition after five years from the date of assessment.

During the inspection of the object by an expert, the following indicators were determined:

1) the effective age of the building being assessed is 30 years;

2) the remaining economic life is 60 years.

Percentage of accumulated wear excluding activity. external factor calculated by the formula:

I = EV: (EV+OSEJ)100 = (30:90) 100 = 33%.

Percentage of wear taking into account the action of external factors:

I= (30 / 35) 100 = 86%.

The accumulated wear of 86% calculated in this case is due to the action of predominantly external factors. The share of possible consideration of other types of wear in this result is extremely small, which allows us to consider the result obtained as external wear. A sharp reduction in the remaining economic life of a building leads to a decrease in investment attractiveness and, as a consequence, a precipitous drop in the likely sale price. In such cases, the purpose of the valuation is not to calculate the full ownership rights to the building being valued, but the short-term lease rights for the remaining economic (physical) life, provided that the potential investor sees any benefit from this acquisition.

After calculating the cost of reproduction (replacement cost), as well as accumulated depreciation, the value of the land plot and the valued property as a whole is determined. (Tab. 6.9).

Approaches and methods to assessment land plots are discussed in Chapter 7 of this tutorial.

To increase the accuracy of calculation procedures for both determining the replacement cost and calculating depreciation, a reasonable compilation of several methods for calculating these indicators is necessary.

Methods for calculating the value of land plots are presented in Chapter 7.

Ministry of Education and Science of the Russian Federation

Federal state budget educational

institution of higher education vocational education

"Tula State University"

Institute of Law and Management

Department of Finance and Management

CONTROL COURSE WORK

in the discipline "Business and Real Estate Valuation"

on the topic of:

WEAR IN ASSESSMENT

Completed by Belova E. S.

gr. 720621

I checked L.V. Solomykova.

Assistant at the Department of Physics and Mathematics

Tula 2014

Introduction

One of the important stages of assessing a property is, undoubtedly, determining the degree of its wear and tear. Depreciation, at its core, is the loss of utility of an object of evaluation, leading to the fact that the market value of the object becomes less than its replacement cost or reproduction cost. Consequently, without determining wear and tear, the assessment of the cost of an object will be incorrect, since it does not take into account the physical and functional changes that have occurred to the object during its operation, and does not take into account the costs that will be required to restore the original characteristics or adapt the object to modern ones. market requirements. The procedure for determining the wear and tear of an object allows you to assess its real condition, objectively determine its economic life and, importantly, correctly select analogue objects for conducting a comparative analysis and assessing the value of the property.

The above describes the relevance of my chosen topic. The main purpose of this work is to consider the problem of determining wear in assessment. Achieving this goal predetermines the formulation and solution of the following tasks: description and calculation of wear, its eeconomic content, consideration various types wear, analysis of methods for assessing physical, moral and external wear and tear, as well as determining their advantages and disadvantages.

1 Definition of wear and its economic content

Determining the degree of wear and tear is an important stage in assessing a property, since it helps to identify its true condition, objectively determine its economic life and correctly select analogue objects for comparative analysis and cost assessment object.

Wear and tear partial or complete loss of consumer properties and value, both during operation and during inactivity.

Appraisal depreciation is any loss of utility of an appraised item that causes the market value of the appraised item to be less than either replacement cost or reproduction cost.

Depreciation is defined as the difference between the costs of reproducing improvements at the valuation date and their current market value. The economic content of wear lies in the fact that wear is classified not from the position of technical feasibility, but from the point of view of their economic feasibility. Let's consider the periods of life of the object of assessment and the assessment indicators characterizing them (Fig. 1)

date of construction estimates demolition of the object

Assessment date is the day when no improvements are made

Actual age to increase in cost

Effective age remaining economic life

Economic life of the object

physical life of the valuation object

Figure 1 Life periods of the valuation object

Let us examine in more detail the periods of the object’s life presented in Figure 1:

Physical lifespan of an objectthe period of time during which the object can actually be used for its intended purpose. In a simplified manner, this period is determined depending on the capital group of the object in valuation practice. Acts as a natural limiter on economic life.Physical life ends when the object is demolished.
Economic life of the objectthe time during which improvements contribute to the value of the object in excess of the cost of improvement, that is, when depreciation is removable.

The term can be extended due to high-quality maintenance, timely modernization and repairs.

In domestic practice, technology economic justification the design life of the building is determined, which is usually indicated in passports standard project and the constructed object. On its basis, the depreciation rate and the frequency of repair maintenance are established.

Actual agethe time from the commissioning of an object to the date of assessment is established by the object’s passport or certificate of registration.
Effective agetime, which is estimated by the life expectancy of an object based on its physical condition, equipment, design, economic and other factors affecting its value.

Depending on the operating characteristics of the building, the effective age may differ from the physical age up or down. In the case of normal (typical) operation of an object, the effective age is, as a rule, equal to the actual age.

Remaining economic lifeobject time determined by the appraiser from the moment of inspection of the object until the end of its economic life.

The deterioration of the building is due to the deterioration of its physical condition, the discrepancy between the functional characteristics of modern concepts of the real estate market, and the influence of the external conditions of the operation of the object on its value. Since the listed factors are interrelated, their impact on cost is assessed comprehensively.

By general accumulated depreciation, appraisers understand the loss of value of the appraised object for all possible reasons.. The amount of total accumulated depreciation represents the difference between the market value of the structure on the valuation date and its full replacement cost, calculated as either reproduction cost or replacement cost. Cost-effective approach considers the full replacement cost of the buildings being assessed on the assumption that they are new. Therefore, having assessed the value of the total accumulated depreciation for buildings, appraisers subtract it from the full replacement cost indicator and obtain the residual value of the building as a result.

Estimated depreciation reflects the market reaction to certain characteristics of the valued object that distinguish it from a similar hypothetically newly built object on the valuation date. Wear of objects occurs under the influence of three main reasons, which can manifest themselves both complexly and in isolation; each of the reasons is the basis of the type of wear, which I discuss in the second chapter of this work.

2 Types of wear

As noted earlier, the wear of an object is influenced by three reasons (factors), which are the basis of three different types of wear:

Physical deteriorationDecrease in the value of property due to loss of specified consumer properties due to natural causes or as a result of improper operation. He pimplies a change in functional abilities, up to the complete destruction of the property.

Physical wear and tear is divided into removable and irreparable. The criterion is the feasibility of elimination costs, which cannot exceed the potential benefits calculated by the expert and appraiser. Irremovable physical wear of rapidly wearing elements is determined by the engineering method (subtracting from total amount cost of reproduction cost of restoration work). Irremovable physical wear and tear is determined by a combination of many factors.

Durable elements of objects have differentservice life, depending on the materials from which they were made and the technologies used. The technical interconnection of structures affects the performance of the entire facility as a whole. Calculations are made based on the most worn element. Objects that wear out quickly may undergo qualitative changes during the process of repeated replacements, which have some impact on determining the value. Carrying out minor routine repairs most often serves as an exampleremovable physical wear. Costs of determining direct and indirect costs, as well as accounting for business profits when restoration work individual elements are calculated according to market prices for goods and services.

Functional or obsoletereduction in the value of property due to its non-compliance with modern market requirements for architectural, aesthetic, space-planning, design solutions, livability, safety, comfort and other functional characteristics.In this case, there may be not only insufficient, but also excessive consumer properties, for example, an overly expensive coating that does not correspond to the functional purpose of the property.

Functional wearis also determined by the difference in costs when installing, for example, an air conditioning system in a building under construction or in operation. A decrease in the value of an object may cause a deficiency or excess of certain quality characteristics. These include: poor planning, excessive building density on a plot of land, inconvenient location and access to the building, the presence of redundant elements that are not involved in functional purpose and etc.

External or economic wear and tearchanges in the value of property as a result of changes in the external environment, namely social standards of society, legislative and financial conditions, demographic situation, urban planning solutions, environmental situation and other quality parameters.

The amount of external wear is significantly influenced by proximity to unattractive natural or artificial objects (sewage treatment plants, dance floors, gas stations, railway stations, industrial enterprises).

Economic wear and tear, unlike physical and moral wear and tear, will always be irreversible.

For clarity, consider the types of wear in Figure 2.

Figure 2 Types of wear and their classification

Removable is a type of wear and tear, the cost of eliminating which does not exceed the resulting increase in the value of the property. If the costs of eliminating wear and tear are greater than the subsequent increase in the value of the property, such wear and tear is considered irreparable.

In addition, physical wear and tear is classified

Due to the cause of wear on:

Wear and tear accumulated as a result of normal use;
Wear accumulated as a result natural Disasters, accidents, etc.

According to the duration of:

Continuous - gradual decrease in technical and economic indicators;
Emergency rapid wear in time.

Moral is classified into:

Functional wear wear, the cause of which is a change in the properties of products similar to this one, reducing the cost of their production;
Technological wear wear, the cause of which is a change in the technological cycle in which the object is traditionally included.

3 Methods for assessing wear, their advantages and disadvantages

Physical deterioration

The literature on real estate and business valuation describes many methods for determining physical deterioration, but the most common are the following:

effective age method;
comparable sales method;
expert method;
breakdown method.

Effective age methodsimple in technical implementation and little dependent on the state of the market, it is based on an examination of the buildings of the object of assessment and the hypothesis that effective age is related to the typical period of economic life, as accumulated wear and tear is related to replacement cost. Based on this assumption, there is a formula for calculating wear:

And wear;

EF effective age;

EJ economic life;

VS replacement cost.

Advantages of the method:

The entire calculation is performed in one arithmetic operation;
BC indicator is taken from regulatory documents on the operation of buildings and does not require special justification.

Disadvantages of the method:

All the appraiser’s assumptions using this method will be intuitive, which leads to his legal vulnerability.
The method does not distinguish between types of wear, as well as the lifespan of individual elements of the object.

A comparison of the advantages and disadvantages of the method leads to the fact that in practice this method is almost never used.

Sales comparison methodis most often used to determine economic wear and tear, and therefore it detailed description is outlined in the third part of this chapter, which describes methods of external wear.

Expert method. The method is based on a scale expert assessments to determine physical wear and tear, set out in the Departmental regulatory documentVSN 53-86r “Rules for assessing the physical deterioration of residential buildings”. The amount of wear is determined by external (visible) damage to the elements. It is this method that BTI workers use when drawing up technical passports for buildings.

The formula for calculation looks like:

Iphys = × 100%

where Иi the amount of physical wear i of that element in the building, determined according to the regulatory document;

HC i specific gravity of i that element in the building;

i item number.

Advantages of the method:

1. Relative ease of calculations;

2. The method for determining physical wear has been established normative document and it is described in sufficient detail. The evidentiary part is reinforced concrete. Especially when the opinions of the BTI employee (reflected in the technical passport of the building) and the appraiser (reflected in the inspection report of the appraised object or in the defective statement) suddenly miraculously coincide completely.

Disadvantages of the method:

1. The methodology itself provides for a calculation accuracy of ±5%. Wear for a specific element can be determined, say, at 25% or 30% - well, the gradation is every 5%. But this is not even scary, but the significant influence of the subjective factor /

2. The magnitude of the error is inversely proportional to the experience of the appraiser. In addition, quite often there is a situation where simple cosmetic repairs hide many visible signs of wear and tear on the main strength elements of a building, which leads to a significant underestimation of the actual wear and tear on the building as a whole.

When choosing a calculation method, very often the advantages of the method outweigh the disadvantages, and therefore this method is used very actively by appraisers.

Breakdown method involves determining the general physical wear and tear by individual groups, taking into account the physical possibility of eliminating this wear or the economic feasibility of eliminating it:

Correctable physical wear and tear (deferred repairs);
Irreparable physical wear and tear of short-lived elements (those that can be repeatedly replaced during the operation of the building);
Irreparable wear and tear of long-lived elements (those that form the building’s load-bearing frame and can only be restored during a major overhaul or reconstruction of the entire building).

The amounts of irreparable wear are determined from the cost of the elements, taking into account removable wear. Total physical wear and tear is determined by summing individual species wear. At the same time, as part of the implementation of the breakdown method, the cost compensation method, the chronological age method, and the expert method can be used at various stages of calculation.

Advantage of the method:

1. The method allows you to take into account both visible and hidden factors that cause wear of elements (for example, natural “fatigue” of materials, which appears suddenly and leads to instant destruction of the element).

Disadvantages of the method:

It is difficult to explain to the person reading your report why calculated value the deterioration of the building as a whole exceeds the depreciation indicated in the building inspection report (i.e. deferred repairs);
Quite a large amount of calculations compared to other methods;
The method is not applicable for conditions where there is no reliable information about the timing of repairs for short-lived elements (for example, the building was purchased quite recently and the new owner simply does not have information about what and when was last repaired at the property being assessed). Consequently, it becomes impossible to reasonably calculate the irreparable wear of short-lived elements using the chronological age method.

Despite the large number of shortcomings, this method is quite actively used in practice.

Obsolescence

TO functional wearinclude a decrease in property value associated with non-compliance of design and planning solutions, construction standards, design quality, and manufacturing materials with modern requirements for these items.

Functional wear can be removable or irreparable. Removable functional wear is most often calculated using the cost method.

Disadvantages requiring replacement or modernization of elements, items that still perform their functions, but no longer meet modern standards (water and gas meters and fire-fighting equipment). Depreciation for these items is measured as the cost of existing elements, taking into account their physical deterioration, minus the cost of returning materials, plus the cost of dismantling existing ones and plus the cost of installing new elements. The cost of returning materials is calculated as the cost of dismantled materials and equipment when used at other facilities (revisable residual value).

Irremovable functional wear and tear is caused by outdated space-planning and/or structural characteristics of the buildings being assessed relative to modern construction standards. A sign of irreparable functional wear and tear is the economic inexpediency of spending on eliminating these deficiencies. In addition, it is necessary to take into account the market conditions prevailing at the date of the assessment to ensure that the building is adequately architecturally suited to its purpose.

Depending on the specific situation, the cost of irreparable functional wear and tear can be determined in two ways:

Capitalization of losses in rent;

Capitalization of excess operating costs.

To determine the necessary calculation indicators (rental rates, capitalization rates, etc.), adjusted data for comparable analogues are used.

In this case, the selected analogues should not have signs of irreparable functional wear identified in the object being assessed. In addition, the total income generated by the property complex as a whole (building and land) and expressed in rent must be divided accordingly into two components. To allocate part of the income attributable to the building, you can use the investment balance method for the building or the method of analyzing the ratio of the value of the land plot and the total sales price of the property complex.

Calculation of irreparable functional wear and tear by capitalizing the excess operating costs required to maintain the building in good condition can be done in a similar way. This approach is preferable for assessing the irreparable functional deterioration of buildings characterized by non-standard architectural solutions and in which, nevertheless, the amount of rent is comparable to the rent for modern analogue facilities, in contrast to the amount of operating costs.

3.3 External wear

External or economic wear and teardepreciation of an object due to the negative influence of the external environment in relation to the object of assessment: location, market situation, easements imposed on a certain use of real estate, changes in the surrounding infrastructure and legislative decisions in the field of taxation, etc. Although external wear cannot be eliminated in most cases, it can sometimes resolve itself due to a positive change in the surrounding market environment.

The following methods can be used to assess external wear:

Method of capitalizing losses in rent;

Method for capitalizing excess operating costs;

Sales comparison method.

The assessment of external wear and tear by the method of capitalizing losses in rent and the method of capitalizing excess operating losses is carried out similarly to the calculation by these methods of functional wear and tear discussed above. In the case of an external wear assessment, it is necessary to identify losses in rent caused by signs of external wear or excess operating costs caused by signs of external wear.

Sales comparison methodis to identify market valuation accumulated depreciation of an object by comparing its replacement cost with current sales prices of comparable objects.

Stages of method implementation:

Selection of recent sales of objects similar to the property being assessed by the nature of the improvements, adjustment of their prices and generation of information to determine the replacement cost of the building;
Determining the value of a plot of land for each comparable property;
Determining the prices of buildings taking into account depreciation by excluding the cost of land plots from the sales prices of comparable objects;
Calculation of the current replacement cost of each comparable object;
Determining the amount of accumulated depreciation of comparable buildings by subtracting their prices taking into account depreciation from the current replacement cost of the same buildings;
Determination of the average percentage of depreciation of comparable buildings for its transfer to the assessment object.

Advantages of the methodconsists of the objectivity of its results, since by comparing sales the appraiser only reveals the market reaction to the aging of the property and environmental changes.

Disadvantage of the methodis the impersonality of the identified type of wear, that is, in the absence of the possibility of differentiation by types and types of wear, which limits the use of this method in property management. In addition, the method is quite labor-intensive, since it requires calculations not only to compare sales, but also to determine the value of land plots and the replacement cost of improving all objects.

Conclusion

Determining wear and tear is an integral part of assessing a property. It contributes to an adequate determination of the real state of the object and helps to assess the remaining period of its economic life. Without the stage of determining wear and tear, the assessment of the object will be incomplete and incorrect.

In the course of writing the work, the intended tasks were solved, including the fact that I determined that wear and tear in the assessment is any loss of utility of the assessment object, leading to the fact that the market value of the assessment object becomes less than either the replacement cost or the cost of reproduction. In addition, the economic content of wear has been analyzed, which consists in the fact that wear is classified not from the position of technical feasibility, but from the point of view of their economic feasibility.

Analyzing the problem of determining wear and tear, I identified the causes of wear and tear of real estate, as well as their types: physical, functional or moral, external or economic.

In addition, during the work, I reviewed existing methods for determining wear and became convinced that a correctly selected method for determining wear plays a great role in assessing an object, since each type of wear has its own specifics. Having analyzed the methods for determining the assessment, I identified their advantages and disadvantages, which allowed me to conclude that the most rational and effective use of the expert method and the breakdown method, which is confirmed by existing practice.

Bibliography

the federal law“On valuation activities in the Russian Federation” dated July 29, 1998 No. 135-FZ
Kalinin V.M., Sokova S.D. Assessing the technical condition of a building: Textbook. M.: INFRA-M, 2010. 268 p.
Rules for assessing the physical wear and tear of residential buildings VSN 53-86 (r), M.: Gosgrazhdanstroy, 2007.
Alenicheva E.V. Methods for assessing real estate objects. Tambov: Tamb publishing house. state tech. Univ., 2012. -335 p.
Yaskevich E.E. Real estate valuation practice. Moscow: Tekhnosphere, 2011. -504 p.
Real estate valuation: Textbook. Second edition, ed. Drapikovsky A.I., Ivanova I.B. ed. 2nd B, Ega-Basma Publishing House, 2011. 480 p.