European Real Estate Society 19th Annual Conference 13th-16th June 2012

1. European Real Estate Society 19th Annual Conference 13th-16th June 2012 Real property appraisal - essential part based similarities and differencesKaarel Sahk, lecturer Estonian University of Life Sciences

2. Abstract • While we think about real estate, it is quite common to limit with land or buildings. Other way, while we are speaking about real property early, then beside the land and buildings we commonly imagine not only finance or the bundle of rights but also the essential parts like forest, structures, and landscape are eligible. The lastly named diversification points us attention that we can draw down a nomenclature of different things that should be valued or their value, metric or non metric as a component will influence the estimated value. The last approach explains that some components, things, are non metric and they are described under some different circumstances like emotional, natural, social, etc. types of values that are not the common characteristics enclosed into the real estate value. The named situation, linked with the other contemporary situation of valuation which must account sustainability as a generic name, or energy efficiency, green etc, as its extensions, supply us with the huge multiplicity of resolutions that includes the both, similarities and differences.Keywords: essential part, real property, metric and non metric, types of values ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

3. Un harvested grop Legaldefinitonbasedissue BUILDINGS STANDINGWOOD SECURITY PRE EMPTION OTHERPLANTS UNHARVESTED GROP SERVITUDES encumbrance superficies ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

4. What happen while to summarize otherway? Pairs of antipodes Pairs of antipodes • Natural landscape • Nature • Rural landscape • Natrual palce • Cultural landscape • Artifact, • Urban landscape • Simulated palce ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

5. Owerallprinciples Roose, A, Sepp, K, et.al. Neighborhood-defined approaches for integrating and designing landscape monitoring in Estonia ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

6. Place and Camus – onemoredescription • We may refer here and hereafter to the definition offered in the world-famous novel by Albert Camus, The Myth of Sisyphuswhere the place as a complexity of various implications is constituted from three basic components: • the physical settings • the activities and • the meanings ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

7. Place as a complexity Activity Sence of Place Physical setting Meaning ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

8. Data based approach of APPRAISAL’s DATA Qualitative data Quantative data • Land owners & users • Building owners & users • Forest owners & users • Developers • Real estate professionals • Local authorities • State agencies • 3-d sector • Society • Land register • Web map service • Sales price register • Forets register • GPS & GIS info • Register of Environment • GPS & GIS info • Buildings register • Premesies register ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

9. Multiplicity of Register of Environment • Biota • Protected nature • Monitoring • Natural recourses • Water conditions • Air conditions • Permits & licenses • Waste & hazards • Nature protection objects • Valuable habitation • Areas with international significance ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

10. Values of landscape due appraisal • Cultural value • Historical value • Ethics value • Identity value • Natural value • Recreate value • Tourism potential value • Restful value Commonly nonmetric paramters ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

11. Somepossiblediversifications. Vol 1 • Recreational value + Tourism potential value = Restful value • Existence of traditional approaches to category • Commonly, in many occasions summarizing the all earlier values of landscape • Some basic drivers of restful value • Beauty • Variety of relief and greenery • Multiplicity of forest • Existence of water bodies or accessible coastline • Area is a carrier of local traditions and history • Availability of popular sights and showplaces ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

12. Some possible diversifications. Vol 2 • Ethics value • Beauty of landscape • Diversity of landscape • Individuality of landscape • Maintenance of landscape • Variety of landscape, i.e relation of fields, grassland, groves and buildings or structures • Traditionality of landscape • Variety and spectacular relief • Beautiful views, i.e attractive ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

13. Some possible diversifications. Vol 3 • Identity value • Similar to the sensitive value (e.g Persson) • Applied property valuation in Europe. A study of 19 countries. Master of science thesis No. 13, (1998)Stockholm: KunglTekniskaHögskolan. • Important and valuable for local residents and neighbourhood • Commonly associated with former or future owner • In practice hard or commonly impossible to attachable to other properties ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

14. Value of land - basic types of land use • Commonly metric parameters • Value of land is in straight correlation with the intended use of it, fixed in the Land cadastre as a specified cadastral unit use under the legislation and their determination (Land Cadastre Act). • Different schemes of diversifications; local v.s international ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

15. Value of land - basic types of land use IVS regualtion • Land for housing • Land for business • Land for manufacturing • Land for bodies of water • Land for transport • Land for garbage disposal • Land for national defence • Land for nature protection • Land for profit yielding • Land without intended use • Land for mining industry • Land for peat handling • Land for social use • Crop(ping) Farms • Irrigated Land • Perennial Plantings • Specialised Livestock Facilities • Livestock Ranches/Stations • Dairy Farms • Forestry/Timberland • Specialised or Special Purpose, Properties • Integrated Unit • Agricultural Activity • Biological Assets ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

16. Value of land - Land Valuation Act • Valuation - The object of a valuation is a plot of land without the buildings, forest, other vegetation or accessories situated thereon. • Appraisal - In an appraisal, the object of the appraisal may be a plot of land together with its essential parts and accessories. • Valuations of land are classified as assessments, appraisals and valuations of unlawfully expropriated land. ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

17. Value of forest • Commonly metric parameters • Value of forest is not synonymous with value of forest land. • Forest land valuation is subordinated to land valuation procedure. • Common land valuation rules are employed • Forest valuation is a procedure of appraisal of standing wood. • Standing wood value gain + marketability ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

18. Value of forest • Peggy Petrzelka, et.al in paper (Land use policy 2013), The elephant in the room: Absentee landowner issues in conservation and land management – absence of owners • It means – forest value approach is linked with ownership • The aim is value and the goal is evaluation of existing situation and extracting of standing wood value form the aspect of the Forest management plan • Site class of forestland is in correlation with standing wood classification and management plan ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

19. Value of buildings • Commonly metric parameters and non metric parameters (sustainability, green aspect) • On possibility for diversification is: as it planned v.s as it built, all of these approaches are covering the full part of lifecycle, i.e from plans up till permit (license) of use (occupy). • The more demonstrative is built up the environment of buildings value according the different phase from idea up till the permit (license) of use (occupy). ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

20. Value of buildings • Ideamaster planning detail planning terms of reference of design designpermit to build building project  construction worksinspections permit to use use & utilizationmaintenance & reconstruction demolition  reuse or waste • Here is key point of appraisers knowledge –to know current prices on to beable to compare them • Here is a key point of appraisers as an artist, we speak a abilityto atract ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

21. Similarities. Vol 1 • Every item (type) of comparison is a subject to organization or management plans like • Landscape – Protection plans, maintenance plans • Land -land adjustment and readjustment plans • Building – building project, maintenance and facility management plant • Forest – Forest management plan • Every item is placed under degradation • Every item as an asset needs a classification, condition assessment and maintenance for derivation best value in the future ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

22. Similarities. Vol 2 • Subordinated to lifecycle, • economical (50 years) and • physical (up till 200-300 years) - buildings • Changeable in time • Open to changes in surrounding environment • Sensitive to legal situation • Permanent maintenace procedures are required ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

23. Differences. Vol 1 • Methods applied for extracting • Different usage of results – loan security, economic objective • Different ownerships – different values approaches • Power institutions influences – ministries, departments • Parameters describing the value are varying • Very different professional regulation ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

24. Differences. Vol 2 • Influence of the Structure of holding • Chronological extent (amplitude) • Extracted value - non economic • Different types of extracted value – • special value, compensation value, investment value, synergetic value, fair value, market value, insurance value, ordinary value, • earlier applied - owners value i.e value in use ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

25. Aboutthesituation • The questionary is on the way. Based on the involved parties of procedure • Co-operation for deeper and profounded layout with  professor Sepp -landscape application assistant professor Lang – forest valuation  Goal – paper for journal “Baltic forestry” or “Land use” ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

26. Refererences • Encyclopedia of real estate terms : based on American and English practice, with terms from the Commonwealth as well as the civil law, Scots, and French law / Damien Abbott London ; Washington, DC : Delta Alpha, c2000 • Enemark, S. EducatingSuveyorsforLandManagement, FIG; Com 2 sysmposium18-20.10.2000 • Real estatevaluationtheory/ editedbyKoWang and Marvin L. Wolverton Boston [etc.]: KluwerAcademicPublishers, 2002 • The Valuation of Property A Treatise on the Appraisal of Property for Different Legal Purposes. Volume I. By James C. Bonbright. McGraw-Hill Book Company, Inc. New York and London, 1937 • Real Estate Valuation. A Statement of the Appraisal problem and a Discussion of the Principles Involved in the Development of Valuation Methods by Frederick M. Babcock. University of Michigan, 1932 • TheAppraisalof Real Estate by Frederick M. Babcock. B.S. New York TheMacMillan Company,1924 • Tõnisson, J. Liikumatu varanduse hindamisest Liivimaal. Postimees, Jurjev, 1902 • Väljaspool linnu ja aleveid asuvate kinnisvarade hindmaise seadus. Riigi Teataja nr 23, 1927.a • International ValuationStandards 2011. International ValuationStandardsCouncil, London 2011 • International ValuationStandards. EightEdition. 2007. International ValuationStandardsCommittee, London 2007 • A Valuer’s guide to the Red Book, RICS, 2007 BVC2011#Kaarel Sahk#Mutual recognation ...

27. Author’s additional information:https://www.etis.ee/Portaal/isikuCV.aspx?LastNameFirstLetter=S&PersonVID=43875&lang=en&FromUrl0=isikud.aspx • E-mail addresskaarel.sahk@emu.ee • Mail addressKreutzwaldi 5, 51014TartuEstonia ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

28. Thank you! ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences

29. Questionsplease! ERES 2012# Kaarel Sahk #Real property appraisal - essential part based similarities and differences