Methodology for Calculating Quantitative Adjustments in Real Estate Valuation Tasks

The purpose of the study is to develop a methodology for calculating adjustments from the objects of comparison to the object of assessment, based on data on completed transactions. Price adjustments of similar objects are used in the quantity adjustment method. According to the authors, this method is outdated and will gradually be replaced by modern methods of data analysis. However, today it is most popular among independent appraisers due to its simplicity and established tradition. Thus, there is a need to provide evaluators with tools that allow combining traditional and modern calculation methods. One of the ways to determine quantitative adjustments is the method of paired sales (comparisons). Pairwise comparisons are supposed to search for objects that differ in the value of one characteristic. The disadvantage of this method is the difficulty of finding such objects and the lack of a priori information about the reasons for the difference in prices. The observed difference in properties do not automatically affect prices. When working with small samples, one can encounter the observed and even statistically significant effect of the “influence” of a particular feature on the price of an object, since small samples do not ensure the stability of the results of statistical conclusions within the frequency approach, which is traditional for appraisers. Remember the rule “correlation does not imply causation”. Most often, the problem of accounting for false connections disappears as the volume of the analyzed sample grows. Thus, the problem of ensuring that only those differences in the properties of objects on the market that actually affect prices are taken into account can be solved, first of all, by increasing the amount of analyzed data. For a long time in the domestic theory and practice of evaluation, mainly offer prices available from advertisements in listings are considered. The results obtained on their basis, including coefficients that can be used as adjustments, always have elements of subjectivity, since only the expectations of sellers are reflected in the prices of proposals. Therefore, we have to study the conditions for the transferred property rights, the conditions of a possible transaction, the “marketability” of the transaction, etc. With the opening of Rosreestr data on completed and registered transactions, new opportunities for data analysis appear, including for calculating adjustments, at least for those pricing factors that are entered into the Rosreestr database when registering transactions.

Materials and methods. The article uses open data of Rosreestr on completed and registered transactions. The main research method is the A/B testing technique, which has proven itself in digital marketing. The method of calculating adjustments, discussed herein, is essentially a transfer of A/B testing to the theory and practice of real estate valuation. Calculations were performed in the statistical package environment R. Data preprocessing and mapping were performed in Python. The OpenStreetMap mapping framework was used.

Results. A methodology for calculating adjustments from comparison objects to the object of assessment by pricing factors included in the Rosreestr database is proposed. The technique is based on open data, is easy to reproduce and is brought to the software solution. It should be noted that the result of the article is precisely the method, and not the specific numerical values of the adjustments. The appraiser in person using data relevant to the specific task must perform all calculations.

Conclusion. Open data of Rosreestr can and should be used in real estate valuation tasks. They allow you to solve a number of evaluation problems that were previously inaccessible or difficult to resolve due to the lack of data on transactions. This gap in valuation theory and practice is gradually being filled with the introduction of open access to transaction data.

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