What is the role of a real estate appraiser in investment decisions?

This interview is part of a large four-part project that highlights investment opportunities in real estate both in Germany and in other European countries.

Real estate expert

In this conversation, we have Olga Müller, who is a qualified lawyer and economist, as well as an active member of the Royal Institution of Chartered Surveyors (RICS). In her professional life, she holds the position of associate professor at the European Academy of Real Estate Valuers (ESA) and works as an independent expert in this field, holding PersCert TÜV and EN ISO/IES 17024 certifications. Additionally, Olga is a managing partner at IIG Real Estate GmbH and MSI R.E.S. GmbH.

Real estate appraisal

We started our conversation with the topic of real estate appraisal, which is one of Olga's important areas of work. We learned about the functions performed by an appraiser. Indeed, the need to involve an appraiser does not arise with every real estate purchase. However, in certain situations, their expertise proves to be indispensable.

• For example, when it is necessary to conduct a comparative analysis of various objects based on a number of criteria.
• An appraiser will help determine the real value, especially if there are doubts about its justification.

The significance of appraisal services

Additionally, the services of an appraiser may be requested to formulate arguments during negotiations on pricing issues. It is important to remember that appraisal is crucial when concluding banking transactions involving collateral.

• It is necessary to determine the collateral value of the object in question.
• In addition, appraisers are often called upon by tax authorities to calculate tax liabilities in cases of gifting or inheritance.

The client's first question

When a client contacts an appraiser, their first question is often: "How much is this property worth?" However, sometimes the situation requires a more in-depth analysis. For example, if you are planning to buy a plot of land for building a residential house, it is important that your investments are justified.

• In this case, the appraiser must assess not only the land but also the overall construction estimate to ensure that the project is economically viable.

Assessment is not just arithmetic.

It should be noted that property valuation is not just about simple calculations. The appraiser provides a much more detailed and objective analysis of the property's value. Let's consider the situation in Cyprus.

• The increase in real estate prices on this island is partly due to the possibility of obtaining residency and citizenship.
• But how can one determine the real value of real estate, excluding the influence of migration programs?

Risks and long-term prospects

This question becomes particularly pressing when trying to understand how much an asset will be worth in a few years if these programs change or cease to exist. Investors need to assess the risks associated with this in order to clearly see what price they are actually "paying" for citizenship.

Accuracy of assessment

It is also important to discuss how accurate appraisal is as a science. The answer to this question is not straightforward: appraisal can be quite accurate, but the range of possible deviations can be as much as 30 percent in either direction.

Thus, it can be stated that this process is based on mathematics, but market data serves as the foundation for calculations, and it is not always possible to avoid inaccuracies. It is important that the assessments made are well-reasoned and of high quality, which is the essence of the tasks of a professional appraiser.

In the process of property appraisal, it is crucial to use only accurate and verified data. This raises an interesting question: can the personal preferences of the client affect the outcome of the appraisal? The answer to this question is clear: such requests should not influence the appraiser's results. For example, requests like "I want the appraisal to be higher" or "try to appraise it lower" are unacceptable.

Methodology of assessment in different countries

If you are involved in the valuation of properties in countries like Germany, Austria, Russia, and Estonia, following a unified methodology, you can be confident that the valuation structure can be applied similarly across all these countries. However, what about the information for valuations? In Germany, data for analysis is generally available, while in other countries it may be more challenging. Where can one find information about markets that lack clear price benchmarks for real estate?

Gathering information about real estate

In Europe, there are many professionals who specialize in evaluation and provide similar services.

Conclusion

I hope this interview has been useful and informative for those interested in investment opportunities in real estate in Germany and other European countries. Olga Müller’s approach to property valuation reveals many nuances that can significantly impact decisions regarding the purchase or sale of properties. After all, accurate valuation is not just about having a number; it involves a deep analysis and understanding of everything that lies behind that number.

Olga explains very clearly that the work of an appraiser is different from the services provided by realtors or agencies. She asserts that an appraiser offers a more comprehensive and objective view of the property's value, taking into account numerous factors: market conditions, legal aspects, potential risks, and other economic realities. It is also worth noting that the appraisal is not subject to the subjective preferences of clients, which makes the results more reliable and thorough.

Advantages of working as an appraiser

• Objective assessment of the value of the object.
• Taking into account market conditions and legal aspects.
• Immunity to clients' subjective preferences.

Moreover, I found it particularly noteworthy that property valuation in such diverse countries as Germany, Austria, Russia, and Estonia is based on unified criteria. This indicates a high level of professionalism and standardization among appraisers, which is very important in the international market. It also allows investors to work confidently with appraisers, regardless of the country they are in.

The future and risks in evaluation

The interview with Olga also highlighted the importance of thoroughly studying the market and the circumstances that may affect property values in the future. This once again emphasizes that appraisal is not just a mathematical manipulation, but a deep analysis of current and potential factors influencing the value of properties.

Key points

• The assessment includes numerous factors that affect the value.
• It is necessary to take into account market conditions and potential risks.
• The appraiser should base their assessment on the facts of the present day.

In conclusion, if you are planning to invest in real estate, it is crucial to choose a qualified appraiser who can provide you with accurate and well-founded data. The work of an appraiser can be decisive for successful business operations in the real estate sector, as your understanding of the market and the correctness of your investment decisions depend on them. I am confident that a clear awareness of all the aforementioned aspects will help many avoid financial losses and ultimately achieve the desired success in their investments.