The Importance of Valuation Report in Inheritance
The Importance of Valuation Report in Inheritance Sharing and Problems with Share Deeds
The process of inheritance sharing is generally complex and prone to disputes. One of the most important steps for the proper sharing of inheritance is the impartial valuation of the properties, hence the preparation of valuation reports for the properties.
The Role of the Valuation Report in Inheritance Sharing
A real estate valuation report is an official document prepared to determine the market value of a property. This report examines the market value of the real estate within the framework of current economic conditions and includes the physical condition of the property and all other legal factors and general market data that may affect the value. Real estate appraisal reports are prepared by a licensed appraiser.
- The current market value of the property is determined. This may be based on the sale prices of other comparable properties.
- Economic factors in the region where the property is located, in the country, or global economic developments may affect the real estate market. The analysis of these issues is also taken into account in the valuation report in a general framework.
- Regional or environmental features in the vicinity of the property, such as infrastructure, transportation facilities, urban facilities, etc., are considered in the valuation process.
- The appraiser makes a valuation by examining the physical condition of the property. This includes important factors such as any damage to a built property, the need for maintenance, and the physical advantages or disadvantages of the property (goodwill factors such as building quality, facade, view, floor, etc.). Similarly, comparisons can be made with goodwill factors based on the type of property for commercial properties or vacant lots or land.
The income Discounting Method (Project Development, Discounted Cash Flows, Direct Capitalization Approaches) or Cost Method may also be used for immovable properties where it is not possible to use market value or where more than one valuation approach is required by expert judgment.
- In the market approach, a comparative analysis is made with the sales or realized sales prices of comparable properties. This helps to determine the market value of the property based on its characteristics.
- Factors such as title deed records, legal restrictions on the property, if any, recorded in the title deed records, legal processes related to the property in the municipal zoning file, documents such as minutes and demolition decisions, if any, and technical and legal permits such as court decisions are also considered among the factors that may affect the value in the valuation reports and the details are presented in the report.
What is a Share Deed? What are the Differences Between Shared Ownership and Unified Ownership?
"Article 701 of the Turkish Civil Code defines joint ownership as the ownership of those who jointly own the goods due to the community formed by the law or the agreements stipulated in the law. In joint ownership, the partners do not have defined shares, and the right of each of them extends to all of the goods entering into the partnership.
Shared ownership, in other words, joint ownership, is the ownership of the whole of something that is not materially divided by more than one person with certain shares. In a shared title deed, the rights between the shareholders are shared in a certain proportion and these persons are granted certain rights of use and disposition on the property.
Article 640 of the TMK regulating the "Inheritance Partnership" states: "In case there is more than one heir, with the passing of the inheritance, a partnership is formed between the heirs covering all rights and debts in the estate until the sharing.
"Conversion of joint ownership into shared ownership", which is one of the cases of termination of joint ownership, is regulated under Article 644 of the TCC. Under this article, for the conversion of joint ownership into shared ownership, one of the heirs must request the conversion of joint ownership into shared ownership on all or part of the property included in the estate.
Following the termination of joint ownership, shared ownership will be formed and the shares of the heirs will be formed as required by law. Disputes can often arise, especially in the division of shared ownership where more than one property is inherited.
How Does the Valuation Report Prevent Disputes?
Valuation reports are extremely important to prevent disputes between property owners in shared title deeds. Contributions of valuation reports to dispute prevention processes:
An Objective and Independent Perspective:
Appraisers appraise the market value of the property from an independent and objective point of view. This prevents emotional factors from influencing the valuation process. The fact that property values are revealed through the eyes of a completely objective and outsider expert provides confidence for all parties.
Basis in Legal Process:
Appraisal reports are prepared by licensed appraisal firms and report a valuation that is historically and reliably accurate. Having an official report at hand can provide a foothold in legal proceedings. In case of disputes, it can be used as data to create a solution between stakeholders.
Property and Value Inventory:
Especially in cases where multiple properties are inherited, the values of each property can be inventoried upon client request. Since the share values of the shareholders in exchange for their shares are also presented in the report, it is very easy to realize the property divisions without going through the court process. Solutions such as possible share or property swaps, and share transfers in return for consideration can be provided as a result of the values appraised by the valuation expert with a professional perspective.
2.2.2024
What is the IFRS?
What is the IFRS and what is its purpose? - International Financial Reporting Standards with General Definitions
IFRS stands for International Financial Reporting Standards. Developed by the International Accounting Standards Board (IASB), these standards are designed to regulate the financial reporting processes of companies around the world. IFRS aims to increase global financial comparability by making companies' financial statements more transparent and comparable.
Are IFRS and TFRS the same?
Yes, TFRS (Turkish Financial Reporting Standards) is the Turkish implementation of IFRS, in other words, TFRS is the Turkish translation of IFRS. Turkey adopted IFRS in 2005 and aligned Turkey's financial reporting standards with IFRS. IFRS is a local implementation that takes the principles of IFRS and adapts them to the legal and economic conditions of Turkey.
What are IFRS and TFRS?
IFRS (International Financial Reporting Standards): A set of standards set by the International Accounting Standards Board (IASB) that standardize the financial statements of companies around the world. They aim to increase transparency and comparability in global financial markets. Promotes trust and transparency.
TFRS (Turkish Financial Reporting Standards): Financial reporting standards used in Turkey. TFRS are based on IFRS and are harmonized with Turkey's legal regulations.
Is IFRS important?
Compliance with IFRS or TFRS is necessary for companies to prepare their financial reports. Valuation reports support compliance with these standards in terms of determining the fair value of assets and liabilities.
Valuation reports provide transparent and reliable information about a company's financial position. They provide an objective determination of the company's value for investors, shareholders and other stakeholders.
Can be used as a basic guide in the company's financial planning and strategic decisions. Accurate valuation of assets and liabilities allows for more accurate financial planning for the company's future activities.
Regular valuation of company assets can improve asset management processes. Provides accurate baseline data for performance evaluations.
It can be subject to an independent audit of the company's financial position. Provides auditors and managers with information on potential risks and warnings.
Ensures compliance with legal requirements and tax regulations. Contains accurate valuation information for tax returns and other legal obligations.
Why is there a need for International Financial Reporting Standards?
The increase in global trade, investments and transaction volume has caused companies to cross the borders of the geographies in which they operate. This has led to the need for a broader and more generalized framework for financial reporting.
The use of different accounting standards in different countries makes it difficult to compare the financial performance of companies. An international set of standards enables companies and investors to compare financial statements more easily.
Compliance with international standards builds trust among investors. A common language and set of standards enables investors to evaluate companies more accurately.
Global financial crises have emphasized the importance of financial stability. A common set of financial reporting standards can help financial markets to be more transparent and on a sound footing.
As a result, International Financial Reporting Standards have been established to enhance integration in the global economy, comparability of companies and stability of financial markets. By promoting transparency, these standards enable investors, businesses and other stakeholders to make better financial decisions.
IFRS and Valuation
IFRS 13 defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
According to International Valuation Standards (IAS), market value is the estimated amount that would be received to realize the fair value of an asset or liability in an arm's length transaction between a willing seller and a willing buyer, as a result of appropriate marketing activities, in which the parties act knowledgeably, prudently and without compulsion.
In this comparison, the fair value of all assets following IFRS 13 and the market value of all assets by the IAS are mutually exclusive.
Valuation reports prepared by international valuation standards are used to determine the current or retrospective fair values of property, plant and equipment to be used in financial reporting.
You can contact us to get information and services about the IFRS / TFRS Valuation Report.
16.1.2024
What's the Difference Between Value and Price?
Correctly diagnosing the relationship between the concepts of price and value and the points where they diverge is important in terms of understanding the valuation theory correctly and making sound valuations. In practice, the terms price and value are sometimes used interchangeably. However, although these two concepts are related, they theoretically have different meanings. (Ertugrul, 2008)
What are Value and Price?
In economics, price refers to the amount of money exchanged for a good or service. It is a measure of the cost of something in terms of currency. Price is determined by the forces of supply and demand in a market. When demand for a good or service is high and supply is limited, the price will tend to be higher. When a good or service is in abundant supply and low in demand, the price will tend to be lower. In short, “Value is an intangible measure of the value of a good, while the price is a concrete measure of the money value of a good in the market.” (Capital Market Communiqué - Series: VIII, No: 45, Yılmaz 2017)
Price is a term used for the amount supplied or demanded or paid for a good or service. The selling price, whether publicly disclosed or kept confidential, is a historical fact. Value is an economic concept related to the price established between buyers and sellers for a good or service to be purchased. Value is not real data, but simply an appraisal of a price likely to be paid for goods and services at a given time, according to a given definition of value. (UDS, 2005)
The concepts of value and price, which are sometimes confused with each other in terminology, are terms that should be separated from each other, especially from the point of view of the appraiser. In the event of a purchase and sale transaction, it may be explained as the selling price, or it may be called the requested price. It can be used for supply and demand amounts. Value, on the other hand, is data that can be revealed as a result of estimation and appreciation. It is a hypothetical estimate of the probable price that can be agreed upon between a buyer and seller for a good or service that would result in a sale. There may or may not be any relationship between the price paid for a good or service and the appraised value. With its version published in 2005, IDS also defines the concept of price as an indicator of relative value.
It is important to note that price and value are not always directly related. A high price does not necessarily mean something has a high value and vice versa.
Source:
Biltekin, M. (2019). Examination of the factors affecting housing valuation and housing values by using geographic information systems and regression analysis methods (Master's thesis, Mimar Sinan Fine Arts University).
Ertugrul, M. (2008). Value-Price Split and Business Value: A Theoretical Perspective. Eskişehir Osmangazi University Journal of FEAS, 3(2), 143-154
30.3.2023
What Should Be Considered When Purchasing a House?
Buying a new house is undoubtedly one of the most important decisions we can make in life. When we make such an important decision and want to own a house, one of the most important questions to be answered is "What should we pay attention to when buying a house?" is coming. We will try to answer this question to protect you from future risks in your real estate investments.
What should be considered when purchasing a house?
As real estate appraisers, we will touch on the importance of paying attention to two main issues when buying a house: The value of the house and the correct analysis of the legal status of the real estate. The legal status analysis of the immovable can be determined by the appraisal report.
One of the most used methods when determining the value of a home is the Market Approach (comparison of sales approach). In this approach, many criteria such as age, location, area, flat type, solid, and physical condition are taken into account in determining the value by searching for similar (similar) properties to the subject property.
How can I find out if there is a problem with the deed?
Institutional research is also carried out on the legal status analysis of the property for appraisal. The Land Registry Directorate and the Municipalities are at the forefront of the legal regulatory institutions in our country regarding real estate. In line with the approval and consent of the owner, the legal processes, including whether there is a record that prevents the sale of the house and, if any, restrictions on its use, can be examined with the examination to be made in the land registry records. In addition, the accuracy of the location of the residence is determined by comparing it with the project in the land registry office.
What should be considered in the municipality when buying a house?
In municipal research, we can touch on two main issues. The first is the zoning situation. When renovating your property in the future and urban transformation, the zoning status of the parcel where the property is located in one of the critical issues.
The second is the examination to be made in the zoning archive file of the house. In line with the owner's approval and consent, issues such as whether a building permit and occupancy certificate of the residence (occupation permit for buildings completed by the legislation) have been obtained in the zoning archive file, or whether a negative document related to the residence (building holiday memorandum, council decision, etc.) has been prepared.
As experts, we include these two basic issues in real estate valuation reports that we need to pay attention to when buying a house.
You can contact us about this article, in which we try to cover the basic information, and for more questions.
23.3.2023
What is Risky Building Detection?
What is Risky Building Detection?
Risky structures can be defined as structures in which the life safety of the people living in a possible disaster is not available. These structures must first be determined by their owners. Buildings identified as risky can be objected to. However, a sixty-day demolition process begins for structures that have been demolished.
Which Institutions Are Detected to be Risky Buildings in Turkey?
The buildings that are determined to be risky as a result of the studies are reported to the Provincial Directorate of Environment and Urbanization or the Administration. Provincial Directorates of Environment and Urbanization or Administrations examine the reports, if there are missing or incorrect issues in the reports, the reports are returned to the relevant person, and the annotation notification regarding other appropriate determinations is sent to the relevant land registry directorate.
Where to Make an Objection to the Risky Building Detection?
By the relevant Title Deed Directorate, the indications entered in the land registry, against the risky building determination, can be appealed to the Directorate in the place where the risky building is located within fifteen days from the date of notification, otherwise, the building should be demolished within a period determined by the Administration, not less than sixty days, from the date of notification. shall be notified to the real and personal right holders and this notification shall be notified to the Directorate.
When is the Risky Building Evacuated?
The technical committee, which will examine the objections, is constituted of seven members with the participation of four members notified from universities and three members working in the Ministry organization, two of which are civil engineers and one is a geology or geophysics engineer. The owners of the immovables registered in the land registry as risky structures are requested to demolish the risky structures by giving not less than sixty days.
Whether the risky buildings are demolished by their owners within sixty days is checked on site by the Administration, and if the building is not demolished, a notification is made stating that the building will be demolished by the administrative authorities and giving an additional period of fewer than thirty days. At the end of this period, if the risky buildings are not demolished by their owners, the relevant institutions and organizations are requested not to provide electricity, water, and natural gas to the risky buildings and to stop the services provided.
Who Washes the Risky Building?
The Administration notifies the Directorate in bimonthly periods of information and documents related to risky structures that cannot be evacuated and demolished. Structures that cannot be demolished are demolished or demolished by the Ministry or the Directorate. The owners are responsible for the costs of the evacuation and demolition made or made by the Ministry or the Administration, in proportion to their shares, since they were not demolished by the owners.
How is a Building Renovation Decision Taken?
It is decided by at least two-thirds majority of the stakeholders in proportion to the shares they own, to unify or allocate the parcels, to register them in the land registry, and to reconstruct the buildings, without requiring the buildings to be demolished in the risky areas. In this communiqué, it is stated that if the decision is not accepted within fifteen days, the land shares will be sold by auction method to the other stakeholders who have reached an agreement, not less than the current value to be determined or maintained by the Ministry. is registered ex officio.
How to Make an Urban Transformation Decision in an Apartment?
For the sale of the land shares of the owners; Documents such as the minutes of decision signed by the owners who have agreed that the owners have agreed with at least a two-thirds majority; Documents stating that the owner who does not agree with the decision is notified and given fifteen days for its acceptance; In case of transfer of authority by the Directorate or the Ministry in writing, an application is made to the Administration, together with the documents regarding the value of the immovables belonging to the owners who do not agree with the decision taken by a two-thirds majority, to the licensed valuation institutions operating as registered with the Capital Markets Board and the address information of the owners of the land shares to be sold.
The sale of the land shares of the owners who do not agree with the decision taken with at least two-thirds of the shareholders in proportion to their shares is carried out by the Directorate or the Administration, by the 15/A of the Implementing Regulation of Law No. 6306. carried out by the procedure laid down in the article. It is implemented when the sales transactions are completed.
13.3.2023
What is machinery valuation and how do you value?
Machinery valuation is the valuation stages made for the material evaluation process of the machines in factories, workshops, facilities, real estate for production purposes, and assets in terms of general structure.
Machinery and Facility Appraisal is carried out with CMB Licensed Appraisal Expert Mechanical Engineers who have served in the field of machinery and facility valuation for many years under the organization of a separate unit directorate in our company.
What is Manufacturing Facility Valuation?
It is the analysis of the real estate used for production purposes (power plants, factories, workshops, etc.) together with the machinery, equipment, and auxiliary facilities used in production, and reporting separately or integrated by using value concepts and valuation approaches by international valuation standards in line with the purpose of valuation.
How do you value machinery?
The Machinery Valuation study is carried out by a CMB Licensed Mechanical Engineer (Machine Valuation Specialist). It is important that the expert who will do the study handles many details and analyzes each stage carefully. Although it varies according to the purpose of preparing the report, the Machinery Valuation Study is generally carried out as follows.
First of all, machinery and equipment are examined within the scope of fieldwork, and their determinations and macro-micro identity information are obtained. Analysis of the data obtained in the field and their ownership status are examined. In valuation, appropriate methods from Market Approach, Cost Approach, and Revenue Reduction Approaches are used. Finally, the work done is reported.
What is the purpose of the valuation report?
Determination of the value of machinery and equipment that will be subject to collateral and pledge within the scope of the loan request
· Purchase and sale of machinery and equipment
· Financial Lease Transactions (Sell and Lease Back)
· Public Offering transactions
· Valuation of tangible fixed assets within the scope of IFRS and TFRS
· Insurance Value Determination
· Expropriation
· Valuation of tangible assets in case of company split, merger
As Asal Appraisal Co. you can contact us here for detailed information about our Machinery Valuation service.
9.1.2023
What is the Property Appraisal?
Before clarifying the subject of real estate appraisal or its widespread use and real estate appraisal/property appraisal, “What is valuation?” You have to answer the question. In its simplest sense, valuation is the work of appraising, determining the value of a commodity and appraising its value. Appraisers do valuation work.
What is Real Estate Valuation?
A real estate appraisal is the realization of the probable value appraisal of the relevant property at a certain date by independent and impartial real estate appraisers, based on independent, impartial, and objective measures. In summary, the real estate appraisal process is defined as the appraisal of the value of a real estate, real estate project, or the rights and benefits associated with a real estate, by choosing the most appropriate valuation method for the property, within the framework of certain laws and regulations, and accordingly preparing the real estate valuation report.
Who is a Real Estate Appraiser and What Does He Do?
Real estate appraisers are experts who are permanently employed in real estate appraisal firms or provide services on the condition of a contract. As a result of the exam organized by the SPL (Capital Markets Licensing Registry and Education Board, Inc.), one is entitled to become a real estate appraiser or a residential appraiser, provided that certain education and experience requirements are met.
Real estate appraisers and real estate appraisal companies are members of TDUB (Association of Appraisers of Turkey) in our country and can carry out their activities subject to the regulations of the CMB (Capital Markets Board) and/or BRSA (Banking Regulation and Supervision Agency).
How to Calculate the Value of a Real Estate?
While determining the value of the real estate, 3 main approaches are generally applied, namely the Market Approach, Cost Approach, and Revenue Approach within the framework of IVS (International Valuation Standards). To briefly mention these approaches.
Market Approach refers to the approach in which the indicative value is determined by comparing the asset with the same or comparable (similar) assets for which price information is available. It considers the sale of properties similar to the appraised property or relevant market data and does a valuation with a comparative transaction. Although it is also called the Peer Comparison Approach in the industry, in IDS 2017, 2020, and 2022 versions, it is presented as a sub-title, as a Market Approach Method as the Comparable Transactions Method.
The Cost Approach determines the indicative value by calculating the current replacement or reproduction cost of an asset and deducting any depreciation that occurs in physical deterioration and other forms. The cost approach is separated into three methods in IAS replacement cost method, reproduction cost, and collection method.
The Income Approach allows the indicative value to be determined by converting future cash flows into a single current value. In the income approach, the asset's value is determined based on the present value of the revenues, cash flows, or cost savings generated by the support. It is an approach in which the income expectation and potential of the real estate are associated with the value of the real estate. From a value-based perspective, the income approach is required to cover the amount and timing of all future cash inflows and outflows related to the subject asset.
7.12.2022