What does the mass valuation of your home change? The debate between officials and appraisers

What will the mass valuation of your home change? Debate between officials and appraisers

Kun.uz organized a debate on mass real estate valuation involving officials and independent appraisers. The debate was attended by Feruz Sultonov, Deputy Director of the National Center for Mass Valuation of Real Estate; Botir Karimov, Department Head at the Center; Zebuniso Isanova, Chairwoman of the Society of Appraisers of Uzbekistan; and Shuhrat Abduvahobov, a member of the Society's Board of Directors.

The discussion raised questions regarding the legal status of mass valuation results, the concept of "value close to market price," the coefficients used in the valuation, and the ability of property owners to appeal.

As Feruz Sultonov explained, the results of the mass valuation are not intended as a value that directly determines compensation when real estate is taken for public needs. It can serve as an information source for preliminary calculations and estimates.

The representative of the Center stated that the current procedure for compensation will be maintained, and if one of the parties does not agree with the result of the mass valuation, an independent appraiser may be involved.

"In the 'demolition' process, based on the mutual agreement of the two parties, the same procedure as the current one will be followed," Sultonov said.

According to him, if the property owner and the second party agree on the value determined in the mass valuation, they can also make payments based on it.

Shuhrat Abduvahobov objected to this very approach. In his opinion, relying solely on the agreement of the parties in the matter of compensation is not enough: the law on the acquisition of land for public needs provides for separate losses that must be covered.

Along with the value of real estate and land rights, the appraiser also mentioned perennial trees, lost profits, and relocation expenses. He stressed that mass valuation does not cover all these factors.

"Because the mass valuation results do not fully cover the objects of compensation, applying it would be incorrect," Abduvahobov said.

Thus, while officials described the mass valuation as a preliminary guide for compensation, appraisers stressed that the limits of its application must be clearly set out so that it does not replace the final calculation.

Regarding buying and selling, Feruz Sultonov stated that the mass valuation will not be a mandatory price for the owner and the buyer.

"It does not set any restrictions on buying and selling. It is not a mandatory rule," he said.

According to his explanation, there is no requirement to sell or buy a property valued at one billion sums for that exact amount. The mass valuation allows the citizen to know the approximate value of their property, and the buyer to estimate in advance how much money is needed. The state, on the other hand, will have the approximate value of the real estate stock by region.

The appraisers' objection was focused on how clearly this explanation is expressed in the draft law. Shuhrat Abduvahobov noted that Article 12 of the draft law specifies that the results can be used for executing real estate transactions, taxation, and other purposes established by legislation.

In his view, "real estate transactions" is a broad concept: it includes mortgages and other relations along with buying and selling. For this reason, it is necessary to clearly define where the value is mandatory and where it is advisory.

The appraiser explained that an owner's attitude toward the same value changes depending on the purpose for which it is used. A value lower than the market price may be preferable for taxes, while in receiving compensation or contributing property as a share to a company's charter fund, a lower value is likely to work to their detriment.

Abduvahobov also suggested clarifying the provisions in Article 11 of the draft that state the results are "advisory in nature" and "considered a priority" in cases directly provided for by law.

Zebuniso Isanova stated that experts' objections should be taken as professional proposals aimed at improving the draft law.

"Attention should be paid precisely to the proposals submitted by expert appraisers based on a professional approach," she said.

Sultonov said that the clause on not restricting the agreement of the parties in buying and selling had been included earlier, and the relevant sentence might have been omitted in the version presented to the public. He expressed readiness to review the final draft together with the appraisers.

According to the representative of the National Center for Mass Valuation of Real Estate, one of the goals of the system is the fair distribution of the tax burden. It is envisaged that these differences will be taken into account when taxing property that is more expensive due to its location and infrastructure, compared to property in an area with limited opportunities.

However, Sultonov emphasized that establishing the procedure and amounts for applying valuation results to taxation is not within the Center's mandate.

"In which area it should be applied, in which area it should not be applied, what percentage or in what procedure it should or should not be applied in a certain area—this does not fall within our competence," he said.

According to him, mass valuation itself does not mean a multiple increase in taxes. Before applying the results in practice, it is necessary to study the results of the pilot project and improve the system.

Appraisers, on the other hand, stated that the purpose of applying the results should be clear from the start. Zebuniso Isanova stressed that any valuation must be directed toward a specific purpose.

Shuhrat Abduvahobov noted that while a property owner is not obliged to participate in a purchase, sale, mortgage, or insurance transaction, they do have a tax obligation. In his opinion, the scope of application of the results should be determined based on identifying the processes that create the need for mass valuation. He said that such data could also be used in planning renovation programs and preliminary calculations of necessary funds.

The Center explained that mass valuation does not involve entering every apartment to inspect its actual renovation condition. Properties are valued based on available data, brought to an average renovated state. In an individual valuation, the property is inspected directly on site. According to Feruz Sultonov, it is precisely because of this difference that the result is referred to as a "value close to market price."

Zebuniso Isanova stated that the place of this term in the field of valuation needs clarification.

"There are only two types of value in the valuation field: market value and non-market value," she said.

Isanova raised the question of which of these value types the result determined in the mass valuation falls under. Abduvahobov stressed that there is a definition of market value and standards for determining it, and the very concept of "close to market" itself relies on market value.

The debate also discussed the discrepancy between listed prices and actual transaction values. Sultonov said that over 100,000 offered listings and more than 85,000 notarized purchase-and-sale transactions in Tashkent over the course of a year were studied. He explained the 30–40 percent discrepancies mentioned in the discussion as the difference between the asking price and the final selling price after bargaining.

Abduvahobov, however, stressed that amounts in notarized contracts do not always reflect the real selling price, and that an adjustment for bargaining is also taken into account in individual valuations.

At the end of the discussion, Shuhrat Abduvahobov drew attention to the procedure for reviewing appeals from property owners dissatisfied with the results. According to him, a commission chaired by the director of the Center reviewing objections to a value calculated by the Center itself raises questions regarding objectivity.

"If the same commission itself reviews the value of a property it evaluated to re-check it, the approach itself is a bit wrong," he said.

The appraiser also asked for clarification on how the result would be taken into account if the property owner provides an independent valuation report. These questions remained without detailed discussion during the debate. Representatives of the Center invited the appraisers to jointly review proposals regarding the draft law and methodology.

Issues such as the limits of applying mass valuation, the calculation of coefficients, and the appeal review mechanism remained open for future discussions.