Expert rating of appraisal companies. Robot opens an account

The rating agency RAEX (Expert RA) has compiled the ninth ranking of the business potential of the largest appraisal companies in Russia. It showed that this market is gradually emerging from the crisis. The brake on the development of the sector of these services may be a change in the rules of the game, and the driver may be the gradual return of business interest in investing.

The current edition of the ranking differs from previous ones in the principle of distribution of participants. Instead of one main list, two separate ones are now compiled - in one, organizations are ranked, and in the other, groups of affiliated appraisal companies. Among the reasons for revising approaches to compiling rankings is the gradually increasing role of the state in monitoring the activities of appraisal companies (see table “Ranking of the business potential of appraisal organizations in Russia based on the results of 2016”), which are the executors of appraisal orders, unlike groups and partnerships with a much wider profile of activities. As for the ranking of groups of affiliated companies (see table Ranking of business potential of appraisal groups in Russia based on the results of 2016), it allows one to obtain broader information about the scale of business of the structures that include appraisal organizations, and therefore about the potential for their development.

The total revenue of participants in the current ranking at the end of 2016 amounted to 5.5 billion rubles, which, according to comparable data, is 11.8 percent more than what they earned in 2015. Against the backdrop of official inflation of 5.4 percent, this is a very respectable figure.

Many orders for the assessment of large assets (especially state property) are carried out through tenders, where the criteria are price and deadline

It is too early to talk about the final recovery of appraisers from the crisis - the general economic situation is not conducive to solving the long-standing problem of dumping, which, according to the participants themselves, is distorting the market. “Many orders for the appraisal of large assets (especially for state property) are carried out through tenders, where the important criteria are price and time. The appraisal companies that offer the lowest price win. This leads to a decrease in the quality of services, because in order to fit into the budget, contractors hire students without experience, they do not conduct inspections, and so on. There are real cases when, after bidding, the price for services went even negative. Most likely, appraisal companies that do this may have a hidden interest, which the other party will pay for, which will lead to non-transparent and poor quality. assessment,” complains Irina Komar, vice-president of the SRO Union FSO and managing partner of the Professional Group of Appraisal company.

Points for assessment

Recently, the state has been closely involved in solving the problem of assessment quality. According to Law 172-FZ, adopted in June 2016, all appraisers are required to pass a qualification exam and receive the appropriate certificate by April 1, 2018.

Mandatory confirmation of status and qualifications, in theory, will increase the professional level of appraisers and will remove random companies from the market. In practice, appraisers are skeptical about these innovations. “The Ministry of Economic Development performs a duplicative function in terms of conducting a qualification exam in relation to the system of Independent Assessment of Qualifications, which has existed for almost 10 years within the framework of the SRO. Moreover, the standards for organizing and conducting the qualification procedure are significantly lower. The exam can be reduced to testing and memory testing, rather than knowledge, and even more so will not allow solving problems of professional ethics. This will not help clear the market of non-professionals and poor quality assessments,” says Irina Komar.

According to Kirill Kulakov, first deputy general director of the Center for Independent Expertise of Property (TSNES), in accordance with 172-FZ and the order of the Ministry of Economic Development of the Russian Federation, qualifying exams will now have to be passed every three years, and the unified appraisal profession will be divided into three areas - real estate appraisal , plant and equipment valuation and business valuation. These innovations can lead to an outflow of specialists from the industry, a redistribution of orders for assessment, a shortage of appraisers and a sharp increase in the cost of services. An increase in the specific volume of work will not always mean high quality work.

Immaterial forces

The largest share of the ranking participants' income traditionally comes from real estate valuation - almost half of their revenue is concentrated here (2.5 billion rubles). Market assessment of the value of real estate in order to challenge its cadastral price, as well as forensic examination of assessment reports, are still in high demand. “Changes in market value entail a stable demand for assessments in order to challenge the cadastral value of capital construction projects and land plots, as well as the work of appraisers in review commissions,” explains Daniil Slutsky, General Director of the company “Business Assessment and Consulting” (OBICS) .

Valuation of real estate is also in demand in asset purchase and sale transactions and remains relevant for the purpose of collateral when obtaining loans. “Banks are concerned about improving the quality of collateral portfolios due to the likelihood of the subsequent sale of collateral objects in the event of bankruptcy of debtors. The valuation of collateral is initially initiated by the customer who wants to take out a loan, but after the borrower is declared bankrupt, the bank raises the issue of valuation, for example, for the purpose of the subsequent sale of property,” adds Daniil Slutsky.

Another significant segment of income is the assessment of securities and businesses, from which the ranking participants earned 1.6 billion rubles (29 percent of total revenue).

“In our experience, most of the valuation of businesses and securities falls on raising financing and intra-group transactions. In general, on the market, the largest volume of valuation is done for banks, while the share of valuations as part of enterprise restructuring has recently increased,” says Arina Matveeva, partner of the NEO Center consulting group.

Other areas of work brought less noticeable income to the ranking participants. Thus, in 2016, the assessment of equipment and vehicles from the list participants accounted for 464 million rubles in revenue; slightly less - 477.5 million rubles - was brought in by work in the field of asset revaluation. Another 218.4 million rubles were added for the assessment of investment projects and 120.5 million rubles for the assessment of intangible assets and intellectual property.

According to the ranking participants, requests for assessment of the effectiveness of investment projects are growing. “The largest share of requests falls on the development of commercial real estate. In addition, our company took an active part in the development of methodological recommendations for assessing the effectiveness of investment projects for government agencies. The number of applications from innovative companies with unique intangible assets is also growing,” comments Alexey Savelyev, director of ABN-GROUP assessment.

He also draws attention to the shift in the interests of customers from traditional forms of collateral to intangible assets. “Today, more and more transactions involve the transfer of rights to a trademark and other intangible assets to the bank as collateral. There is a growing demand from clients for consulting services regarding the correctness of assessment, documentation, reflection of intangible assets in the financial statements, as well as in general, ways to include them in business turnover,” says Alexey Savelyev.

Interview with Vera Konsetova, General Director of the company "AFK-Audit"

Your company has long been one of the leaders in the appraisal services market. What are the advantages of your business?

Vera Konsetova:Our credo is continuous activity in all aspects related to the sustainable development of the company: activity in searching for new partners, entering new markets and industries, activity in communications with clients, and in developing our professional potential. In addition, our three pillars give us an advantage.

The first is the synergy that arises from the mutual support of the competencies of auditors, appraisers, lawyers, business analysts and marketers. All these professional areas are quite developed in our country; specialized consulting services are provided on their basis. For example, when implementing complex tasks in the field of business valuation, distressed assets, due diligence, cross-connection and joint work of such specialists provide the necessary effect - an accurate and effective solution to complex problems.

The second is the development of information technology, automation and knowledge management. Thanks to the accumulation of large amounts of verified information on the real estate market, as well as on many sectors of the real sector, we have created a database and database management system, this helps us carry out current tasks more efficiently and quickly. It is no secret that the key to the effectiveness of the work of consultants and appraisers is the completeness of information about the object and the availability of tools to verify its reliability and relevance.

And finally, the third one is competence. Today we are able not only to continuously support and improve the level of our employees, but also to be a source of information and knowledge for colleagues in the shop - appraisers and auditors, as well as our clients. Therefore, we are actively developing the AFK corporate university and all forms of training and advanced training within its framework. This gives an incredible impetus to both establishing new contacts with clients, generating new services, and increasing the reliability and quality of our services.

Vera Koncetova. Photo: "AFK-Audit"

For appraisal consumers, important criteria are the qualifications and experience of appraisers. How do you maintain the required level of competence of your specialists?

Vera Konsetova: We understand that qualifications in the future will become one of the main criteria for choosing a contractor. Therefore, within the framework of our corporate university, several programs have now been developed in three areas: valuation of machinery and equipment, real estate and business. And the majority of appraisers in our group of companies have already completed training in these programs.

Please describe the current state of the appraisal services market. What factors, in your opinion, favor the development of assessment and, conversely, what factors hinder the development of this segment of professional services?

Vera Konsetova: The development of the appraisal market is largely facilitated by the development of the companies themselves that order appraisal services. Currently, the management of many of our clients is solving increasingly complex problems. There is a growing need for in-depth analysis and assessment of problem objects, non-core and redundant assets, assessment for IFRS purposes is developing, and new objects for assessment are emerging - for example, social networks.

Development is hampered by insufficient regulation of the professional valuation activity itself, unfair competition, closedness and limited market information.

In your opinion, what significant changes have occurred recently in the regulation of the appraisal industry? What do assessment clients get from this and how does this affect the results of their activities?

Vera Konsetova: It's no secret that on July 1 of this year, quite significant changes to the legislation in the field of appraisal activities came into force, which require all appraisers to pass a qualification exam in their areas of activity. At the moment, it is not yet entirely clear how the procedure itself will be organized, but ultimately, in our opinion, customers will receive a more qualified, but also more expensive service.

The qualifications of the appraisers themselves are the cornerstone that determines both the problems and trends of the industry. Strengthening qualification requirements will streamline the market, leaving professional and reliable players in it.

Are clients' current valuation needs different from historical needs? What are the prospects for demand for the services of appraisal companies in the current economic situation?

Vera Konsetova: First of all, I would like to note that the customer has become more demanding and competent. Services for revaluing the value of collateral and assessing distressed assets on the part of banks, as well as assessment within the framework of procedures for challenging cadastral values, are still in demand, although the latter can no longer be called a growth driver.

And demand prospects may be associated with the analysis and assessment of non-core and redundant assets due to the presence of many enterprises with optimization programs for property complexes. In addition, our colleagues are seriously considering using assessment competencies in other consulting services, such as financial modeling, strategic and business planning, marketing, forensics, etc.

This year, the RAEX agency (Expert RA) has updated its methodology for ranking appraisal companies. How timely do you think these measures are and what assessments they can give to the market and its users?

Vera Konsetova: If we talk about the division into rankings of groups and individual organizations, then any clarification and detailing provides users with additional information and a more adequate understanding of the market participant. We hope that improving the methodology will have the same effect as changing the methodology for ranking audit companies and groups, namely, “cleansing” the ranking of nominal associations and distorted revenue data, and will also provide market participants with the necessary information about direct counterparties - companies providing appraisal services.

The RAEX rating agency has prepared the next, 15th annual release of rankings of the largest appraisal companies in Russia by revenue for 2018.
2019-09-29 | popularity: 992
The appraisal market in the country continues to stagnate - this is evidenced by the results of the annual ranking of appraisal companies in Russia, compiled by the rating agency RAEX (RAEX-Analytics) based on the results of 2018. The long-standing problem of dumping has not been resolved. Market players are kept afloat by real estate and business valuations, and development prospects are associated with the growing valuation of intellectual property and challenging cadastral valuations.
2019-09-29 | popularity: 587
The appraisal services market cannot overcome the recession. According to a study by AC Expert, its nominal total revenue decreased by 7% in 2018, taking into account inflation - by 12%. Market participants discussed the limitations and problems of the industry at a round table organized by the Expert AC and Expert-Ural in Yekaterinburg.
2019-05-18 | popularity: 788
The Expert Analytical Center presents its latest rating of auditing and consulting companies in the Urals and Western Siberia based on the results of 2018. We received questionnaires from 18 companies, 11 of them participate in five waves of the study in a row, their share in total revenue is 64%. “Rastam-Audit”, “2K”, “Accountant”, “Lev-Audit”, which missed last year, returned to the project.
2019-05-18 | popularity: 628
The appraisal market is adapting to new competitive conditions. The determining factors are the qualifications of the appraiser, his technical and information equipment and readiness for maximum automation of work.
The Expert Analytical Center has prepared an annual rating of appraisal companies in the Urals and Western Siberia. The total revenue of the 2018 rating participants decreased by 5.2% (here and everywhere below we compare with 2017, unless otherwise indicated) and amounted to 413.8 million rubles in nominal terms. Recalculation taking into account inflation of 4.3% gives a reduction of approximately 10%.
2019-03-30 | popularity: 1350
AC "Expert" has prepared an annual rating of appraisal companies in the Urals and Western Siberia. Nominally, the total revenue of study participants in 2017 increased by 2.8% to 394.9 million rubles, but taking into account inflation (2.5%) - only by 0.3%. Of the 20 companies (there were 25 in the previous rating), twelve ended the year with a positive outcome. The two largest players, Rastam and Expert-Evaluation, which in previous years accounted for almost a quarter of total revenue, did not participate in this rating. The Apriori group of companies, which closed the top three in last year's study, came out on top with a result of 13.5% of total revenue. In second position is the Tyumen “Association ALKO” (8.9%). The Metrix group of companies closes the vanguard (8.4%). The best in terms of revenue growth dynamics was Chelyabinsk Technocom-Invest - its revenue increased fourfold compared to 2016.
2018-03-29 | popularity: 1889
In addition to the global ranking of the 100 most valuable brands, Millward Brown produces industry rankings that include brands that are present in a particular market. These rankings may include brands that are not in the top 100 because they are priced below what is required to make the global list.
Rating based on market conditions as of May 2015
2016-02-05 | popularity: 3653
The latest ranking of the business potential of Russian appraisal companies, compiled by the rating agency RAEX (Expert RA), revealed a decline in the appraisal market - growth here does not even cover inflation. This pattern has been observed for the second year in a row.
2015-07-11 | popularity: 5344

AC "Expert" has prepared an annual rating of appraisal companies in the Urals and Western Siberia. Nominally, the total revenue of study participants in 2017 increased by 2.8% to 394.9 million rubles, but taking into account inflation (2.5%) - only by 0.3%. Of the 20 companies (there were 25 in the previous rating), twelve ended the year with a positive outcome. The two largest players, Rastam and Expert-Evaluation, which in previous years accounted for almost a quarter of total revenue, did not participate in this rating. The Apriori group of companies, which closed the top three in last year's study, came out on top with a result of 13.5% of total revenue. In second position is the Tyumen “Association ALKO” (8.9%). The Metrix group of companies closes the vanguard (8.4%). The best in terms of revenue growth dynamics was Chelyabinsk Technocom-Invest - its revenue increased fourfold compared to 2016.

A loan gives you a job

The leading position in the structure of total revenue of the rating participants is still occupied by real estate valuation (52.7%). The share of business and securities valuation accounts for 21.3%. Participants earned about 12% on equipment and vehicle valuations.

The high demand for real estate valuation is explainable: the constituent entities of the federation continue to switch to calculating property taxes for certain categories of legal entities based on cadastral value, and business owners, dissatisfied with the amounts, are trying to challenge these calculations. However, 4.2% less services were provided for assessing the cadastral value of real estate when it is contested, the share in total revenue decreased from 13.7% to 11.9%, in real estate valuation - from 23.9% to 22.6% ( hereinafter - comparison to the same period last year, unless otherwise indicated). The number of reports increased by 1.6%, but the average price of a report fell by 5.8%.

But the demand for business valuation for the purposes of bank lending, primarily in the mortgage segment, is returning. According to the Bank of Russia, in 2017, credit institutions in the Urals and Western Siberia issued 220.9 thousand mortgage loans totaling almost 360 billion rubles - an increase of 38.5%. The revenue of the rating participants for this type of service increased by 22.2% to 29.2 million rubles, while the number of reports decreased by 14%. The average price of the report rose by 42.1%.

Evaluation is born in dispute

Expertise in court, assessment of receivables, damage assessment and assessment of finished products, collected in the category “other situations” (34.3% of the total revenue of the rating participants), turned out to be the most in demand in 2017 - an increase of 38.9%.

Director of the Profit Center for Expertise Denis Syukosev notes an increase in the share of forensic examination in the total revenue of appraisers in property disputes. “Our company has increased the number of projects on forensic examination, cost consulting, reviewing reports and expert opinions,” confirms Egor Churin, General Director of the Invest-Audit company. “Disputes about the value of property are often resolved in court. The opponents’ points of view on the disputed value of the object are very far from each other, and the price of the issue can be high; the forensic appraisal procedure in this case is necessary to prove the value,” explains Director of Invest-Active-Evaluation Arthur Mosgold.

The second most popular set of services is assessment of the “current situation” (lending, insurance, rent) - its share in revenue is 31.4%, although demand fell by 11.7%. The demand for services for the evaluation of purchase and sale contracts decreased by almost a quarter. Revenue from valuation services aimed at organizing and restructuring a business increased 2.5 times, thereby reaching almost 8% of total revenue. Last on the list, as before, is the assessment for registration of privatization (1.2% of revenue), over the year the volume of revenue increased by 23.3%.

Back to school

Indirectly, the dynamics of income were affected by the complex procedure for passing the qualification exam: in order to prepare for it, company managers were forced to release valuable employees from fulfilling some orders. Conducting a qualification exam is another attempt by the state to restore order in the appraisal industry, getting rid of unscrupulous or illiterate representatives of the profession, and to eradicate dumping that has flourished for many years. A new filter has been invented for this purpose. To obtain the status of a member of an SRO and the opportunity to provide valuation services, you must pass an exam before April 1 of this year, separately in three categories - valuation of real estate, movable property and business valuation. After April 1, appraisers will be able to sign reports only in the area in which the certificate was received. Those who do not pass the exam are deprived of the right to provide assessment services for three years.

In the professional community, the attitude towards legislative innovation is contradictory. Among our study participants there are many who support change. Vitaly Shulgin, executive director of the engineering company Shulgin and Partners, sees the need for dividing appraisers into categories (movable property, real estate, business) as expedient: “In our practice, there have been several projects challenging reports on the assessment of intellectual rights performed by appraisers who specialize on determining the value of real estate. The picture was extremely sad: significant errors were already revealed in the preparation of the assessment task. With government innovation, the situation should improve radically.”

According to Alla Plesovskikh, executive director of EKO-N, preparation for the qualification exam revealed the strengths and weaknesses of the company as a whole and of each employee individually: “The fundamental changes in the requirements for appraisers helped us take a fresh look at the prospects for the development of our business areas.”

General Director of the Russian Standard consulting and analytical center Sergei Lobanov believes that the introduction of a qualification exam will contribute to the consolidation of assessment organizations.

General Director of 2K JSC Tamara Kasyanova sees both negative and positive sides in this: a reduction in the number of market participants will ultimately lead to an increase in prices for services, but at the same time quality will increase, dumping will go away, and responsibility for evaluation results will increase.

Vladislav Bakhtin, a leading assessment specialist for the Taxes of Russia association, sees behind the innovation a further increase in state pressure on the industry through excessive regulation: “The consequence is centralization, consolidation and displacement of regional companies by Moscow or St. Petersburg companies.”

Digital poses a threat

Forecasts for the development of the appraisal industry for the current year are ambiguous. Alla Plesovskikh believes that further changes in legislation in the field of regulation of valuation activities will greatly affect the dynamics of revenue: “A mobile response to legislative changes, as well as a strategy of reorientation towards forensic assessment, will help maintain positions.”

Executive Director of Apriori Group of Companies Galina Alibaeva is confident that the demand for services will depend on the state and pace of development of the real sectors of the economy, on activity in the lending system: “We expect an increase in capital investments in investment projects due to the obsolescence of fixed assets at enterprises, reorganizations in connection with the growth of benefits from the development of outsourcing. The participation of appraisers in these processes is objectively necessary.”

Chairman of the NP "Ural Chamber of Ready Business" Ilya Simkin finds the prerequisites for the further development of the market segment through the assessment of real estate (capital buildings) for the purpose of establishing a market value (less than the cadastral value) and reducing the tax base. In addition, in his opinion, due to the increase in litigation, the need for forensic examinations will increase.

General Director of ENSO Appraisal Marina Golovchenko believes that the dynamics of revenue of appraisal companies will be affected by a further increase in the number of bankruptcies (including bankruptcies of individuals) and tax disputes (including those related to the cadastral valuation of objects).

Meanwhile, in addition to standard external demand factors, new circumstances are beginning to influence the industry, in particular the advent of digital technologies. Many companies, primarily state corporations and large private holdings, already practice placing orders for independent assessments in the format of auctions on electronic trading platforms (ETP).

Ilya Simkin sees many disadvantages in this technology, despite its progressiveness:

This will affect the quality of reports for the worse, because in this case the main task of the “supplier”, that is, the appraisal company, is to receive a more or less large order for the minimum possible amount and do it in the shortest possible time, specified in the application for participation or in the tender documentation.

Information technologies are entering the industry under the influence of the activities of related segments, in particular banks. Thus, Sberbank has already begun to look for solutions to use artificial intelligence for real estate valuation. Arthur Mosgold believes that the experiments may well result in practical results:

To do this, it is necessary to find ways to cheaply train the appropriate neural network for evaluation activities. All technologies that can replace the work of an appraiser are currently known. Modern automation is capable of collecting the necessary information from relevant sites, storing and systematizing it; process images of analogues and the object of evaluation; if necessary, even make a voice call to the representative and recognize his answers.

So in the future, the development of machine learning is quite capable of leaving some appraisers unemployed.

The Expert Analytical Center has prepared an annual rating of appraisal companies in the Urals and Western Siberia. According to the study participants, their total nominal revenue for 2017 increased by 2.8% and amounted to 394.9 million rubles. But taking into account inflation, which amounted to 2.51% at the end of 2017, the dynamics are only 0.3%.

Of the 20 participants in the rating (25 companies were represented in the previous rating), twelve ended the year in the black, while the rest experienced a decrease in income. This year, the two largest players in the region’s appraisal market did not take part in the study: RASTAM and Expert-Evaluation, which accounted for almost a quarter of revenue in previous waves. The Apriori Group of Companies, which closed the top three in last year's study, came out on top this year, accounting for 13.5% of the total revenue of the ranking participants. In second position is the Tyumen company “Association ALKO” (8.9%). The Metrix Group of Companies (8.4%) closes the top three. The leader in terms of the rate of increase in income was the Chelyabinsk company Technocom-Invest - the company’s revenue quadrupled compared to 2016.

The leading position in the revenue structure of the rating participants at the end of 2017 is still occupied by real estate valuation (52.7% of total revenue). The share of business and securities valuation accounts for 21.3% - the second largest share in the revenue structure of the companies in the rating. Participants earned about 12% from evaluating equipment and vehicles.

The high demand for real estate valuation continues to be driven by challenges to its cadastral value. In 2017, the companies that took part in the rating provided services for assessing the cadastral value of real estate when it was disputed by 4.2% less than the year before. The share of services in total revenue from appraisal services decreased from 13.7% in 2016 to 11.9% in 2017, in real estate appraisal - from 23.9% to 22.6%, respectively. The number of reports prepared increased by 1.6% compared to 2016, but the average price of a report decreased by 5.8%.

The assessment situation is better in mortgage lending: revenue increased by 22.2% compared to 2016 and amounted to 29.2 million rubles, but the number of reports decreased by 14.0%, respectively. It should be noted that the average price of the report increased by 42.1%. At the same time, the volume of mortgage lending is growing: according to the Bank of Russia, in 2017, credit institutions in the Urals and Western Siberia issued 220.9 thousand mortgage loans to individuals for a total amount of almost 360 billion rubles, which is 38.5% more than a year earlier.

In terms of assessment purposes, the most in demand in 2017 were services related to the assessment of “other situations” (forensic examination, damage assessment, etc.) - they accounted for 34.3% of the total revenue of the rating participants (an increase compared to 2016 amounted to 38.9%). In second position are services related to the assessment of the “current situation” (lending, insurance and rent) - 31.4%, while the demand for these services over the year decreased by 11.7% compared to 2016.

Compared to 2016, the demand for services for evaluating purchase and sale contracts has fallen by almost a quarter. Revenue from valuation services aimed at organizing and restructuring a business increased 2.5 times, thereby the share of services almost reached 8% in the structure of total revenue. Privatization closes the list as before (1.2% of revenue) - over the year, revenue increased by 23.3%.

Methods and information

The rating of appraisal companies in the Urals and Western Siberia (Sverdlovsk, Chelyabinsk, Orenburg, Kurgan, Tyumen regions, Perm Territory, the Republics of Bashkortostan and Udmurtia, Khanty-Mansiysk and Yamalo-Nenets Autonomous Okrug) was prepared by the Expert Analytical Center. The research is based solely on information officially provided by companies (questionnaire). The absence of a company in the tables may be due to the fact that it did not disclose data. The correctness of the information is guaranteed by the signature of the first person and seal, as well as the financial statements of the organization. Foreign companies, due to the various forms of formation of branches, cannot always confirm data with financial documents, so their data is certified by the signature of the first person and seal. The main criterion for ranking participants is the company’s revenue from the provision of appraisal services for 2017. The company, whose parent organization is registered in the Ural-West Siberian region, provided data on all enterprises. If the parent company is registered outside the region, then data on branches and representative offices in its territory were taken into account.

The latest, tenth edition of rankings of appraisal companies in Russia, compiled by the rating agency RAEX (RAEX-Analytics), revealed stagnation in income growth in this market. The demand for mass types of assessment and its cost are falling, and new large-scale niches that can expand the market are not yet visible. On the contrary, people - the further, the more - will be replaced by information technologies, which are already capable of assessing standard objects.

The total income of the largest Russian appraisal organizations participating in the current ranking amounted to 5.929 billion rubles at the end of 2017, having increased by 2.4 percent over the year. If we adjust for inflation (2.5 percent per year, according to Rosstat), we observe complete stagnation in this market. Let us remind you that in last year’s edition of the ranking we recorded more rapid growth rates of its participants - in 2016 they amounted to 12 percent with inflation of 5.4 percent.

Among the factors that caused such a slowdown in the appraisal market are the general investment and economic background (GDP growth at the end of 2017 was 1.5 percent), a decrease in the cost of appraisers’ services, and in some cases, the demand for them. The total number of assessment reports based on comparable data from the reporting participants amounted to 122.2 thousand, an increase of 10 percent over the year - that is, the volume of work performed in 2017 grew much more than the corresponding income. As a result, of the hundred companies participating in the ranking, almost half (40 companies) ended the year with a decrease in revenue.

There is no reason to expect a sharp change in market development. Moreover, the demand for mass assessments will begin to decline over time. This will be facilitated by the development of information technology with the gradual displacement of standard IT-based assessment work. Already today they are used by appraisal customers, for example, banks, as well as appraisal companies themselves.

Qualified stripping

One of the main events for the market over the past year was a change in the rules of the game associated with amendments to the law on valuation activities (172-FZ), which came into force in the summer of 2016. Starting from April 2018, the subject of appraisal activities is an appraiser who, in addition to membership in the appraisal self-regulatory organization, as was previously the case, must have at least one qualification certificate in the area of appraisal (real estate/movable property/business), obtained as a result of passing a special exam. You will need to take qualifying exams every three years.

Mandatory qualifications are intended to confirm the professional status of the appraiser and remove random players from the market. “The tightening of requirements for appraisers is due to distrust of the appraisal community on the part of appraisal consumers. To clear the market of non-professionals, the Ministry of Economic Development introduced a qualification exam,” explains Irina Komar, managing partner of Professional Appraisal Group LLC.

Infographics "RG": RAEX / Vladimir Kuznetsov

However, appraisers themselves perceive the legislative innovation ambiguously. “The introduction of qualification certificates made it possible to clear the market of fly-by-night companies and “dead souls”, as well as to reduce the number of SROs, which, in competition with market leaders, were forced to “trade” positive conclusions. But for appraisers, the exam procedure is stressful, because preparing for it takes away a lot of time. In addition, many exam questions and tasks have nothing to do with practice, and the wording itself is often confusing, and dividing certificates into three areas is costly for appraisers,” complains Daniil Slutsky, CEO of Business Assessment and Consulting. (OBICS).

And Dmitry Kuvaldin, Chairman of the Board of Directors of the RUSSIAN ASSESSMENT company, believes that the tightening of requirements for appraisers - individuals is primarily a consequence of the fact that legal entities that actually provide appraisal services are practically excluded from the law about appraisal activities. “The regulator over and over again tries, as they say, to “look under the lamp, and not where it is lost.” That is, “under-regulation” of legal entities leads to “over-regulation” of individuals. It would be much more useful for both suppliers and customers of appraisal services do not introduce more and more new requirements for appraisers, but legislate the principles of qualifying selection of appraisal companies. After all, it is obvious that selection based on the minimum price and time for providing services leads to a decrease in quality, no matter how qualified the performers are,” says Dmitry Kuvaldin.

Real estate fades into the background

The decline in dynamics in the appraisal services market is largely due to trends in the real estate appraisal sector, which over the past year, despite a formal growth of 1 percent (to 2.4 billion rubles), declined after taking into account inflation (see Charts 1 and 2).

The ranking participants explain this by the development of their own practices for the valuation of collateral and assets among the main customers of valuation services - the largest banks and corporations are switching to internal valuation for their own needs, creating corresponding divisions in their structures. “Many banks do not prepare a full-fledged Valuation Report in accordance with the norms of 135-FZ and FSO. In practice, they draw up a so-called short “judgment on the value of the collateral”, which, according to formal criteria, is not subject to official examination by SRO appraisers and which is often not at all is provided to the borrower, since it is internal in nature. Thus, in the appraisal segment for collateral purposes, appraisers can only cooperate with those banks that continue to use the results of independent appraisals in their work through pre-selection or accreditation of appraisal companies,” explains Kirill Kulakov, First Deputy. General Director of LLC "Center for Independent Expertise of Property" (CNES).

The indicators of the “real estate” sector were also influenced by the fact that the state cadastral valuation of real estate is now carried out only by specialized state budgetary institutions. “In accordance with 237-FZ, independent appraisers retain only the right to participate in procedures for challenging the results of determining the cadastral value by establishing the market value of a property, including as forensic experts,” adds Kirill Kulakov.

The qualification certificate will remove random players from the market

The further, the more standard mass assessment procedures use, as the ranking participants note, information technologies. It is no secret that the assessment of, for example, apartments in order to identify the cadastral value is, in most cases, the collection of information on the cost of similar objects from open sources, followed by its systematization and the introduction of minimal correction factors. Not the most complex program can handle such work.

As the analysis of the ranking shows, things are a little better in the business and securities valuation sectors (1.8 billion rubles, an increase of 5 percent over the year). But revenue from the evaluation of investment projects increased over the year by only 1 percent (i.e., adjusted for inflation, it went negative), to 231.9 million rubles.

The composition of the most financial customers of appraisal work remains quite stable - these are large businesses, state and quasi-state companies. “In the corporate sector in 2017, the growth of the valuation market was associated with the de-offshorization of the economy, challenging the results of cadastral valuation, property transactions, purchase and sale of businesses. In the public sector, the valuation of assets for privatization is in demand. In addition, the implementation of infrastructure projects requires valuation for the payment of compensation to rights holders when seizing assets. Such large-scale projects as the construction of the Power of Siberia gas pipeline, the reconstruction of the road transport network in Moscow, and the construction of the Central Ring Road cannot be implemented without the preliminary work of appraisers,” explains Roman Chibisov, General Director of Swiss Appraisal Russia and the CIS.

According to Garegin Grigoryan, General Director of the Center for Corporate Solutions company, development projects in the capital region and large cities of Russia also showed demand for assessment in 2017: “In Moscow, most of the projects were related to the development of residential areas of industrial zones. Also a contribution to the assessment was given by venture projects. Assessment of investment projects is necessary for the distribution of investors’ shares at the stage of initial financing, subsequent additional financing and upon exit from the project. Assessment is also required for investors to monitor the progress of the project.”

Infographics "RG": RAEX / Vladimir Kuznetsov

Intelligence pledged to offshore companies

Other areas of valuation work brought less noticeable income to the ranking participants than in the valuation of business and real estate, but showed rapid growth. In 2017, the valuation of equipment and vehicles from the list participants accounted for 524.9 million rubles, the growth rate was 14 percent.

Increased demand in this segment is associated with an increase in the volume of non-core property of banks - they open showcases of collateralized property or sell it at electronic auctions. “You can buy a car or other equipment that is pledged through an auction or auction, when the bank and the debtor sell the property before the accounts payable appear; or in court, when enforcement proceedings have already been opened against the debtor; or from the bank’s property register (in ownership the bank transfers the property not sold at the auction). movable property under agreements with the largest banks: Sberbank PJSC, VTB Bank (PJSC), as well as for Rosagroleasing JSC,” Natalia Almazova, General Director of the company “ADN Consult - International Center for Valuation and Financial Consulting,” talks about growth factors.

A little less, namely 500.8 million rubles, was brought in by the work of appraisers in the field of revaluation of fixed assets, but the increase in revenue here was 19 percent. Market participants associate it with requests for this type of assessment from the financial sector. “We see increased interest in appraiser services from banks and other financial organizations. This is due to the actions of the Bank of Russia aimed at increasing the transparency of the financial system. Thus, banks bring their balance sheets and the balance sheets of controlled entities (for example, closed real estate mutual funds) into compliance with new regulatory requirements. In addition, banks continue to get rid of problem assets inherited from bankrupt borrowers, which also requires a revaluation of fixed assets and claims,” says Pavel Lazarev, general director of the appraisal company LL-Consult.

As for the valuation of intangible assets and intellectual property, here, despite the smallest amount of revenue (196.4 million rubles), last year there were the highest growth rates - a record 49 percent. “The development of the intellectual property market has an impact on the income of appraisers. For example, the Federal Law of July 18, 2017 N166-FZ encourages owners to legalize and more actively put intangible assets on their balance sheets, which in turn leads to their more active involvement in economic turnover. This leads to an increase in demand for the valuation of intangible assets,” says Sergey Silantyev, director of the VIP client department at Price Inform.

Another factor stimulating demand, according to Alexey Zhuravlev, CEO of Everest Consulting, is the process of deoffshorization. "By returning assets from offshore companies, Russian companies increase their balance sheet currency, which has a positive effect on the investment attractiveness and rating of companies. In addition, the growth of the information technology market, the emergence of new software products and the need to carry out procedures to protect intangible assets also have a positive effect on this area of assessment. Growth in This in the structure of our company’s revenue is due to the fact that, having extensive experience in the field of valuation for IFRS, we have accumulated an extensive portfolio of projects on the distribution of transaction prices in the M&A market. An integral part of these projects is the identification and valuation of intangible assets,” Alexey shares his experience. Zhuravlev.

Interview with Roman Chibisov, General Director / Russia and CIS Swiss Appraisal

A significant legislative norm for the appraisal industry has become the requirement that appraisers have a specialized qualification certificate. What, in your opinion, is connected with the tightening of requirements for subjects of valuation activities? What are the main objectives of introducing a qualifying examination?

Roman Chibisov: Over the past decade, the number of certified appraisers in Russia has increased significantly. The fact is that yesterday’s student has only basic knowledge and often lacks practical skills, but according to the law, they could immediately begin to put them into practice by joining an SRO and insuring their professional activities. To make the industry work more efficiently, the Ministry of Economic Development introduced a qualification exam, as well as a requirement to have at least 3 years of practical appraisal work experience. On the one hand, such a requirement increases prestige and respect for the profession. The goals of introducing a qualification exam are to restore order in the market for appraisal services in the field of business and investment projects, reduce the number of non-professional appraisers, increase the responsibility of the professional community, combat unfair appraisals, increase the status of the appraiser profession, and finally, eradicate the practice of dumping in asset valuation.

Roman Chibisov, General Director of Swiss Appraisal/Russia and CIS. Photo: Provided by the press service of Swiss Appraisal/Russia and CIS

But on the other hand, such close attention to a specialist not only bureaucratizes the process of becoming a “full-fledged” appraiser, but also shows the regulator’s distrust of his professional opinion. For example, abroad, in addition to the professional skills acquired during training and practice, appraisers are guided by strict standards and ethical norms, knowledge of which is included in the condition of passing the exam. At the same time, Western certification is a bonus for the reputation of the appraiser and the company in which he works, but is not a prerequisite for conducting business.

In my opinion, a competent appraiser is not one who can answer questions in a qualifying exam, similar to passing a session at a university, but one who understands the market as a whole, knows what methods and approaches to use, how to effectively build a financial model and how to correctly come to the results of the value of the object of assessment.

What professional standards is the qualification exam based on and what areas of assessment does it cover? Does the implemented qualification system correspond to the global assessment market? What certifications today allow an appraiser to carry out orders from foreign companies, including when working outside the Russian Federation? What benefits does the appraisal customer receive by seeking the services of a certified appraiser?

Roman Chibisov: The Russian qualification exam for appraisers currently exists in three areas - business valuation, movable and immovable property, and also requires knowledge of laws and regulations, methods and technologies for conducting valuations and calculations. It is still premature to compare the Russian and, for example, Western qualification systems, since the first is being created at the present time, and the second has existed for decades. In countries with developed market economies, professional communities of appraisers have authority, reliability and status, and a high level of professional requirements, for example, in the USA it is The American Society of Appraisers (ASA), in the UK it is the Royal Institution of Chartered Surveyors (RICS). They are trusted by the business community and government agencies, their qualifications are confirmed by cooperation with banks, insurance companies, non-state pension funds, and the judicial system.

In Russia, trust in appraiser communities is at a low level both on the part of regulators and on the part of customers. The topic of organizing professional communities and committees, as well as legislation in the field of valuation activities, is in constant change, which also reduces the dynamics of development of the industry in the country. From the point of view of doing business and transactions, today it is not so much the appraiser’s certificate that is important, but professionalism in solving the goals and objectives of the appraisal, although undoubtedly, turning to a certified appraiser for the client reduces risks, since he has legitimacy in the market. Usually this is a company with a long history and a high reputation in the market, and most importantly, it is a working practitioner, not an armchair theorist. As a result, the customer receives a reliable supplier.

Roman Chibisov: De jure control over the appraiser is exercised by an expert council. De facto, the main control over the function of appraisers is exercised by the customer - the bank and its regulator, the Central Bank, insurer, lessor, tax authorities, Rosimushchestvo, forensic expert, and other users of the appraisal report.

In your opinion, despite the differences in the purposes of assessment within which it is carried out, what are the main factors over the past year and now that determine the demand for assessment? Who is the main customer of assessment today - the state or the private sector? What services are mostly in demand from them and why?

Roman Chibisov: The Russian office of the Swiss appraisal company Swiss Appraisal has clients from large businesses and state and quasi-state companies - their shares in the project portfolio are approximately equal. It can be noted that in 2017, the drivers of growth in the valuation market in the corporate sector were associated with deoffshorization of the economy, challenging the results of cadastral valuation, property transactions, purchase and sale of businesses. In the public sector, asset valuation for privatization purposes remains. In addition, infrastructure project delivery processes require evaluation to compensate rights holders when assets are repossessed. Such large-scale projects as the construction of the Power of Siberia gas pipeline, the reconstruction of the Moscow road transport network, and the construction of the Central Ring Road cannot be implemented without the preliminary work of appraisers and the preparation of the necessary documentation and reports.

What innovations in legislation or changes in the economic situation could you associate with the demand for business and stock valuation, valuation of intangible assets and intellectual property, valuation of investment projects?

Roman Chibisov: As part of several projects, we assessed the company's software for inclusion in the authorized capital as an intangible asset. In the future, the development of technologies and Internet models, I think, will lead to an increase in cost, and therefore the assessment of software in the field of security of IT technologies, financial and banking processes, money transfers and payments, and various technical platforms and Internet resources.

Give examples of the largest projects that your company implemented last year or continues to implement today? What does your customer get from their implementation?

Roman Chibisov: In 2017, appraisers from the Russian office of Swiss Appraisal worked on projects in the fields of construction, fuel and energy, IT and mechanical engineering. Among the interesting projects, I can mention the field of shipbuilding - we assessed the cost of sea vessels as part of leasing transactions at the construction stage, which made it possible to competently carry out the procedure for registering collateral and obtaining government funding. And, for example, in the fuel and energy complex we assessed assets in a purchase and sale transaction of an energy business, including 14 thermal power plant facilities for Kuzbassenergo; as a result, a complex transaction with a large number of assets was completed. Finally, in our international practice, we conducted a resource assessment for the international divisions of the largest Russian metallurgical company in West Africa and South America.

Please evaluate the prospects for the transformation of valuation activities under the influence of advanced information technologies. What solutions and innovations are you familiar with? Does this trend correspond to global trends? In your opinion, how can “digitalization” affect the quality of assessment?

Roman Chibisov: Today it is impossible to imagine the daily work of the team and each employee without new technologies, devices, programs for transferring and storing data. The realities of our time are the active development of digital technologies, in which the creation of cloud solutions and computing, a multiple increase in data volumes, the use of gadgets in the corporate sphere and promotion, customer service and in project processes will have a decisive impact on business.

At Swiss Appraisal we make the most of the opportunities provided by our international technology platform. Our clients and partners have the opportunity to gain competitive advantages through speed and professionalism, as well as the active use of a large accumulated array of data. Thus, the development of databases and cloud solutions contributes to the efficiency and speed of our work; we can confidently compete with other companies in the cost consulting market in Russia and abroad.

Development of the appraisal services market in Russia

Kirill Kulakov, First Deputy General Director of Center for Independent Expertise of Property LLC (CNES)

LLC "Center for Independent Expertise" (CNES) is one of the leading Russian companies providing a wide range of services in the field of valuation, cost consulting, investment design, judicial, legal, construction-technical and cost expertise, financial and technical supervision and construction audit.

For the high quality of services and significant contribution to the development of valuation and consulting activities, CNES has been repeatedly awarded a number of professional awards: Golden LOGODA, Golden Equivalent, Golden PerOO, Gold Medal and Gold Certificate UNIPRAVEX Uni, National Award in the field of audit, valuation, examination and consulting.

First Deputy General Director of TsNES, member of the Council for Valuation Activities under the Ministry of Economic Development of the Russian Federation, Doctor of Economic Sciences, Professor at Moscow State University of Civil Engineering, Kirill Yurievich Kulakov answered our correspondent’s questions and spoke about the main trends in the development of the valuation services market in Russia.

Kirill Yurievich Kulakov. Photo: Provided by CNES

In your opinion, what factors have contributed to the decline in revenue in the appraisal segment over the past year?

Kirill Kulakov: Rather, it is not a decrease, but a lack of growth in these incomes. This was due, first of all, to the ongoing post-crisis situation, as well as the difficult foreign policy situation, during which the economic activity of most business processes and investment projects was significantly reduced, especially in the private sector of the economy. The main customer for assessment services in such conditions becomes the state, which pays, although steadily, but not much.

In addition, the market for appraisal services itself is shrinking. Many of the largest banks and corporations have also switched to the so-called. "internal" assessment for their own needs, creating appropriate units in their structures. Or, for example, the state cadastral valuation of real estate will now be done not by independent appraisers, but by specialized state budgetary institutions.

Thus, in these sectors, appraisers can only examine reports prepared by banks and challenge the results of cadastral valuations?

Kirill Kulakov: Banks that have switched to the so-called "internal assessment" will not prepare a full-fledged Assessment Report in accordance with the norms of 135-FZ and FSO. In practice, they draw up the so-called a brief “judgment on the value of the collateral”, which, according to formal criteria, is not subject to official examination by SRO appraisers, and which is often not provided to the borrower at all, because is internal in nature. Thus, in the appraisal segment for collateral purposes, appraisers can only cooperate with those banks that continue to use the results of independent appraisals in their work, through the preliminary selection (accreditation) of appraisal companies.

As for the scope of cadastral valuation, then, indeed, independent appraisers retain, in accordance with 237-FZ, only the right to participate in procedures for challenging the results of determining the cadastral value by establishing the market value of the property, incl. as forensic experts.

When will the state carry out the next work to determine the cadastral value of real estate? Should appraisers then expect a wave of demand to challenge the cadastral value?

Kirill Kulakov: Work on the next (new) state cadastral assessment is already being carried out in several constituent entities of the Russian Federation, incl. in Moscow and the Moscow region, and will be completed before the end of this year. Some constituent entities of the Russian Federation, for example, the Krasnodar Territory and the Kaluga Region, have already published reports on determining the cadastral value.

Taking into account the fact that all previous estimates of cadastral value had a trend toward an increase in the final indicators, then with a high degree of probability this can be expected now. And since the real market value of real estate has practically not increased in recent years, and in some regions has even decreased, the demand from taxpayers for dispute services can only increase.

An exception may be individuals, for whom a law will soon be adopted to reduce the tax base by 30%, as well as to freeze the growth rate of property taxes at no more than 10% per year.

It is also worth noting that, unfortunately, the new cadastral assessment does not take into account the fact that the results of the previous assessment were contested. The cadastral value of all objects is again calculated using mass valuation methods, without any adjustments. It turns out that some kind of cyclical error occurs, which the taxpayer encounters again and again. If it were eliminated, there would be significantly fewer disputes.

What areas of assessment over the past year and now were most in demand from the government customer? What determines the need for services in these areas?

Kirill Kulakov: At the level of the central bodies of the federal executive power and the largest state corporations, there is a demand, first of all, for the assessment of blocks of shares for the purposes of privatization, purchase and sale, additional issue, and contribution to the authorized capital. The assessment of large property complexes and fixed assets is also in demand.

At the municipal level, the state most often orders the assessment of rental rates, as well as the assessment of individual, small-sized real estate objects for the purpose of priority purchase by small and medium-sized businesses. In large cities there is also a share of assessments of rights to implement investment and construction projects on municipal lands.

If we talk about the private sector, what types of assessments showed the most significant demand last year and why?

Kirill Kulakov: Last year, as in the year before, the greatest demand was for the valuation of real estate in order to challenge their cadastral value and, accordingly, reduce the amount of property taxes, as well as for valuations commissioned by government bodies, state corporations and natural monopolies for the purposes of privatization, purchase sales, leases, contributions to the authorized capital, additional issue of shares, etc.

What development prospects do you associate with these areas for the coming year?

Kirill Kulakov: The volume of assessment services for government needs will remain approximately at the same level, but some increase is possible. This is due, first of all, to the mandatory assessment of government facilities. In addition, the state continues to increase its influence and control in almost all sectors; the majority of large and especially infrastructure projects are carried out by order or with the participation of government agencies.

As for services for the purpose of challenging the cadastral value of real estate, in this segment there will be an expected pause of one year, and in some regions for a longer period, associated with the next state cadastral valuation (GKO). At the same time, this GKO will be carried out according to new rules in accordance with 237-FZ, namely, not by independent appraisers, but by specialized state budgetary institutions. And the potential volume of services for challenging the cadastral value in subsequent years depends on how correct the results of the said state tax bill turn out to be.

Kirill Kulakov: It influences in different directions. On the one hand, this leads to faster document flow between appraisers and customers, as well as the search for the necessary information for assessment. On the other hand, this trend may eventually lead to the replacement of the classic appraiser with some kind of IT application, at least in the segment of assessing similar or simple objects. By analogy with a taxi, there will be a certain Yandex appraiser that will answer the question faster and cheaper: “how much does the object cost?”

What are the most important regulatory and legislative changes in valuation activities that you would note in terms of their impact on the development of the valuation market?

Naturally, the most important change that has occurred recently in appraisal activities is the requirement for all appraisers to pass qualification exams in three areas. After 04/01/2018, an appraiser who fails to pass the appropriate exam loses his professional status. Currently, out of 23 thousand appraisers who are members of the SRO, approximately 10 thousand people have passed the exam, i.e. about 40%. In a number of regions, there has begun to be a shortage of appraisers, especially business appraisers, and some appraisal firms are ceasing to provide services in one or another area of appraisal. Moreover, several SROs of appraisers may cease to exist, whose members may therefore temporarily lose their professional status.

All of the above will lead to a certain concentration and even greater centralization of the market for appraisal services, as well as self-regulation in the field of appraisal activities. Small and many regional appraisal companies, as well as SRO appraisers, will have to merge with the largest representatives of the market to maintain their status and the ability to function in the future.

What do you think is the reason for the tightening of requirements for subjects of valuation activities? What are the main purposes of requiring a qualifying examination?

Kirill Kulakov: The state has long wanted to bring order to valuation activities. In fact, this is what the evaluation community itself wanted, although not using exactly the same methods...

The results of the activities of appraisers are involved in most of the most important economic government processes, projects and transactions. In recent years, a social component has been added to this in the form of property taxation of individuals and legal entities. Unfortunately, the model of regulation and responsibility of independent appraisers that existed until recently practically did not work. The low quality and sometimes the “custom” nature of many assessments has led to distrust of appraisers both by the state and by many customers. In this situation, the state decided, without reinventing a “new wheel,” to clean up the market for appraisers through an examination filter, as it had already done with auditors and cadastral engineers.

Another question is that the exam itself will not solve the above problems of appraisal activities... A systematic and comprehensive approach is needed, moreover, controlled not by the state, but on the basis of SRO appraisers. Otherwise, the institution of self-regulation will be practically overthrown and there will be another return to state regulation and licensing.

What professional standards is the qualification exam based on, what areas of assessment does it cover?

Kirill Kulakov: Questions from the general and theoretical parts of the exam are based, naturally, on the current Russian legislation, incl. 135-FZ and Federal assessment standards. The nuance is that the same legal issues clearly fall outside the normal range of functioning of the appraiser and do not even fall within his jurisdiction and area of responsibility. The same can be said about a number of theoretical questions that sometimes have a highly specialized focus, rarely encountered in practice, for example, knowledge of the characteristics of pastures in the Far North, etc. Many practical tasks are also divorced from real practice and, in fact, are aimed at testing readiness for a purely mechanical, template calculation, without checking the real level of professionalism and erudition of the appraiser.

The qualifying exams themselves are taken in three areas: real estate valuation, movable property valuation and business valuation. At the same time, the regulator (the Ministry of Economic Development of the Russian Federation) has not yet given clear explanations on the distribution of the most common types of valuation objects in these areas, for example: rights of claim, bills of exchange, property complexes, lost profits, damage, etc. This can cause certain problems with significant consequences for both appraisers and clients of the appraisal. After all, an Appraisal Report signed by an improper appraiser may be considered void and, accordingly, this may lead to the nullity of the transactions themselves and other processes.

Please rate how close the Russian qualifications system is to world practice in the field of assessment? Will other qualifications be introduced depending on the area of assessment, for example in the field of assessment of intellectual property and intangible assets?

Kirill Kulakov: This system with three types of written test exams, which also must be retaken every 3 years, is far more distant than close to leading world practice. Both in RICS and TEGoVA, entrance tests consist of several stages, each of which is clearly regulated and, most importantly, has a specific practice-oriented nature. Thus, at the initial stage, the level of education, length of service and actual work experience in the relevant field are analyzed. Next, the examinee prepares several real cases, with various practical situations and tasks. The final stage is an oral examination-interview, which is assessed individually by a panel of three (at RICS) experienced examiners within one hour. At this exam, the applicant for membership answers questions about himself, questions on prepared cases, as well as questions on knowledge of organization standards (for example, Red Book RICS), incl. ethical standards and evaluation standards. And such an exam is taken only once, after which you only need to annually collect a certain number of hours of advanced training, moreover, at various professional events, and not just in educational institutions. As we can see, this model of entrance tests to the profession is more adapted to practice and reveals the real knowledge of the applicant.

In the Russian Federation, in fact, a new system of independent assessment of professional qualifications in accordance with 238-FZ should also be fully operational in the near future. In addition, this system will apply to almost all industries and professions in the Russian Federation, incl. and for appraisers who, since 2015, have their own professional standard “Specialist in Appraisal Activities.” According to this standard, the qualifications of appraisers will be confirmed at 8 levels with corresponding sub-levels, depending on the category of complexity of the objects being assessed, as well as the set of professional functions performed. And the process of assessing qualifications will be very similar to world practice and will include both a theoretical exam and the implementation of practical cases and the preparation of sample reports.

In this regard, it remains a particularly pressing task to synchronize the current system with three compulsory examinations with the future system of independent assessment of qualifications. These systems should complement each other, and not contradict or mislead consumers of appraiser services.