WHO APPRAISES PROPERTY?

DIANA LOBZHANIDZE

Today a total cost of large objects or any other property displayed for privatization is a subject of intrigues. Since property tax becomes effective on January 1, determination of our property cost will be a matter of principle. In the whole world this issue is not solved without professional property assessors.

Even a little bit important deal or agreement such as sale and purchase of an enterprise, real estate, car or intellectual property, etc. can not be made without them. As it is said, everything has its price in this world and someone should fix the price. Such “exotic” profession as assessor appeared in the 90s of the XXth century in post-soviet space and much earlier abroad. Unlike our country, this business is fast developing and very profitable in Russia. Nowadays, more than 8 thousand property assessment companies with billions of dollars annual turnover are registered in Russia.
In Russia demand for this profession appeared after the law on state and municipal property privatization had been elaborated. The law was passed in summer 1991. At that time the principal ideas of attracting assessors during privatization process were formulated. According to the law, de-nationalization of an enterprise provided for obligatory property assessment.
However, there was no need for assessors in Georgia neither during nor after privatization. Privatization was performed in accordance with book value. No one was interested in paying the real cost. As far as we know, some large objects were privatized through friendly ties and connections. Property assessment institution should be established now that we claim to real privatization. Assessors should assess the real cost of objects.
Due to the lack of legislation, this business started so to say “illegally”. Now that our country transits to real market mechanisms some people got very much interested in the real cost of their own or other’s property for sale or purchase; and naturally, assessors have appeared. As professionals say, there are quite high-level experts in Georgia. Work in this direction started, but there is only lack of legal framework. In general, property assessment such as for instance personal property: flat, private business, etc. was not based on real market price excluding cases when property was bought by a private proprietor. Yet, in such cases with there being no open public market and despite the fact that it was private property bought by private proprietor, price was fixed on occasion. Now there appears a notion of property tax and insurance that will provide stimulus for the formation of property assessment market.
The state embarked on last privatization phase. Naturally enough, there arose a question of how real a selling price is. If it is an unreal price, we will again have inefficient management and we will not achieve production increase. On the other hand, most enterprises have turned into scrap metal. At first glance, this or that enterprise can be gigantic, but its real cost is low. Property assessment institution is necessary from this point of view, too.
When speaking about tax on private property, we come to the conclusion that property should be assessed by a licensed assessor. Certainly, there will be no result if licensing goes the way it was before when some limited liability companies attached to city municipal bodies and in fact representing persons who act in agreement with land registration and survey administration allegedly operating as private companies and accepting private orders. This should be an absolutely free market accessible to each professional that wishes to undertake responsibly for assessing property. There is tax on sale and purchase of property in notary offices amounting to 2% of property cost. Absurd as it might seem, but in fact a notary assesses the cost of this or that flat.
Besides, there appeared a notion of zones: Vake is one zone, Saburtalo is another, etc. Real estate has quite different price in this zone, but we do not take into consideration the fact that due to the building quality and other characteristics the price of a house in “good zone” Vake might be far from reality costing much cheaper than for instance a house in Varketili if we do not take into account the cost of land.
Regulation of this sphere is not possible. It should be self-regulating and absolutely free one. When a person expresses the wish to work in this business and meet specific criteria, nothing should stand in his way. Otherwise, we will face corruption source again.