Applicability of Databases in the Real Estate Valuation Process in the Conditions of the Emerging Economy of the Republic of Moldova

The real estate valuation activity in the Republic of Moldova dates from 2002, with the adoption of Law No. 989 on Evaluation Activity. Nevertheless, the legislative and methodological framework is extremely limited. There are no national professional standards. Meanwhile, the situations that require real estate valuation are multiplying and diversifying. Therefore, the valuers apply the provisions of the International Valuation Standards (IVS) and of the European Valuation Standards (TEGoVA) adapting them to the national realities by virtue of their knowledge and experience. Information stored in databases plays an important role in the real estate valuation process. In this pa-per, the authors analyse the content of existing databases in the Republic of Moldova (the databases of normative documents, the information system for the cadastre of real estate, the statistical databases, and specialized databases), the quality of the included information, as well as the applicability of that information in the real estate valuation process. The disadvantages, limitations and shortcomings of databases are highlighted, and measures are proposed to increase their usefulness.


Need for Evaluation
The real estate valuation activity in the Republic of Moldova was formalized in 2002, with the adoption of Law No. 989 on Evaluation Activity [1]. The valuation may be voluntary or mandatory. The mandatory valuation is carried out at • expropriation for the cause of public utility of the objects of valuation; • taxation of property and forced collection of taxes; • reorganization and liquidation of state and municipal enterprises, and insol- The law also provides for the possibility of occurrence of other situations to be legislated. Evidently, the valuation can also be voluntary at the initiative of the beneficiary. The highest share of requests for voluntary valuations is for the valuations in order to guarantee loans (including for the insurance of the mortgaged/pledged assets), followed by consultations for negotiation of sale-purchase contracts, investment consultations, etc.
Over the last two decades, valuation activity has undergone multiple international changes and almost nothing nationally. The International Valuation Standards [2] after the 2000 edition, which was considered for elaboration of national normative acts, were modified and updated 7 times (in 2003, 2005, 2007, 2011, 2013, 2017, 2020 editions).  [5]. The only changes were in 2015 and only for the valuation methodology of securities valuation [6].

Shortcomings of the Legal Framework
The existence of a rudimentary methodological framework generates erroneous interpretations by specialists and misunderstanding of the created situations.
For example, in 2019 there was a requirement to estimate market rent for publicly owned land, but the normative-methodological framework of the valuation did not include the definition of "market rent" as a type of value (Table 1), and the methodology of its estimation was lacking.

Databases Used in Real Estate Valuation
Currently in the Republic of Moldova there is no methodological framework for assessing the value according to the purpose of the valuation. The particularities of real estate valuation for guaranteeing loans, financial reporting, insurance, etc.
are not specified.
These shortcomings and limitations are partially compensated by the existing databases. The main databases used by valuers are: 1) The databases of normative documents (the portal of normative documents in constructions) http://www.ednc.gov.md/ [18]; 2) Software packages WinSmeta and WinDox for calculating construction estimates; 3) The information system for the cadastre of real estate e-Cadastre [19] http://asp.gov.md/en/bunuri-imobile includes the legal, technical and economic aspects of the registered real estate; 4) The statistical databases provided by the National Bureau of Statistics (NBS) [20]  A specific feature of the Republic of Moldova is the use of regulations developed in the 70s of last century in the Soviet Union, which are still applied in the Commonwealth of Independent States (CIS). We refer to the Collections of the Combined Indices of the reproduction cost of all types of buildings, constructions, edifices existing in that period. There are 50 anthologies, which were digitized in order to simplify their use, and were transformed into an extremely important database for the valuation of the buildings built before 2000 [27]. Open Journal of Applied Sciences The applicability and usefulness of information provided by the existing databases in the framework of valuation approaches and methods is further examined in this article.
Thus, the information from the first two databases is applied within the Cost Approach to estimate the value of the construction considered new by the resource method. Those databases are completed and updated every six months. Problems arise in the case of valuating atypical and specialized constructions/ buildings, or those built according to new technologies, with the application of new construction materials. Moreover, it is problematic the valuation of historic buildings, because the existing regulations do not reflect objective reality. Updating the norms for construction estimates is cumbersome, it requires financial resources for development and involves a long approval procedure.
The e-Cadastre database includes the Real Estate Register, which covers [28] According to the legislation of the Republic of Moldova, the elaboration of the construction estimates is mandatory only for the objects financed from public funds. Since, for privately funded objects the elaboration of the construction estimates is of recommendation nature, in practice, it is not elaborated, using the direct negotiation of the final amount. Thus, in the valuation process neither the resource method can be applied, nor its derivatives the resource and index method and the basic index method.

S. Albu, I. Albu Open Journal of Applied Sciences
As the information required for the application of the methods specified in the Provisional Regulation [3] does not exist, the application of the cost approach becomes problematic for constructions built after 2000.

Conclusions: Solutions to Increase the Usefulness of Databases for Real Estate Valuation
The analysis of the information contained in the existing databases and applied in the process of real estate valuation in the Republic of Moldova revealed huge gaps that prevent the correct assessment of the value.
In order to increase the usefulness of existing information applied by valuers in the cost approach, it is recommended: • to update the norms for construction estimates (normative time for the performance of works, consumption of materials, type of materials used, technology applied, current prices), including for the rehabilitation and restoration of historic buildings; • to indicate in the legislation the mandatory elaboration of the budget estimates by the method of resources for the construction works regardless of the source of financing, this will also protect the consumer and avoid existing frauds; • to report the generalized information on the construction and the total estimated cost to the NBS, and based on the accumulated information to determine updated combined indices for the objects built in the 21st century.
In order to increase the usefulness of existing information applied by valuers in the market approach, it is recommended: • to require the mandatory registration of real estate transactions within a short time after the transaction is completed (for example 10 days); • to create a transaction database within the Cadastre Department of the Public Services Agency (PSA). The PSA already has all the information on the transactions, and it has to be digitized. It should be admitted that prices indicated in the contracts do not always reflect reality, although the trend of recent years confirms that more and more people understand the need to indicate the real price (especially in the case of mortgage).