Today new economic environment, which has elements that are at the stage of formation and research, is being formed for all economic market participants and citizens. First of all, it concerns the real estate knowledge system which is connected with people activity in different business spheres, management and organization.

In this paper we present the decision of actual task, namely, property value modeling in conditions of recession.

Today we can find three costing methods of property value. However, any of them doesn`t take into account economy recession (dollar cost increase, reconsideration mortgage) and market equilibrium condition.

We can forecast, analyze the factor impact on property value, etc. with the help of developed model.

1. mathematical models of property value, which include the recession period.
2. factors ranking, which has impact on cost formation.
3. use of fuzzy logic apparatus for performance evaluation [7],[10].

Costing method selection is very important for getting fair and exact property value.

There are three costing methods of property value:

1. Cost method
2. The method of direct comparative analysis of sales.
3. 3. The income approach

Comparative method

The method of direct comparative analysis of sales is based on the rest on premise that all parties on the market implement purchase and sale deal resting upon the same dealing information. It follows that we have at the root of this method the assumption that every rational customer won`t pay more for put up for sale realty as he can find identical one in quality and availability.

Principal stages of real-estate evaluation with the help of comparative approach:

1. On the first stage we study market position and development trend, especially of those element to which belongs given item. We draw out those property which is the most associated with estimable sold recently.
2. On the second stage we gather and check information as for similar object. The collected information is analyzed and each similar object is compared to estimable one.
3. On the next step we make allowances in sale prices of comparable objects.
4. On the last stage we concerted corrected price of similar objects and derive total market value on the basis of comparative method.

We should take into account that functions of estimated items can have different principle [1]. Some of them are really additive. But most of amendments have multiplicative character, i. e. it`s a the product index not an adding to fixture cost [2]:

C_k (t, p_i) = A_k (p_i) * G(t) + Bk (p_i)

Где C_k (t, p_i) – unit square price (m2) of any apartment at a time t;

A_k (p_i), B_k (p_i) – describe multiplicative and additive topical adjustments,

G(t) – describe input of global business factors.

The income approach

The income approach is based on the foresight principle. An investor or customer buys real estate with a view to earn future income or profit. In other words, the project cost is defined as earning power in the future.

Discounted cash flow method is built upon turning of the future holding estate incomes into current cost [8]. It is used for present value determination of future income which focused on disposal and property sale.

We have three stages of cash payments on the lines of discounted cash flow method [4]:

1. The forecast of future income stream (withdrawal) and assumed resale of property (reverter), even if there is no selling in real.

2. Calculation of discount rate.

3. Future cost reduction of cash flow to the current one with the use of interest multiple technique.

We can use by way of valuation:

1. Net profit

2. Cash flow (before taxes& after taxes)

There is great inflation influence in Ukraine, that`s why calculations are made on the basis of adjusted data for inflation rate.Inflation rate is accession price rate over a period. We use the next formula:

r_p=(r_n-i)/(1-i)

где r_p – actual discount rate;

r_n – nominal discount rate;

i – rate of inflation.

Calculation of a discount rate.

Appraisingly the property we settle discount rate by accrual method. Riskfree rate of earnings is taken as basis to which we add the margin for risk of investment into market niche and a correction for illiquidity. Evaluator can insert additive adjustment taking into account nature of property. Final stage calculation of the discount rate is correction for unmarketable products. We can use various discount rates making the discount of money flows and future value back mutation. Reduction of future cash flow cost to current using techniques of compound interest.

Discounting is based on the usage of compound interest formula.

PV=FV/(1+r)n=[1/(1+r)n]*FV

где PV – current cost;

FV – future value;

r – discount rate;

n – periodicity;

1/(1+r)n – present value ratio.

Cost method

Cost method relies on research of investor consequence at the moment of real estate acquisition. It assumes from investor prudence, i.e. he pays the fair sum for property which is equal to relevant one for building construction in the nearest future without essential expenses. The result of this method is objective findings in the context of possibility to evaluate quantity of value and depletion of object providing relational demand balance and market supply realty.

Cost method provides valuation of object reproduction new cost increased by market-value land with net depletion [3].

Principal stages in given method:

1. Calculation of acquisition value of unoccupied and at the command land for the purpose of optimal utilization.

2. Calculation market-value of building for getting reproduction cost of object.

3. Sizing the manual, functional and external depletion of object, equipping and machinery.

4. Decrease of current cost by sum depletion for getting depreciated reproduction cost of object.

5. Adding of cost land to calculated depreciated replacement cost of building.

Also we can count project cost by formula:

где B – project cost in totality;

V_j – volume j-ro part;

C_j – unit value extent;

n – amount segregate objective

Кн – index, which considers available difference between estimable object and selected typical building (for identic object Кн=1);

Ки – index, considering aggregate wear.

1. We made analysis of factors which influence on the property value.

2. We made comparative and detailed analysis of existing costing method of property value.

3. We made ranking using multichain set of key factors working upon property value.

4. We built trial version of model and apprised efficiency of developed model