VII Report of the Azerbaijan Appraisers Society ...

The Report presented by the Chairman of the ASA to the VII Report-and-Election Conference of the Azerbaijan Society of Appraisers

Dear conference participants, colleagues, guests and media representatives!

On the initiative of legal and natural persons engaged in valuation activities, economic scientists in December 1998, the Azerbaijan Society of Appraisers  (ASA) was established and registered in the Ministry of Justice in February 1999. At present, many appraisers of the republic, legal and physical persons with great experience in the field of valuation are members of the Azerbaijan Society of Appraisers .

The purpose of the establishment of the Azerbaijan Society of Appraisers  is to create a civil market of valuation services in the territory of the Republic of Azerbaijan, to help the activities of specialists engaged in the appraisal of various types of property, to protect their professional rights, to protect their professional interests and to help raise the level of their qualifications. In order to realize this goal, during the past period, the ASA, together with state bodies, other public associations, and international organizations, has implemented the development of projects and programs, national valuation standards in accordance with international and European standards, holds trainings, conferences, seminars, briefings on improving the qualifications of appraisers, solves numerous problems of valuation activities, learns and shares international valuation experience.

During its activity, the Azerbaijan Society of Appraisers  cooperated with other Associations of Appraisers, including Belarus, Russia, Moldova, Kazakhstan, Kyrgyzstan, etc. various meetings, scientific-practical and international conferences were held with the participation of representatives of appraisers' associations of various countries. Important issues such as the preparation of the development concept of valuation activities in Azerbaijan, the improvement of the quality of conducted valuation work, the preparation of the appraiser  certification system, the preparation of documents on the development of national valuation standards and the normative-methodical basis of valuation activities were discussed at these meetings.

Training of appraisers, wide application of the procedure for certification of their activity is one of the important issues at this stage. Establishment of the "appraiser certification system" of ASA since 2008 with the support of the International Finance Corporation is an example of it.

Currently, ASA closely cooperates with associations and societies of appraisers of the Russian Federation, Moldova, Belarus and other countries, as well as with international agencies of appraisers and realtors.

As you know, membership in various public associations by increasing the level of professionalism of appraisers confirms the ability to obtain the necessary information, they get the right to issue on behalf of these unions and use their logo and name. At present, the work on membership and cooperation with the International Valuation Standards Council of ASA is about to be finalized. ASA develops and approves methodological tools, normative acts, conducts seminars and trainings for its members. The purpose of the society is to increase the professionalism and support the activities of specialists who are engaged in the valuation of various types of property.

One of the main functions of ASA is to develop and regularly update valuation standards and ethical code of conduct for appraisers. For this purpose, the National Valuation Standards developed by ASA have been in force since 2009. However, currently the National Valuation Standards had expired and need to be updated.

In addition to the activities listed above, ASA has also been inactive or weak in various periods in the past. I would say that the reason for this is that there are more objective reasons rather subjective. Perhaps the first of those objective reasons is the fact that the legislative framework, which is the main regulator of valuation activity, that is, the Law "On AR Valuation Activity" adopted on June 25, 1998, cannot meet the current requirements. For your information, this Law was adopted in Azerbaijan for the first time in the CIS in 1998. Even though the relevant Law was adopted in the Russian Federation after 8 months, the Law was amended and changed about 15 times in the past period that as a result, the Law has completely lost its original content. Some articles of the law adopted 20 years ago do not meet the requirements of existing international standards or the ability to control this professional activity is limited. From this point of view in 2013, the Azerbaijan Society of Appraisers  prepared a new draft Law of the Republic of Azerbaijan "On Appraisal Activities" and submitted it to the Milli Majlis for consideration, and sent a copy to the Cabinet of Ministers of the Republic of Azerbaijan. This draft law has been reviewed by the government of the Republic and a number of executive structures, and we have not received an answer to date. The new draft Law, which consists of 7 chapters and 32 articles, fully complies with European Standards and meets the reality of the day. Thus, unlike the previous Law, the new draft Law is systematic, fully reflects the duties and obligations of market participants, and gives them independence in their activities. I am very sorry that we have not been able to get answers to our repeated requests until today. From this platform, I once again appeal to the relevant authorities on behalf of the ASA board for a positive solution to this issue.

The valuation market has been operating in the country for 20 years. Of course, this period is not long, but not short. The work done is not less, but not too much. Much more could be done during this time. There is a sufficient base for this - international and Russian experience, and it would be possible to benefit from it. As a result of the work that was not done during this period, unprofessionalism is now rampant in the valuation market, and more than that , they continue to strengthen their positions. The market is full of risks, the number of adventurer continues to increase, and independent valuation organizations suffer from all this.

But what is the reason?

1. Although valuation organizations have formed legally established, self-regulating Union, their activities are not fully regulated within the framework of this Union, and many of them operate scattered by making independent decisions;

2. The mechanism of certification of appraisers has been developed, but here, too, a unified position has not been established;

3. Appraisal organizations do not have a centralized database, and therefore different appraisers prepare reports in different formats with different approaches;

4. Guidance documents were not developed and distributed by the ASA and the links between the organizations are very weak;

5. A set of regulating documents has not been developed by the ASA and it does not have a mechanism of influence on other market participants;

6. ASA works poorly with the public and especially with the media and fails to communicate the necessity of its product to market consumers.

Of course, many of them can be listed. But what are the ways out:

1. The role of ASA and Member of Parliament, professor Kh. Kazymli in the creation and development of the appraisal market in Azerbaijan is undeniable. However, today the activity of ASA is not enough. This gap should be filled, and relations between the Society and the Appraiser should be established bilaterally and multilaterally;

2. At least in the capital, a close cooperation of valuation organizations should be established and their activities should be regulated. Without such real unity, all documents accepted will remain on paper;

3. Several business clubs should be created with the participation of the financial market, other market participants and appraisers, and through these clubs, strengthen the relations between the real estate market participants and activate the market in full force;

4. It is necessary to complete the processing of the documents accepted and guided by the valuation in the international markets, to organize their dissemination and study, and later to demand at the public and official level;

5. To activate work in the public sector and establish close relations with mass media;

6. Prepare appeals to official state institutions, commercial banks, and other credit organizations and establish a unified action mechanism by inviting them to comply with the valuation standards and regulatory laws in this field;

7. Clarify the boundaries of activities between audit organizations and valuation organizations operating in the country and establish business relations;

8. Organize a joint tour of active participants of the valuation market to foreign markets within the framework of projects;

9. ASA should protect the rights of market participants and, in particular, valuation organizations, as well as ensure equal and free competition among them;

10. Should organize ongoing training courses and ensure the status of certificates to be issued.

After the completion of all these works, in the 2nd stage, focusing on other more global issues, they should be resolved:

• To develop the legal and regulatory bases of the service in the valuation market;
• To ensure the development of theory, methodology and practical processes in the valuation process;
• Work on the programming of the entire valuation process by applying complex approaches to valuation and various economic-mathematical models;
• To ensure the continuous training and improvement of the qualifications of professionals;
• Achieving the preparation and systematization of market data depending on the purpose of the property;
• Continuous organization of scientific seminars, conferences, and meetings on actual problems in valuation activities.

Finally, I want to emphasize that 2018 should be a turning year in the activity of ASA. We have a lot of work to do. I would like to list the main ones:

• As stated above, additional measures should be taken by us for consideration of the draft law in the Milli Majlis;
• National Valuation Standards have expired and must be updated;
• The statutes of the ASA do not meet modern requirements, changes to the statutes have already been prepared, they should be addressed to the relevant institutions;
• A register of valuation companies operating in the country should be maintained, regular joint work should be established with them;
• In order to solve the issues proposed in the new charter in the activity of ASA, the solution of financial problems should be on the agenda of all appraisers;
• Appraisers and company managers should not have the main goal of getting a certificate, but instead, appraisers should have knowledge that meets modern requirements;

In carrying out the activities provided for in the action plan of ASA, all company managers should take the basis of their activities and support the common work.