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(English) The Appraiser’s Role in Today’s Real Estate Transaction

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16 comentarios
  1. Geo Gervasi
    Geo Gervasi Dice:

    While I agree and applaud most of the article Al, I completely disagree with your analysis of listing/pending/sold comps as to the market incline or decline. Many listings are overpriced and therefore in my analysis, hold little or no weight in value/market determination. And, as far as pending sales go, 15% to 20% of pending or UC properties wind up canceled or denied. The pending/UC metric is unreliable in my 9 years of valuation experience. I examine local micro economic indicators and data to determine specific market performance as well as overall macro pictures that influence price and value. I usually ignore listing/UC prices, unless they are very realistic- and those are few and far between in my markets and areas of CNJ/NNJ.

  2. Brenda
    Brenda Dice:

    Do you have an opinion about VA appraisals. As a real estate agent who has been dealing with appraisals on all different loans, VA, FHA, Conventional. I have found the VA appraisals to be especially low. I was just wondering your thoughts on this?

    Thanks for the article…we have seen this problem in the Charleston area. We have a new Boeing Facility, which is bringing in many new transplants for jobs. And we are stabilizing in the under $400,000 range. However, foreclosure are still a problem. Although, the foreclosures are being absorbed quickly, if priced right.

  3. David Mott
    David Mott Dice:

    The topic of “cost to build” never comes up in the appraisal process, although it is a tool of the appraiser (I saw this on an appraiser’s form). What hurts the market the most is an appraisal that comes in lower than the cost to build (and purchase the property).

    Whether it’s a city property in a subdivision, where you have basic water, sewer, power, phone, cable, etc., all connections right at the street, or especially if you have a property in the county where you have to put in a driveway, septic system, well, and pay for power poles and transformers, etc., the cost to build should reflect these items in addition to the actual cost of the home.

    Additions, improvements, outbuildings (like a garage), as well as neglect could adjust the price accordingly.

    Outside of this cost to build value is possibly the greatest variable, and that is the location and or size of the lot.

    In my opinion, after the cost to build approach is used to derive the actual value of the main structure (the underwriter’s target), then lot value could be determined by the neighborhood or vicinity. If an acre is $100 or $100,000, it should be reflected in the appraisal.

    Apartments and condos should not be used to comp single family homes and vice versa.

    Last but not least, if the appraisal is significantly different than what the county has appraised the property for, or what the insurance company has the property appraised for (rebuild rate), then a flag should be thrown.

    Not using the cost to build approach has killed the construction industry. Why would anyone in the industry bother to build anything if it is not cost effective? If the appraisal comes in lower than the materials list alone to build a structure, how on earth can the labor cost be justified?

  4. Brian
    Brian Dice:

    David, it sounds like you have not actually looked at many appraisals. The cost approach is widely used as one approach to value. Apartments and condos are never used as comparables for single family detached homes (fee simple) or vice versa. The market does not care if a builder can’t build and make a profit. the market only cares about the principle of substitution, as Mr. Wagner described. That is why we have seen so little new construction in many area of the country over the last few years.

  5. Larry
    Larry Dice:

    David Mott: in reference to what you wrote. You can not possibly be a real estate professional, am I correct? It may do you well to help your frustration to talk to a real estate professioanal to get a handle of your thinking about real estate and the way things really work. You are all mixed up when it comes to this topic.


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  1. […] don’t have the fine details of the surrounding sales to incorporate into their final report. The Appraiser’s Role in Today’s Real Estate Transaction is the topic of a recent post on the KCM Blog, as written by a real estate appraiser. The appraisal […]

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