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Appraisal Articles is an Internet website dedicated to providing free information in the form of articles on appraisal and real property / real estate topics to appraisers and the public.  Authors are invited to contact us and submit related original articles for approval. 

Appraising Water Treatment Plants and Power Generating Facilities

by Administrator on May 25, 2016 Public / Private Utility Appraisals 6 Views

Many appraisers are never given the opportunity to appraise a water treatment plant or a power generating facility since many are publicly owned and they don't often transfer ownership but there are times when even the government or a private utility owner need a property valuation. Water treatment plants and power generating facilities are "going-concerns,' and thus the properties include a real property value and a value associated with their business entity, but the business entity value is usually nominal. Properties of this type are capital intensive and rates are often regulated. Does that mean that these facilities don't provide good returns? No. As evidenced by the recent acquisitions of major utility companies by prominent investors it is anticipated that utility companies currently provide and will likely in the future provide a reasonable return.

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Using Ratios and Multipliers in Appraisals

by Administrator on May 23, 2016 Narrative Writing 9 Views

It's not news to most real property appraisers that discovering every possible indicator of value can get you closer to a credible market value opinion. We all know that we consider all three appraisal approaches to value but when buyers and sellers use ratios and multipliers like; floor-area-ratio (FAR), land-to-building ratio, gross income multiplier (GIM) and capitalization rates appraisers must know what's being considered. While ratios and multipliers are usually considered "simplistic" by appraisers they can at times provide an indication as to whether a property is comparable with its peers. Of course there are lots of variables related to the figures being reported like accounting methods and expense manipulations that can skew ratios and multipliers. Ratios and multipliers also tell you only about a property as of a single moment in time and they also do not consider risk or returns over time.

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Preparing for an Appraisal Inspection

by Administrator on May 10, 2016 General Appraisal 25 Views

I'm always struck by how many people run to make the bed as I start taking interior photos of their home. I guess many homeowners and renters don't realize that appraisers must actually view and usually have to take photographs of the rooms in their home. I always tell them, because it's true, that I'm not looking at their bedding and the clothing that are sometimes scattered on the floor, I'm looking for cracked walls, water damage and deferred maintenance which usually are things that can't be fixed an hour or two just before the appraiser arrives and definitely not when I have arrived. I'm also looking at the overall condition of the building improvement but that usually means things like roofing, exterior paint, flooring wear, water damage, the condition of interior walls, kitchen cabinets and fixtures. Also important are the site improvements and whether the property is well-kept. If you collect old auto or parts I’m usually going to reduce the value to have a clean-up to br

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What Happens to Leases When a Property is Sold?

by Administrator on May 8, 2016 Real Estate 25 Views

Leases are contracts that encumber a property even after a real property is sold. So if you acquire an industrial building that is already leased and the lease allows five options to the tenant for 5 year for each option the tenant has rights to rent the building for at least 25 more years. So if you think you are going to purchase the building and eject the tenant you are in for a big disappointment. Why would an owner give a tenant renewal options that can continue to control the use of a property over a 25-year term? There are a number of motivations. Some tenants have to make significant tenant improvements. A dentist for example may want to make improvements that cost hundreds of thousands of dollars and they can't make them if their lease will expire after 3 to 5 years.

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Reviewing Appraisals from India

by Administrator on May 6, 2016 International Appraisal 23 Views

I guess that I have inadvertently been drawn into the international appraisal world by accepting an assignment to review appraisal reports completed in India on real properties located in India. I have never been to India, but I am not reviewing the accuracy of the market data used in the reports. I'm looking at how the reports deal with basic appraisal concepts, and suggesting how they can best be revised or changed to address USPAP 2016-2017 requirements. So far I have seen some important appraisal keywords and concepts used in appraisal reports from India like "fair market value" but the terms are used without their definitions included as required in the U.S. by USPAP. If you don’t detail a “fair market value” definition you may find that it has many different meanings. I was also struck by the fact that there was no discussion in the reports about basic appraisal theory and process. Nothing was in the appraisal reports about the three (3) approaches to value, scope of work,

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