Appraisal Articles 2018 Free Appraisal Articles for Appraisers and the Public
Automated Valuation Models (AVMs) are everywhere on the Internet, they display your property value with a click of the mouse, and many assume that the value indication that they display is a reliable indication of market value, it's not. If you can accept a value opinion that may be off by 15% or more, then an AVM may work for you, but if you really need accuracy, an appraisal is the only reasonable way to go.
A number of states have implemented, or are in the process of adopting, laws that prohibit the improper influence of real property appraisers through coercion, extortion or bribery when the appraisal is ordered in connection with a mortgage. Laws of this type are welcomed by appraisers, many of whom are pressured to "make the numbers work" after they have accepted an assignment.
Appraisers try to compare properties using uniform measurements, and area is an important physical characteristic of a property compared when land or buildings are analyzed. Land area comparisons appear to be simplistic, until you consider why parcels sizes vary.Most parcels of vacant real property were subdivided, based on the U.S. Department of the Interior / BLM rectangular survey system, from square mile, 640 acre Sections to 320 acre half-Sections to 160 acre quarter Sections to 80 acre, 40 acre, 20 acre, 10 acre, 5 acre, 2.5 acre down to 1.25 acre parcels. These parcels sizes, deemed "gross acreage" by the following Clark County definition, are often affected by survey adjustments, roadway dedications, utility easements and other factors and these parcels can be reduced dramatically in size prior to their becoming "ripe for development."
Until you have been involved in a litigation case that deals with the measurement of buildings you won't begin to appreciate just how little attention is often paid to the measurement process by builders, assessors and appraisal professionals.Problems can begin to crop up when people reference plans, marketing brochures prepared by builders, assessment information and other secondary sources and assert that they are accurate. They may have been sold the building based on a representation made by the builder or the party reselling a building.
HVCC (Home Valuation Code of Conduct) being implemented on May 1, 2009 residential real estate appraisers are about to enter a new business environment. Gone are many of the neighborhood mortgage brokers with whom appraisers used to work. Here are new AMCs (Appraisal Management Companies) that are gaining control over the supply side of the appraisal market, and of course most of these firms have their hand out for a portion of the appraisal fee.
Appraisal management companies or AMC's have effectively become a subsitute "third-party" in the appraisal ordering process. Many financial institutions have started using AMC's in an attempt to distance themselves from being accused of appraiser influence. Unregulated AMC's could, however, become involved in any number of acts that could influence appraisers or bias appraisal results. In my opinion, AMC's should be held to a high standard, and they should be willing to take responsibility for their actions.
Since federally insured lenders now often don't need a full appraisal report, demand has strengthened for broker price opinions (BPOs) in many states. Appraisers have seen real estate agents getting valuation work that they assumed would belong to them, so a move is on to find an appraisal product that will allow appraisers to compete for the work.
Most appraisal assignments direct the appraiser to form an opinion of the market value of a specific property. If you are familiar with appraisal definitions you know that most market value definitions indicate that market value is the “most probable price” that a market participant will pay for a property. So in most instances appraisers have to consider value as an anticipation of future benefits.
After the Savings and Loan crash in the late 1980's, appraiser licensing was put into place in 1991 by the federal government in an attempt to avert another banking disaster. Here we are, however, in 2009 with a much larger banking disaster to deal with. So clearly the original plan for appraiser licensing has ended in failure.
You finally received that appraisal report you ordered and guess what, the value isn't what you expected it would be. It's higher or it's lower and you just can't believe that the appraiser could conclude a figure so far from your expectations. This "value shock" happens regularly and appraisers often hear words of disbelief from their clients and others who receive copies of their reports. Appraisers are, however, generally prepared to defend their value opinions to their clients.