The Value of an Appraisal

Markets improve, sometimes after years of price decreases and long periods of flat, stagnated prices.  It's the kind of change that real estate investors and speculators wait patiently for.  If you want to make money in real estate you don't buy after prices have hit their all-time high, you buy when prices are low and the market is moving up.

When the real property markets begin to change I always get phone calls.  "Can you tell me what the value of retail buildings are?"  Or "can you tell me how much of an increase there has been in the northwest vacant land submarket?"  I understand that there are owners who may be getting phone calls and even offers that they have not received in years.  It's great to see the activity, there is nothing worse than flat market that offer no gains year in and year out.

The problem that many owners have is that they don't know if the offer that they received is reasonable in light of market changes.  When you own a building you may be looking at a value change due to market changes that in some cases can be 10% to 30% of total value and that can be tens of thousands to hundreds of thousands of dollars.

For many it's time to get a professional opinion of value.  Attorneys, accountants, trust managers and even individual owners call me about the market and want to know if it's moving, and if it is I will try to explain why.  In middle 2015 Las Vegas markets have seen falling vacancy rates and in some cases increasing rental rates.  Real estate markets are not rocket science, as the inventory of available space falls, demand increases and so do prices.

The question that I ask potential clients is "do you want to miss the market value of your real property by even 10%?"  On a $ 500,000 building it's $ 50,000 but on a $ 2,000,000 building it's $ 200,000.  Many owners just don't want to ask themselves why, all of a sudden, they have a buyer banging on their door.  Could it be that the buyer see the market movement and they want to capitalize on it?  Or do you just happen to own the one property that they must have?

Even when you have access to an AVM / CVM or a brokers price opinion (BPO) I have seen those "guesstimates" off by significant amounts.  Yes you have to weigh the cost of an appraisal report with it's benefits.  Accuracy is important to appraisers and having a computer model or non-appraiser form a price opinion on your owned, managed or property acquisition to save an appraisal fee is like most bad decisions. 

If appraisers were not providing a valuable and accurate valuation service to their clients including banks and other financial institutions, the IRS, the courts and other corporations, institutions and government wouldn't pay their fees. 

I'm not saying that I try to sell my appraisal services base on a "fear of loss" speech.  I just hate hearing the stories about how a property was flipped after its sale to an unsolicited buyer and thus  the previous long-term owner lost significant money.  Information is a powerful tool, especially in the real estate business, and you don't want to find that your first or last decision as an onwer or buyer was to pass over an important step and didn't know what the market value of the property acquired or sold was.

 For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (http://www.appraiserlasvegas.com), or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/

Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/4554-The-Value-of-an-Appraisal.html