Appraisal Articles 2019 Free Appraisal Articles for Appraisers and the Public
Appraisers know that many taverns include both real property and a business entity and that valuing this type of property may mean that you have to consider the business entirety. Like motels, c-stores and restaurants the value of a tavern may be greater than the sum of its parts. So comparing a retail building to a tavern doesn’t work, because you haven taken into account entitlements like zoning, the licenses or the furniture, fixtures and equipment (FF&E) necessary to run a tavern. Some well-run taverns also have trained personnel and experienced management in place. Some taverns benefit from local or national franchise affiliations that are recognizable and have established goodwill. While I have made a good argument for completing a business appraisal on taverns, the fact of the matter is that many taverns are bought and sold without consideration being given to the business entity. In fact, in my area, relatively few of taverns benefit from exceptional management or custom
If I had a dollar for each time that a potential client did not give me the relevant property characteristics I would have a lot of extra money. The problem isn’t always that a potential client lied to me or hid information, sometimes the just didn’t know how important what they didn’t tell me was. Often potential client’s forget to talk about things like excess land, “oh yeah we have a large yard,” or they forgot to mention that they have a casita, or they forgot to mention that the property is zoned for a single-family use but it is being used as a group home. Yes, those things make a difference to appraisers.
Some properties located near or on the Las Vegas Strip are now ripe for development in that they could be transitioned into hotels, condominiums, high end retail or resort casino support uses in the near future. For a long time, prior to the 2008 stock market based recession, there were many Las Vegas properties approved for vertical development, some actually made it to development right as the market failed. The real estate market has fought its way back and I have recently seen more marketing flyers circulating that display renderings of vertical buildings on them. The Las Vegas Real Estate market wants to return to the days when there were many announced and actually hi-rise buildings under construction.
Well it used to be the case that a reliable appraisal was considered to be “essential to loan underwriting and to the public’s perception of confidence in the nation’s real estate, finance, and mortgage insurance and investment industries.” (U.S. Representative Douglas Barnard (D-GA), but the comment was made after the S & L Loan Crisis) Of course comments like those are always made after there is a financial industry failure. The entire purpose of real property appraiser licensing was to protect the public from what the government perceived as a lack of financial institution oversight. Now we have the S & L industry basically excluding itself from having to appraisal most of its commercial loans. You have to ask yourself, “How does that happen?”
There are many homes located in Clark County, Nevada that adjoin primary or arterial roadways and some have been zoned and / or planned for a commercial purpose. Appraisers understand that if a property has commercial zoning and / or planning in place that zoning or planning is not necessarily its highest and best use. That’s why a certified general appraiser is employed to analyze the highest and best use of a property, it may appear to some to be obvious but in fact it may not be. While it is possible that an existing residential use is more profitable than the land “as vacant” and available for redevelopment, there is no way of knowing that without having researched land values. Some appraisers don’t want to consider the “as vacant” condition scenario, it mean that you have to complete a separate land valuation, but without having completed it how would you know whether or not the land is worth more “as vacant” or the property is worth more “as improved?”
Anyone who knows about retail sales will tell you that you have a much better chance of selling a pedestrian something than selling a person passing by in a vehicle. When you are walking at 1 mph or so you can’t help but look at a retailer or a restaurant’s offerings, but if you are driving by at 25 mph or 45 mph you are lucky if the driver and passengers even see your retail establishment. In Las Vegas pedestrians are usually in tourist areas because they want to be there, and most have money to spend because they are on vacation. Vehicular traffic on the Strip is made up of employees going to work, sightseers who can’t or don’t want to stop, advertising vehicles, destination drivers and taxicabs. You can be on the Strip and have 75,000 vehicles per day or more passing your location, but few if any will stop and park to get into your business.
Well I knew that sooner or later I would see the results of some AVM claiming a very high degree of confidence that it had estimated the market value of my home, and today someone actually did. My mortgage company sent me a home value estimate from www.Xome.com that claimed a 94% confidence that they have correctly estimated my home correctly. I have been a broker and a certified general appraiser for 40 years and I would be hesitant to make that claim, yet because www.Xome.com is using “investment-grade” analytics, whatever that is, they think that they can.
It’s relatively easy to find comparable sales for residential, MF residential and commercial properties through research via one of the many search engines, but what happens when you have to go back and research sales that are 2 years or even 5 years old? If you have built a database or if you subscribe to one that has historical information then you may be able to go back in its history relatively easily and find comparable properties from years before. If you are good you can pull up all of the sales from say the 12-month period before your date of value and review them. The GLVAR MLS even keeps the photos so you can not only look at the sales detail you can look at the exterior and interior photos of you comparable sales. That can give you a lot of confidence especially if you have that kind of data and photos on your subject.