Appraisal Articles 2018 Free Appraisal Articles for Appraisers and the Public
You are going to use that new industrial building that you just purchased for indoor tennis courts, and you want to know if those improvements will make the building worth more money? Or you already purchased and remodeled an industrial build to grow marijuana, and now it’s your opinion that those grow improvements are going to make it much more valuable. The problem that appraisers confront every day is that many parties who purchase industrial buildings and then modify them for a specialty purpose believe that there is an entire market full of people out there who are interested in purchasing the modified building, with its improvements, and they believe that there are many people willing to pay a premium for the improvements.
If you are doing FHA appraisals for $ 450 each you know what your time is worth because if you can complete 5 appraisal assignments a week your gross is $ 2,250 X 52 weeks a year is $ 117,000 a year. Most appraisers can’t however work without vacation time or any time off during the week and most don’t get a consistent number of assignments each and every month. An appraiser who does gross that much money makes about $ 56 an hour if they were working a standard 8 AM to 5 PM day, but we all know that appraisers usually work longer hours than that. Appraisers often work weekends, usually for the convenience of our clients, and many appraisers work more than an 8-hour day but have flexible hours if they are working for themselves. So, it’s hard to make comparisons with those in normal jobs if you don’t know how much time an appraiser is putting in to earn his or her income. I sometimes find that the hourly rate that I charged someone was too low because it actually took much longer t
When everyone on your block has rezoned their property commercial and your property is still zoned and planned residential it’s “reasonably probable” that your property will also be approved for a commercial use. Commercial zoning doesn’t exist for the site, so clearly commercial zoning is a hypothetical condition, but for appraisers it’s not taking a giant leap to realize that uses have changed, and the use of the subject will also likely change. There are other situations in the real estate world that can test an appraisers ability to make the right value decisions. Say you are appraising a low-density residentially zoned lot that is set back off the road, behind constructed single-family homes, but large and small vacant parcels surrounding it (including the homes) have been acquired by a speculator. So you are appraising what is effectively a “spite strip” or an “island” like parcel that you know the speculator must have. It appears to a casual observer that nothing has changed
Once you leave the city and get away from the main, municipal and County water service providers you find out just how valuable water is. If you have a property that is 40 acres in size but you have no water rights or water service you usually have a single home site. You may have zoning that will allow 20 or 40 homes on it but if you can’t provide them all with water you can’t develop the property for all of those homesteads. Water rights are even more important to properties with commercial or industrial zoning, because those properties can never be used for their zoned or planned use without a legal water source. So, you may have an absolutely perfect site with high traffic, visibility and accessibility but if you don’t have the water you can’t develop the property.
Churches are special-purpose or special-use properties and generally not easily converted to alternate uses like retail. Usually you can’t modify a Sanctuary or most other religious buildings for another use, they are just not designed for that purpose. In Las Vegas there are church groups that have purchased what were originally office buildings or retail buildings and then they modified them for church use. Some of those buildings can be reclaimed and used for their original purpose, usually with significant renovation. These buildings are usually rectangular-shaped, one story buildings but they are relatively rare.
Client’s often ask me to appraise a property that has already been appraised. Why would they do that? One of the reasons is because the first appraisal missed important improvements or important sales evidence. The fact is that if you wait long enough even the best appraisal will be out of date because real estate markets change. There are times when I look at the sales used in a report and decide whether or not I am interested in appraising it again. I don’t formally review the old reports I just take a tentative look them and make decisions regarding whether they were accurate or not. Comparable sales may be easy to find in a neighborhood but unless you understand appraisal analysis you can’t tell if the sales are really comparable to the subject property. If the sales that you find are too far away, are too old (and the market has been changing) or the sales are just too dissimilar to the subject, you have to wonder as an appraiser why were they used?
I have been appraising property in Clark County for over 20 years and I can tell you that relatively few appraisers will accept an appraisal assignment in Moapa. It’s a fact that many appraisers if asked don’t know the difference between Moapa, Moapa Valley, Logandale, Overton, Mormon Mesa, Warm Springs and Virgin River properties. It’s just “an area northeast of Las Vegas,” and that’s good enough. If you are talking to a potential appraiser about a Moapa assignment and they don’t inquire about water rights that could be a red flag. An appraiser must know if water rights or water services exist at a specific property and how much (how many acre feet) of water is available. it’s an important factor that affects value.
As discussed in a recent article published by McKissock Learning on their blog, see the link below, the Appraisal Qualifications Board (AQB) of the Appraisal Foundation will adopted changes to the Real Property Appraiser Qualifications Criteria following its fourth exposure draft that will become effective on May 1, 2018. The changes effectively begin, in my opinion, a breakdown of the entry barrier erected by appraisers, that restricted entry into the appraisal industry. As noted in the McKissock article, the following are some of the changes that are being adopted together with those noted in the following table:
If you have taken the time to search you may already know that there are a lot of articles out there on the web regarding fractional interests. So, what do appraisers do when faced with having to develop an appropriate discount for their assignment? If a property suffers no loss due to a lack of marketability and no loss due to a lack of control, due generally to owning a minority interest in a property, then discounting it may not be appropriate. A joint tenancy interest in a property may mean that you only own a portion of the whole, but claiming that your interest should be discounted is tenuous at best.
Most appraisers have walked into a single-family residential (SFR) home they are appraising and discovered that there are multiple families inhabiting it. Does this situation affect real property value or the results of an appraisal report? Financial institutions want to know from an appraiser if multiple tenancy is occurring in a building, it’s one of the things that they are paying you to establish. So, if you keep the information to yourself you have not provided them with the information they requested from you. Often the multiple family use of a home violates home owner association rules, master-plan community rules, city codes, zoning and planning.