NYS Appraisal Chptr 3 THE APPRAISAL PROCESS
Terms
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- appraisal process
- process utilized to otain a reliable opinion of value
- Identification of Real Estate
- Legal Decrisption are most common way
- Property Tax is
- a form of restriction on property rights
- Standard of Value refers
- to the type of value the client expects (investment value, value in use)
- Market Value
- the most probable price which a property should bring in a competitive market
- Effective Date of the Appraisal
- Value estimates are always made on a specific date
- Appraisals of past values
- are often used in legal proceedings like divorce or tax audits
- Appraisal of Future Value
- Always speculative - impossible to predict the future
- Appraisal report date
- Does not directly effect value, it is the date the report is used.
- Report Date
- Date the appraisor completes & signs the report
- Appraisal report date as opposed to the valuation date,
- does not directly effect the value.
- Scope of the appraisal
- the amount of research and development that will be required
- Assumptions
- are facts app believes are true but does not verify
- Limiting Conditions
- is a statement or explination that limits the application of the conclusions in the report
- assumptions and limiting conditions limit the
- liablity of the appraisal.
- Step two of appraisal process
- Preliminary Analysis - there are 5 steps...
- Step 1 - Preliminary anaylisis
- Identfy the necessary data
- General Data
- pertains to R.E. values in general
- Specific Data
- Data about specific Property
- Primary Data
- Generated by the appraisal or other
- Secondary Data
- Data generated by others (puplished)
- Step 2 -of preliminary analysis
- Identify the source of the data
- Step 3 of preliminary analysis
- preliminary analysis - the app will identify relevent data
- step 4 of preliminary analysis
- creating a plan
- step 5 of preliminary analysis
- fee proposal
- Step 3 of appraisal process
- collecting, verifying & Analyizing data
- Step 4 of appraisal process
-
Highest & Best Use Analysis
used for both improved and as vacant - Highest & Best Use important that land & improvements must be valued seperately...which approach
- COST APPROACH
- Site Valuation
- est of the site less improvements
- Site refers to a parcel of land that has been
- improved by grading, clearing and providing access.
- COST APPROACH
- VALUE OF SITE PLUS IMPROVEMENTS LESS DEPRECIATION
- DEPRECIATION
- THE DIFFERENCE BETWEEN COST NEW VS CURRENT VALUE
- SALES COMPARISON APPROACH
- AKA MARKET APPROACH OR MARKET DATA APPROACH - VALUE OF SUBJECT IS INDICATED BY SALES PRICES OF SIMILAR PROP - THEY MUST BE TRULY COMPARIBLE
- INCOME APPROACH
- ASSUMES THAT THE VALUE OF PROPERTY IS INDICATED BY THE AMOUNT OF INCOME IT CAN GENERATE - THE HIGHER THE INCOME THE HIGHER THE VALUE.
- GROSS RENT MULTIPLIER
- MONTHLY INCOME FROM EACH COMP IS DIVIDED BY THE SALES PRICE
- RECONCILIATION
- SELECTING THE MOST APPROPRIETE METHOD OF THE THREE & GIVING THE MOST WEIGHT IN DET THE FINAL EST OF VALUE.
- REPORTING THE DATA
-
1) THE NARRATIVE - MOST DETAILED FORM
2) FORM REPORT - MOST COMMONLY USED
3) ORAL - APPRAISAL PROCESS RECAP OF 8 STEPS
-
1) DIFINE THE APP PROBLEM
2) PRELIM ANALYSIS
3) COLLECT & VERIFY DATA
4) DETERMINE HIGHEST & BEST USE
5) EST VALUE OF SITE
6) APPLY 3 APPROACHES TO VALUE
7) RECONCILE & REACH FINAL VALUE ESTIMATE
8) PREPARE AND DELIVER APPRAISAL REPORT