Archive for the ‘Real Estate Appraisal’ Category
Appraisal Review
An appraisal review is a report that comments on the completeness and accuracy of a real estate appraisal report. Some appraisal reviews ensure compliance with technical rules such as USPAP, and other reviews focus on the value estimate. The review may be written out in paragraph form, or presented as a checklist.
There are three types of appraisal reviews:
> A desk review, as it sounds, is done at the reviewer’s desk, and can be prepared with or without validating the data in the appraisal report. The desk review searches for discrepancies, and verifies that the appraisal meets all standards set by the industry, appropriate comparable properties have been used, and correct adjustments have been made. The desk review ensures that the values are accurate.
> In a field review, the review appraiser examines the property in person. The appraisal is examined for accuracy, and the reviewer provides an exterior field inspection of the subject and all comparable properties used, which provides maximum appraisal certainty.
One reason that a field review appraisal might be required is that the property could be located in an area that just realized a natural disaster, and extensive damage could have been done to a property after the initial appraisal was already completed. To protect a lender’s interest, a field review appraisal may be required to ensure the property being financed was not affected by the disaster.
> A full review is one in which the appraiser independently collects data. Ideally, the reviewer has qualifications at least equal to those of the appraiser who prepared the appraisal. The reviewer is normally not responsible for the value estimate in the appraisal report.
By: Present Value
Perception Versus Reality
News over plummeting home values has home owners – especially those in the Northeast – feeling a little more pessimistic than reality warrants, according to an article posted today on Banker & Tradesman. You can read the full article here. According to the article, a Zillow survey showed that just 20% of homeowners felt that their homes increased in value during 2009, but in reality, 28% of homes increased in value.
Of the surveyed homeowners in the Northeast, 78% said they believe that their homes’ values either decreased or stayed in the same in 2009, but data shows that only 58% of homes in the Northeast stayed the same or decreased in value.
It seems that people are realizing that right now, decreasing home values are the norm rather than an aberration. However, despite the cynicism the survey shows, three times as many homeowners believe their property values will increase over the next six months than those who believe their home values will decrease or stay the same. These beliefs may outpace performance, but it’s nice to see that people still view home ownership as a solid investment.
By: Present Value
CMA vs. Appraisal
Because they’re so similar in nature, there’s often confusion between a comparative market analysis (CMA) and a real estate appraisal. It’s important to understand the distinction if you’re selling your home.
A CMA is a report that is prepared by a real estate agent. After doing a walkthrough of the property, the agent will research information about comparable properties in the area, usually with an industry resource called the Multiple Listing Service (MLS). This includes properties currently for sale, listings that have sold but not yet closed, and properties that did not sell during a listing period.
This is similar to what a real estate appraiser does, but there are important distinctions. A CMA generally gives a price range, whereas an appraiser’s report gives an actual set market price. CMAs are subjective, and often contain a list of improvements to the property that the owner plans to make, and qualities of the property that the real estate agent believes are selling points.
A Uniform Residential Appraisal Report (URAR), prepared by an independent professional appraiser, is a comprehensive evaluation of the property. It is much more empirical and objective, and will withstand scrutiny in court. In any real estate transaction, it is crucial to have a proper appraisal performed. A CMA can give you a general idea of a property’s value, but only a report from a certified appraiser can give you the specific information you’ll need going forward.
Present Value LLC is a certified real estate appraisal company.
By: Present Value
FHA Is True to its Word
Earlier this week, we wrote a post, in part, on the FHA’s plan to crack down on unscrupulous lenders. You can read the post here.
According to an article published in The Wall Street Journal on Tuesday, the FHA is making good on its promise. It suspended Home Mortgage Inc. for six months and pulled the licenses of three other lenders, Strategic Mortgage Corp., ProMortgage Inc., and Americare Investment Group Inc. The FHA said that Strategic Mortgage Corp. and ProMortgage did not uphold the FHA’s loan standards, Americare violated previous settlement terms, and Home Mortgage was suspended for failing to disclose an owner’s indictment. You can read the full article here.
Present Value is an FHA certified appraisal company.
By: Present Value
The Appraisal Institute
The Appraisal Institute is an international association for professional real estate appraisers. Founded in 1991 from the merger of the American Institute of Real Estate Appraisers and the Society of Real Estate Appraisers, the association has more than 24,000 members and 91 chapters throughout North America and the world.
The institute’s designations are SRA (from the former Society of Real Estate Appraisers) for residential real estate appraisers, and MAI (from the former American Institute of Real Estate Appraisers) for commercial and industrial real estate appraisers.
The Appraisal Institute provides residential and commercial real estate appraisal education, research, publishing, and professional membership designation programs. Its curriculum of classroom and online courses, in addition to specialty seminars, provide a solid education in valuation methodology for both novice and seasoned practitioners. Its mission is to support and advance its members as the choice for real estate solutions and uphold professional credentials, standards of professional practice, and ethics consistent with the good of the general public.
Present Value is a proud affiliate of the Appraisal Institute.
By: Present Value
Why Get a Real Estate Appraisal
Here’s a video from CNN on the importance of a real estate appraisal and things to look for in a certified appraiser. There’s also footage of an appraiser hard at work.
http://www.youtube.com/watch?v=pmJVpYCC9ME
Video summary:
- Buying a home can be the single biggest purchase of a person’s life.
- Appraisers are under frequent pressure to appraise a property at a higher value than the property might be worth.
- Smart consumers will get independent appraisals.
- The minimum qualification of an appraiser is that they are licensed. Beyond that, they should have trade designations, be associated with professional appraisal organizations, and be local, or at least familiar with the region.
- Once you hire an appraiser, watch them work to check their thoroughness.
- It’s important to know a home’s value if you’re looking to negotiate property taxes or take out a home equity loan.
- Appraisers use the sales comparison approach, physical characteristics, and neighborhood trends as criteria for property value.
- It’s vitally important to verify an appraiser’s credentials.
By: Present Value
NAPA
The National Association of Professional Appraisers (NAPA) is an organization of appraisal experts who provide economic valuations of real, personal, and intangible property. NAPA members obtain certifications and advanced educational programs in the field of valuation. Present Value LLC is a proud affiliate of NAPA.
NAPA follows the Uniform Standards of Professional Appraisal Practice (USPAP). In addition to USPAP, NAPA requires professional members to prepare appraisal reports in a uniform manner, each containing certain required elements:
- A clear statement of the purpose and scope of the assignment
- A clear definition of the appropriate value
- A description of the methods and techniques used to estimate the value
- A clear description of the property and rights being appraised
- A certification statement that includes the unbiased position of the appraiser
- Supporting evidence (sources and research consulted, comparable sales, or other reasonable evidence)
- A statement of qualifications of the appraiser that specifically states why the appraiser is qualified to perform a particular appraisal assignment
Additionally, there are 10 NAPA membership Rules of Ethics.
- Members agree to perform their duties as appraisers ethically.
- Members agree not to set fees on a percentage basis or that are contingent on arriving at a particular value.
- Members agree not to act as advocates, but as objective estimators of value.
- Members agree not to appraise a property in which the appraiser has a present or future interest without fully disclosing that fact.
- Members agree not to advertise or solicit appraisal work through inaccurate, misleading, false, or deceptive claims.
- Members agree not to misuse their professional status with NAPA.
- Members agree to respond to an inquiry or complaint notice from the NAPA peer review committee.
- Members agree to disclose who performed the appraisal and to have each participant who contributed significantly to the assignment sign a certification statement.
- Members agree that the appraiser is required to possess both the knowledge and experience to perform an appraisal task competently or obtain appropriate assistance.
- Members agree that an appraisal assignment is a confidential matter and agree not to disclose the nature of the assignment except to the client, a court of law, or NAPA peer review committee.
By: Present Value
Massachusetts Board of Real Estate Appraisers
The Massachusetts Board of Real Estate Appraisers (MBREA) serves the needs of real estate appraisers, real estate agents, lenders, borrowers, and homeowners.
The MBREA offers continuing education for appraiser licensing and certification, and professional designations for appraisers that satisfy the requirements relating to experience, examination, and demonstration. Education of appraisal professionals is the cornerstone of MBREA’s mission. The association secures approval of its courses and seminars from the appraisal boards of all six New England states. Instructors are seasoned professionals with demonstrated ability to teach and sufficient practical knowledge.
MBREA played an important role in the formulation of USPAP standards and the development of licensing qualifications. Appraisers who belong to MBREA may earn a professional designation from the association. A professional designation demonstrates commitment to professional growth and the quality of work performed. MBREA designations are “RA” for residential appraisers and “MRA” for general or commercial appraisers.
Present Value LLC is a proud member of the MBREA. They are also certified to appraise outside the New England area.
By: Present Value
Working with HVCC Regulations
A recent article in Banker & Tradesman suggests that consumer confidence in the real estate market is coming back. Coming out of the 2009 Realtors Conference & Expo in San Diego, the article indicates that in spite of the decline of the market, buyers are still looking for vacation and recreational properties.
Industry experts, however, still appear to be concerned about issues surrounding real estate appraisals and the unintended consequences of the implementation of the Home Valuation Code of Conduct (HVCC). As we have discussed in other blog posts, the perceived problem is that appraisers, working for appraisal management companies, are often working outside areas with which they are familiar and may not have access to information about specific markets. Realtors argue that as a result of valuations that sometimes are too low, sales have been delayed and even cancelled.
This Banker & Tradesman article provides some interesting suggestions by realty agents of ways to work with the HVCC changes, including providing appraisers with detailed property comparison information and background materials to help appraisers achieve the most accurate appraisals.
As always, Present Value LLC is both an appraiser and an appraisal management company, which means that it can play the role of the third party required by the HVCC changes and save you the step of having to seek out a separate appraisal management company.
By: Present Value
First-Time Homebuyer Tax Credit Extension
Those who were feeling the pressure to buy a home immediately in order to take advantage of the first-time homebuyer tax credit can relax a bit. On November 6, President Obama signed a bill that, among other things, extended the tax credit available for first-time homebuyers. Originally due to expire at the end of this month, the tax credit now doesn’t expire until next June, provided that the homebuyer signs a binding contract by April 2010 that states a June closing.
In addition to extending the expiration date of the tax credit, the bill added a provision that allows a $6,500 tax credit to home owners who have lived in their current residence for at least five years and plan to buy a new home.
There are a few details to keep in mind about the tax credit:
- The credit isn’t really just for first-time homebuyers. Anyone who hasn’t owned a home for at least three years is considered a first-time buyer.
- The credit is only available for the home in which you plan to live. It can’t be claimed for the purchase of a vacation or rental property.
- Although $8,000 is the number we’ve all heard in regard to this bill, the bill actually states that homebuyers are eligible for a tax credit equal to 10% of the price of the purchased home, up to $8,000. If you happen to buy a $70,000 home, you’d only receive a $7,000 tax credit.
- If you sell your home or move out within three years, you’ll be required to pay back the credited amount.
Remember that any home purchase requires a detailed appraisal, and to ensure an accurate estimate of the home value, you should work with an appraiser who is familiar with the housing market in the area where you found your dream home.
By: Present Value
Recent Posts
Categories
- Appraisal Terms
- Asset Inspection
- business appraisals
- business broker
- Business Valuation
- Buying a Business
- C Corp to S Corp Conversion
- Custom Appraisal
- economic stimulus package
- Equipment Auctions
- Fannie Mae
- FHA Loans
- Freddie Mac
- Goodwill
- HVCC
- Intellectual Property
- Inventory Control
- Machinery & Equipment
- Machinery & Equipment Appraisal
- Press release
- Public-Private Investment Program
- Real Estate
- Real Estate Appraisal
- Sample Reports
- SBA
- SBA SOP changes
- small business
- Small Business Administration
- small business loan incentives
- Tax issues
- Uncategorized
- Valuation Fraud
- Videos
Tags
Recent Comments
- appraisal valuation - StartTags.com on Common Appraisal Definitions!
- Giras Panama on HVCC: The Comp Check Killer
- privat Kredit on Public-Private Investment Program
- Shirl Fissori on Modifications to the Home Affordable Refinance Program
- Present Value Blog » Blog Archive » CMA vs. Appraisal | Real Estate Finance Wisdom on CMA vs. Appraisal