Present Value LLC » Real Estate Appraisal

Present Value LLC’s Top Five Posts on the International Financial Reporting Standards (IFRS)

admin — Tue, 10 Jan 2012 13:21:45 +0000

International Financial Reporting Standards (IFRS) is a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS is issued by the International Accounting Standards Board. Conversations are still swirling over whether or not the Securities and Exchange Commission (SEC) will adopt IFRS or some variation of the standards, requiring U.S. companies to begin using the international reporting standards rather than the current Generally Accepted Accounting Principles (GAAP). We pulled together some of the most useful posts regarding the debate over IFRS.

Companies Will Need Time to Adopt International Financial Reporting Standards (IFRS)

SEC Releases Second Staff Paper on a Possible Incorporation of IFRS into U.S. GAAP: An Analysis of IFRS in Practice

IFRS Loopholes

More Delays on SEC’s Decision on Whether to Adopt IFRS

GAAP and IFRS

Present Value LLC is a worldwide international appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!

By: Present Value

Fighting the Low-Ball Appraisal

admin — Thu, 01 Dec 2011 21:24:39 +0000

Disagreements over real estate values are nothing new. A real estate appraiser who is familiar with an area, performs due diligence, and takes updates and upgrades into consideration will likely have a much higher valuation of a property than an appraiser who breezes in and cashes a paycheck. Unfortunately, both types of appraiser exist.

In a recent survey of members, the Massachusetts Association of Realtors found that more than half of agents said sales had been hampered by appraisals that came in low. Polls by the National Association of Realtors also have documented widespread frustration over faulty valuations, and the association ranks them among the major causes of contract cancellations.

So what can you do to lessen the chances that a bad appraisal will torpedo your transaction? Most importantly, be proactive. Federal rules allow you to provide the appraiser your own comps – recently sold properties of similar size and condition in your immediate area. Your realty agent can help you pull them together before the appraiser arrives.

Also, accompany the appraiser during his or her inspection of the house. Ask questions crucial to competency: Where are you based? How long have you been in the business? What certifications and professional designations do you hold? Do you know local agents or brokers who can supply you with pending sales information and guide you on neighborhood price trends? If the appraiser doesn’t have good answers, you are much more likely to end up with a poor appraisal. Alert the lender to your concerns as early as possible.

After the appraisal is completed, always ask for a copy to review; it’s your right under federal law. If the value comes in low, check everything in the report, from selection of comps to the accuracy of property measurements. If you find serious mistakes and the appraiser refuses to make corrections, appeal directly to the lender. Most have procedures to follow regarding “reconsiderations of value.” Ask for a second valuation by a locally competent appraiser, even if that costs you more money.

Present Value LLC is a worldwide international appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!

By: Present Value

Additional Reading:

How Appraisals Impact Home Sales

High-Value Home Appraisals: 10 Tips

Problems That Will Keep You from Getting a Mortgage

Which Is Better – a 15-Year Mortgage or a 30-Year Mortgage?

admin — Wed, 24 Aug 2011 12:29:26 +0000

Current interest rates for mortgages are very low, enticing some homeowners to refinance. The current interest rate on a traditional 30-year fixed mortgage is around 4.25% right now, but the current interest rate on a 15-year fixed mortgage is hovering around 3.4%, which makes this an extremely attractive option for those homeowners able to handle the extra expense that comes with a shorter-term loan.

When debating between a 30-year fixed mortgage and a 15-year fixed mortgage, there are a few things to keep in mind. A loan with a shorter term saves the homeowner a considerable amount in interest, and allows him or her to gain more equity in the home faster. The down side is that the mortgage payments are quite a bit higher.

So what’s the best option? It depends. If income flow isn’t an issue and you can afford the monthly payments while funneling your money into other necessary investments, a 15-year mortgage is a good idea. But if job security is a concern or your family income doesn’t allow you to both make a payment on a 15-year loan and put money aside for retirement or college, a traditional 30-year loan might be a better option.

Low interest rates are definitely making 15-year loans more attractive. In 2007, only 11% of homeowners went with a 15-year loan when refinancing. In the first quarter of 2011, that number jumped to 53%. But the decision can’t simply be about your budget. It’s also important to keep your family’s long-term goals in mind when refinancing.

By: Present Value

Additional Reading

More Loan Transparency on the Horizon

Obama Proposes Pulling the Plug on Fannie and Freddie

The Debt Ceiling and Your Home’s Value

admin — Thu, 21 Jul 2011 11:49:05 +0000

There’s been a lot of talk in the news lately about the debate over raising the debt ceiling. Historically, when spending was greater than revenue, the government agreed to raise the debt ceiling. But if Congress doesn’t reach that conclusion this time, it could affect the value of your home.

There are some economists who believe that if the debt ceiling isn’t raised, interest rates, including mortgage rates, will go up and those homeowners interested in selling will find that there may be fewer buyers qualified to purchase a home. In addition, if the government has to cut spending, many of the programs that help first-time home buyers and older Americans will lack funding. With fewer buyers on the market, house prices will decrease, which will put many homeowners underwater and increase their chances of defaulting on their mortgages. Foreclosures are already at record highs and some warn that failing to raise the debt ceiling will keep the foreclosure rate at that record level. Some economists believe that the double-dip feared in the housing market will come to fruition if Congress doesn’t agree to raise the debt ceiling.

Most people believe that Congress will reach some sort of compromise and none of this will come to pass. But even if it does, experts say we can expect the housing market to start to turn around in 2013.

By: Present Value

Additional Reading:

Nearly 16 Million Homeowners Are Underwater

Is Your Home Underwater? Then Don’t do Anything Illegal!

What’s Your Business Really Worth?

admin — Tue, 05 Oct 2010 21:07:34 +0000

A recent article on Inc.com, “How to Find Out What Your Business Is Really Worth,” provides advice from a professional who has owned multiple businesses to small business owners, who might be wondering how much their businesses are worth. He discusses his own experiences as a business owner and wondering what his business was worth; essentially, he was guessing at what his business was worth, only to realize that he was way off. He suggests:

Meeting with merger and acquisition (M&A) professionals who buy and sell businesses within your industry

Searching databases that hold historical information about businesses that have sold recently and determine industry norms

Reading M&A firm newsletters that describe the multiples being paid on M&A deals

Looking at online business marketplaces, such as Bizbuysell.com, through which you can search for similar businesses in your industry that are for sale

While all of this can be helpful in getting a ballpark figure for your business’s value, the only way to really know the value of your business is to get an appraisal from a firm that specializes in business valuations and is compliant with the standards and guidelines of USPAP.

Present Value LLC is a nationwide appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!

By: Present Value

Additional Reading:

SBA Changes to go into Effect on October 1, 2010

Financial Advisors Urging Business Owners to Know the Value of Their Businesses

How Does the Economy Affect Business Value?

Foreclosure Fraud

admin — Thu, 16 Sep 2010 23:15:47 +0000

If you’re a fan of our blog, you know how foreclosure can drive down property value – we’ve discussed it often over the past year. Banks want to get bad loans off their books as quickly as possible, so they auction off foreclosed homes at extremely low prices. If you are interested in selling your house for what it’s worth, and you live on a street with a foreclosed home that was sold for $100,000 less than its value, you’ll have a difficult time selling your home for its full value. The reason is that when appraisers determine the value of your home, they have to consider the sale prices of comparable properties in your area.

The Department of Justice announced on Monday that people now have to worry about fraud as a factor in driving down home values. A real estate investor in North Carolina asked other investors not to bid on certain properties that appeared in foreclosure auctions. Then he’d purchase those properties for extremely low prices, and quickly re-sell them or use them as rental properties. His actions, which suppressed bidding, resulted in lowering property values for all of the homes that surrounded the foreclosed properties. And he isn’t the only fraudster in operation.

Don’t struggling homeowners already have enough to worry about?

By: Present Value

What You Can Do to Help Your Home Appraise Better

admin — Tue, 14 Sep 2010 22:24:34 +0000

When it comes to the real estate market, there’s not a whole lot you can do with regard to your home’s value, especially in a down economy. As we wrote in a previous blog post, “Property Values in the Age of Foreclosures,” if a real estate appraiser is comparing your property to similar ones in your area, and the entire area’s property values have nosedived, yours likely will too.

But that doesn’t mean you’re completely powerless. There are things you can do, both short-term and long-term, to set your home apart from others it might be compared to.

First, you can make small repairs and keep up with routine maintenance. These things may not seem all that important to you, but could easily raise the property’s value in an appraiser’s eyes, and by extension, a potential buyer’s eyes.

As an extension of that, you can make upgrades as you’re able to increase the value down the road. Staining a deck, adding crown molding, or upgrading to stainless steel appliances is money out of pocket in the here and now, but can pay off big when the time comes to sell.

Most importantly, keep track of all the improvements you make to your home and write them out in a list, and give that list to the real estate appraiser performing your appraisal. It’s the single best way to ensure that you get credit for all the work you’ve done.

By: Present Value

Additional Reading

Property Values in the Age of Foreclosures

What Exactly Are You Doing, Appraiser?

Fannie Mae Plays Hardball

admin — Tue, 13 Jul 2010 22:44:16 +0000

As we all know, real estate appraisers are the men and women in the field, going from property to property and making evaluations based on years of training and experience, and then reporting these numbers to mortgage lenders to establish property values.

But after receiving appraisals they feel are too high, some lenders have taken to performing desk reviews – appraisals done from a computer. While qualified real estate appraisers are able to perform accurate desk reviews if need be, lenders’ desk review values can be wildly inaccurate. Since there is no on-site inspection, they don’t reflect the condition of a house, they don’t add value for remodels, they’re often lacking information even on room additions, and so forth. Nevertheless, lenders are using desk reviews as justification to reduce appraised values, and sales continue to fall apart.

Fannie Mae has announced that effective September 1, 2010, lenders will no longer be allowed to reduce appraised valuations. Instead, they will be required to contact the appraiser to resolve discrepancies between the appraiser’s value and the desk review value. If the disagreement can’t be resolved on that level, the lender will be required to order a second appraisal.

By: Present Value

Additional reading:

Uniform Residential Appraisal Report

From a Lender’s Perspective

Oil Spill and Property Values

admin — Thu, 10 Jun 2010 19:35:02 +0000

The ongoing oil spill in the Gulf of Mexico has had a devastating effect on the environment, and will likely continue to wreak havoc on the surrounding ecosystem for months or even years to come.

But the spill is also affecting the real estate appraisal market, particularly in Florida. Two of Florida’s property appraisers have asked state lawmakers to allow them to reduce the value of coastal real estate to reflect damage from BP’s oil spill and force BP to make up for lost tax revenue.

Appraisers are elected in Florida, and it’s their job to provide the fairest property values possible to constituents. Chris Jones, one of the elected appraisers, said, “What do I tell the owner of a $1 million house is the value if he can no longer walk on the beach? We want to hold our own citizens harmless and don’t want to put the burden on other taxpayers.” Florida Governor Charlie Crist has been asked to call a special session of the Legislature to authorize governments affected by the spill to revalue property for the current tax year, something that has been done after hurricanes and tornadoes in the past.

The appraisers are seeking permission to reflect damage to property values from the spill in tax bills property owners will receive in November. Under state law, they can’t alter the value assigned to property on January 1 in the middle of the year.

By: Present Value

Be Sure to Use a Reputable Appraiser

Appraisal Review

The Perils of Appraising

Not the Appraisers’ Fault, Either

admin — Tue, 20 Apr 2010 21:18:48 +0000

One of our previous blogs, titled “Pointing Fingers,” covered an article written for the Business Insider website in which a real estate agent blamed real estate appraisers for the current mortgage crisis. “Typical,” stated one Massachusetts-based real estate appraiser, who had not read the article but was familiar with the allegations. “I hear that all the time. But you can’t place the blame solely on appraisers, like myself or the guys at Present Value. Some mortgage companies were asking for inflated property evaluations, which is illegal. They even offered incentives for inflated values, which is also illegal. And some real estate appraisers went along with it – again, illegal. That’s what caused the mortgage crisis. And that’s why they passed HVCC.”

The appraiser continued, “It’s important to note that I said ‘some’ in both cases. You can’t say every mortgage company engaged in comp checks any more than you can say every appraiser agreed to the practice. It’s just those few who ruined it for everyone.”

As stated in the previous blog, assigning blame for the crisis does nothing to alleviate it, but it is important to view it from both sides.

By: Present Value

Additional Reading:

Pointing Fingers

HVCC: The Comp Check Killer

Comp Check: The Code Red of Real Estate Appraisal