Since 2015, legislative officials of Boston have been developing legislation concerning residential evictions in the city. Even though that legislation has failed to advance in the Massachusetts legislature, its proponents continue to work on a revised version for 2019. Residential real estate values are likely to be affected whether or not the bill is ultimately enacted into law.
Appraisers frequently have their work reviewed, especially when an appraisal’s intended use is for financing. Reviewing appraisals is routinely part of the job description for appraisers employed by lending institutions. But the scope of work for review assignments varies significantly, and sometimes reviews are performed by non-appraisers. Both appraisers and their clients need to clearly understand when a review assignment is, in fact, an appraisal and whether an appraiser can conduct an accurate appraisal review.
Agents, investors, property owners and anyone riding on the results of an appraisal want the value to come out the way they expect, and the way they think it should, but is that how high-risk financing decisions should be made? Who is most qualified to evaluate a subject property and select the best comps based on the broadest scope of possible variables, while narrowing in on the comps that match most specifically for the factors that have the great impact on value considering the market?
Why does the real estate industry and financial regulatory infrastructure place such a great emphasis maintaining transparency and impartiality in real estate appraisals? This post will reflect on these issues and offer historical as well as practical insight.
The difference between construction cost and value is a central question in any appraisal assignment. Appraisers use several processes to estimate value. One of these is the cost approach, which takes into consideration the actual cost of building a structure similar or identical to the one under study. But other approaches to value often do not produce the same value estimate as simple as combining building cost and land value. Construction cost is an element of value, but it is not the same as value. An appraiser recognizes the difference and accounts for it in his value estimate. This difference is likely attributable to several causes that are identified and measured in market value appraisals.
Appraisers have nearly unlimited possibilities in how they report the results of appraisal assignments. These choices could be oral appraisal reports, written appraisal reports, limited written appraisal reports, or many standardized report forms. The appropriate appraisal report format is determined by the appraiser and the client, considering the appraisal’s intended use and specific requirements of the client and regulatory agencies. Available appraisal formats evolve as professional appraisal standards and regulatory requirements change. Awareness of current reporting options is required of any professional real estate appraiser.
Most improved real properties and many vacant tracts can only be sold subject to existing easements. Appraisers identify existing easements and consider their effect on value whenever a market value definition is part of an assignment. Easements and rights-of-way often influence how real property can be used and may even affect a property’s ownership cost.
The appraisal process includes the income approach to estimate the value of a property that an investor would ideally purchase for its annual income. The income approach assumes a relationship between a property’s average net income and the price an average investor would pay for the property. The first step to defining that relationship is estimating the amount of net income that would accrue to a property in a typical operating year after all expenses to produce that income are deducted. The resulting estimate is shown in a stabilized or reconstructed operating statement for the subject property.
The Market Analysis section in an appraisal report contains precious information that directly influences the value of a property and also provides priceless insight into a myriad of data relating to the financial feasibility of a property. It is common for many prospective users of an appraisal report to ignore various sections of the report and focus solely on segments that indicate property value. The downside of this approach to valuations is that the reader, therefore, misses key insights into the subject market that can benefit the owner, buyer, seller, or lender.
If you’re planning your next development, considering strategies for an upcoming renovation, or managing an existing build, how can you maximize the returns from the project and do something good for human health and the environment?
There are an array of strategies and methods to reduce environmental impact, limit energy and water consumption, increase demand and resale value, and improve your bottom line.
Probate transactions carry with them a special responsibility to conduct thoughtfully and diligently. Both the families and professionals involved in the probate process deserve respect and genuine care.
Here we’ll talk about some of the things to think about in handling probate cases for real estate professionals and others involved in the process.
New rules have recently made it simpler to file for probate in Massachusetts and reach the resolution needed.