Ask the appraiser ??

What make a great comparable?

2011-10-09T13:24:00.000-07:00

A comparable, also known as a “comp”, often shares many elements and characteristics within the subject dwelling. One of the most important aspects of accurately valuing a property is precise selection of a comparable sale. When overlooked, a property can easily be over and/or undervalued. I’ll expand on three items that make a great comparable: time, location and utility. In mind opinion, these items are the backbone of providing a fair and unbiased real property appraisal on a residential orientated property.

Timely- occurred in relatively close timeframe as the effective date of the appraisal. Market conditions are in constant influx, therefore the more recent the sale, the more relevant in regards to current market conditions.

Close by- Location matters. Real estate is affected by social, economic and cultural elements. Coupled together, a similar type property can sell for thousands less just because of economic influences within the community such as a shutdown of a major employer.

Utility- the overall make up of the home beyond the bricks and the stick. Key variances such as lot size, square footage of the home, total number of rooms, bedrooms and bathrooms impact on real property valuation. Site improvements may enhance a sale but some features (such as above ground pools) may not contribute to the final estimate of value.

If we were considered an income generating property (ICI / Industrial, Commercial and/or institutional), further consideration must be given for all income and expense generating characteristics, which typical takes precedent over the aforementioned items.

As you can see, the level and scope of work is quite time consuming during the Direct Comparison Approach.

Tips to expedite the appraisal process

2011-04-19T05:20:00.001-07:00

One of the first steps within the appraisal process is to review characteristics regarding subject property and to perform a cursory review of the local market and competitive properties. The next step is to inspect your property, which is just as critical however there are often limitations that can turn a straight forward assignment into one with several delays.

1) It’s vital to obtain site information in regards to the size, shape, boundaries, restrictive convents and easements. A survey, plot plan or location certificate will greatly assist your appraiser. Overlooking any of these items can drastically impact the final estimate of value. For example. it is quite common to value a property in a mature neighborhood that is situated on a spacious lot. Care and due diligence must be performed to ensure that there is no subdivision potential available, which could essentially turn the site into a double lot from an appraiser’s perspective.

2) A copy of the original building plan can assist the appraiser is determining the living area, review of the building systems (plumbing, mechanical, heating, electrical) along with noting unique features which may add value. This is especially valuable in custom architecturally designed homes that offer an open concept floor plan within various levels.

3) Documentation of maintenance and renovations which have occurred to the property in recent times. This can assist the appraiser in determining the overall condition of your home. When was your roof shingles replaced? Have you enhanced insulation levels? When was the bathrooms renovated? All of these items greatly impact on market value.

4) A copy of your property tax assessments, which can also determine if your home is adequately assessed.

5) Ensure that all areas are accessible not only within the interior of the dwelling but around the exterior perimeter. Construction and animal debris can limited accessibility throughout the home!

6) It’s beneficial to share previous appraisal reports since there may be components that are not available. If your aware of any comparable sales near your home- now is the time to discuss.

7) If you have pets that may be nervous toward strangers, it might be best to keep them contained in a secure area.

Following these items can save your appraiser time, creating faster turnaround times for your property appraisal!

Tips to expedite the appraisal process

2011-04-19T05:20:00.000-07:00

Our first step of the appraisal process is to review characteristics regarding subject property and to perform a cursory review of the local market and competitive properties. The next step is to inspect your property, which is just as critical however there are often limitations that can turn a straight forward assignment into one with several delays.

1) It’s vital to obtain site information in regards to the size, shape, boundaries, restrictive convents and easements. A survey, plot plan or locational certificate will greatly assist your appraiser.

2) A copy of original building plans can assist the appraiser is determining the living area, review of the building systems (plumbing, mechanical, heating, electrical) along with noting unique features which may add value.

3) Documentation of maintenance and renovations which have occurred to the property in recent times. This can assist the appraiser in determining the overall condition of your home.

4) A copy of your property tax assessments, which can also determine if your home is adequately assessed.

5) Ensure that all areas are accessible not only within the interior of the dwelling but around the exterior perimeter.

6) It’s beneficial to share previous appraisal reports since there may be components that are not available. If your aware of any comparable sales

7) If you have pets that may be nervous toward strangers, it might be best to keep them contained in a secure area.

Following these items can save your appraiser time, creating faster turnaround times for your property appraisal!

A comprehensive overview of the Canadian Mortgage Market

2010-06-28T07:03:00.000-07:00

So what factors make the Canadian mortgage market tick?

How has Canada avoided the foreclosure crisis?

How stable is our economy in relation to the rest of the World?

What percentage of Canadian households own their homes?

What is the average rate of equity within each Canadian home?

How has the Canadian government addressed speculators within the marketplace?

All of these answer are within the link below:

http://www.td.com/economics/special/el0610_cdn_mort_market.pdf

Divorce advice for appraisals

2010-06-23T07:37:00.000-07:00

One of the most common words that married couples love to hate is “DIVORCE”; yet Canada’s divorce rate is one of the highest in the World @ 40%!!!!! This number is staggering but not surprising. From past experiences, the couples emotions are at an all time high and quite often people do not think rationally. The new words of the day are “child support”, “child custody”, “alimony”, “divorce cost”, “timing” however a key term for an appraiser is “property division”.

So who get’s the house?

For all separations there are two options in respect to real estate. The first choice would be to sell the property and divide the proceeds; while the second option would be for one party to “buy out” the other.
This is the time when things may become nasty!

One tidbit of advice is to never become attached to a commodity. Fighting over the LCD TV or that new dining room table takes up your legal representative’s time and in the long run will most likely cost more than their original purchase price.

It is highly recommended that each spouse hire a designated and licensed residential appraiser, known locally as a CRA (Canadian Residential Appraiser). In short, these folks are experts in their local market and these fine appraisers require annual recertification and educational development.
So why would a family require two valuations?

This is done to ensure that there is no undue influence being portrayed by the property owner. It is common to have one spouse wishing (or should I say pushing) for a high value; while the other wishes for a lower amount. As you can appreciate, there is an element of subjectivity with each appraisal, so a wise rule of thumb would be to accept a 10% variance between each valuation.

Another common practice is to hire a single appraiser by both spouses. This is by far the most cost effective measure. In this case, it would be best for both partners to arrange a mutual time to meet with the appraiser, to ensure that the appraiser does not overlook any deficiencies that may not be clearly visible!
Another tidbit of advice is to split the difference between each appraisal, which is save time and money for monopolizing your lawyer’s time.

Please keep in mind, an Appraiser’s final estimate of market value is the only opinion that is accepted within the court of law therefore a Realtor or Mortgage Broker opinions do not apply!

The value of the home is next divided equally between each partner. Another important element is the date of separation, which is sometimes not crystal clear. In this instances, it better to be proactive on having the appraisal completed since I have seen firsthand in the past- many properties appreciate in value rather quickly from the date of separation to the date of disposal.

Generally those folks who are most satisfied with the divorce proceedings are the instances which have been settled quickly. Keep in mind that respect is a two way street and this is not the time to get “revenge” on that the spouse who has not treated you with dignity.

Last January was a historic date in Halifax, as this region hosted the Canada’s first divorce fair. One day was allocated for the males and the next day was allocated for the females.

The verdict is still out on how well this schedule works for same sex couples!

I hope you have learned one facet of the appraisal process during divorces and contact me for further information.

I’ve included links for the Halifax Divorce Fair, Nova Scotia Barristers’ Society and the Nova Scotia Real Estate Appraisers Association:

http://www.legalinfo.org/index.php?option=content&task=view&id=243

http://www.nsbs.org/

http://www.nsappraisal.ns.ca/directory.html

It's renovation time...

2010-05-20T04:19:00.000-07:00

Spring has spring and many folks have the renovation itch on their minds!

Within the last month, I had the sincere pleasure to speak with Donna D'Amour, a freelance writer for a new publication "Your Atlantic Canada Home".

This was an informal interview and I had the opportunity to speak about many misconceptions about the renovation process.

If I am planning renovations to my home in the hopes of improving the resale value, which are the best to take on?

People complete renovations for two reasons, one as a personal taste / lifestyle choice and the other being for adding value to your property.

It should not come as a surprise that the kitchen and bathroom are focal points for any property. These renovations also tend to be the most costly! The renovations project should depend upon the price point of your home.

You do not want to be the Best or Worst property in a neighborhood. The surrounding neighborhood will provide the parameters for your property worth. Knowing the current and potential value of your property is your guide as to where you spend time and money. It is a combination of projects that add the greatest value such as painting, floor cover replacement, modern hardware and fixtures, good storage and landscaping are all interrelated.

I see a growing trend of clients converting cottages into year round residences,
particularly retirees. Their focus is towards making properties more comfortable such as upgrading insulation, modernizing ceiling or wall finish, replacing older windows with more energy efficient products, installing a more conventional heating system, kitchens and baths and upgrading appliances.

We all know energy costs are not going down, so there has been increased interest on high efficiency / specialized products such as dual flush toilets, and energy star rated appliances.

What kind of return on investment could they produce?

The Appraisal Institute of Canada has developed a public web based guide identified as: RENOVA, which showcases to the consumer an estimated return on their investment, based on professional appraisers surveys. This interactive model is available to the general public free of charge and highlights over a dozen common items that are often renovated. For kitchens and bathrooms, expect a return of 75-100%. The Institute’s website is: www.aicanada.ca

Do you have any tips for economical renovations that can have a positive impact on resale value? (People may have limited resources, yet still want to improve the value.)

We’ve all been impacted by the downturn in the economy, so every penny counts. By far the most economical and highest return on investment is interior and exterior painting, which typically commands up to 100% payback.

Other budget orientated items would be upgrading light fixtures and modern light & wall switches, ceiling molding, baseboard trim / interior doors, painting kitchen cabinet doors, upgrading kitchen and bedroom hardware, replaced worn flooring and kitchen/bath counter tops.

Decks, awnings and solar exterior lighting are popular for homes and cottage and return up to 75%.

What are the renovations that do not produce much if any return on investment as far as resale value is concerned?

Any over improvement to a home or cottage could be considered a poor investment.
Having an in ground pool or a $50,000 designer kitchen within a cottage is not common and would not return much value. Pools are not high maintenance or expensive anymore but appeal to a certain segment. Items such as skylights, whirlpool tubs or a fence typically have returns as low as 25%. Although these items can enhance a sales.

Another factor that is often misjudged is the quality of workmanship. Poor quality craftsmanship and incomplete finish can contribute negatively to your property value. An example would be a residential market that typically contains two bedrooms on the main level. Removal of one room to expand the bedroom to include an office or walk in closet would reduce your pool of potential purchasers and will likely reduce property value.

How do I know what my house is worth before and after renovations?

Professional appraisers complete this type of analysis routinely. They have the sales and experience to interpret both markets and form an opinion of value prior to and after your proposed renovations. Each improvement is itemized to ensure that your proposed changes are functional, adequate and is in conformity with your influential marketplace. It is highly recommended that you hire an appraiser prior to starting any renovations, to ensure you enhance value to your property.

What would it cost me to hire an appraiser - I realize this may vary depending on the property and time it takes but could you give me a range?

For an urban or recreational property valuation, expect to pay $300-400, which is similar to what you pay for a home inspection.

Is there anything I didn't ask that you would like to add?

Nova Scotia, New Brunswick and Alberta are the only Canadian provinces where appraisers are licensed by the Government. The appraisal standards, ethics, insurance and requirements are those of the Appraisal Institute of Canada. The Nova Scotia Real Estate Association publishes a directory of professional fee appraisers for all areas in Nova Scotia. This can be accessed at www.nsappraisal.ns.ca.
Each valuation is independent, objective and unbiased. Experience truly matters and it is best to hire an appraiser who is familiar with the type of property being considered and the geographic area.

The two most common mistakes with renovation or construction are poor workmanship and failure to plan. There is an adage that goes - ” Fail to plan – Plan to Fail”. For example you shouldn't’t replace your bathroom fixtures and later decide you now want a new ceramic tile new floor. Local home improvement stores have much free print materials and staff. Use their staff and resources in your planning stage.

Here's the link for a trendy new magazine sponsored by Kent Building Supplies.

http://www.kent.ca/flyer/atlantic_canadian_mag_pdf.pdf

Property Tax Assessment 101

2010-01-19T18:22:00.000-08:00

Property Tax Assessment 101

Property Tax Assessment 101:In Nova Scotia, our property tax assessment notices are issued the third week of January. We all anticipate opening this notice to determine how much our properties have changed in value over the last twelve months! In most regions, market values in Nova Scotia have improved at a more gradual pace when compared with other Provinces. For example, the Canadian Real Estate Association (CREA) recently reported that the average price for residential properties in Nova Scotia during the last several years were virtually unchanged, when comparing November 2008 and November 2009 property values. CREA statistics indicate that the average price in 2008 for a home in Nova Scotia was $239,438 compared to $239,514 in 2009. In British Colombia, the average price in November 2008 was $395,697, which shot up to $482,392- a 21% improvement!

The Property Valuation Service Corporation (PVSC) is a municipally controlled non for profit organization property tax assessment authority. Properties are reassessed each year and utilize a base date two years prior to the calendar date. The base date for the 2010 assessment notice would be January 1, 2008. A market value approach is utilized by PVSC for each and every assessment.

Let’s first consider the definition of Market Value provided by the Appraisal Institute of Canada:

"The most probable price for which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus."

There are three types of assessment categories within Nova Scotia:
1) Residential
2) Commercial
3) Resource

It is common to have split classifications for a property, especially on a commercial orientated property. For example, if a two unit dwelling offers retail space on the main level and a residential unit on the upper floor, the classification would most likely be a combination of residential and commercial. Resource classifications could include: farming, forestry or a community fishing service buildings. There are other properties that are exemplt from property taxes such as Government buildings.

Your property assessment is calculated by mass appraisal techniques. PVSC's large data base records characteristics within each and every property throughout Nova Scotia. Statistical analysis is used and sales are reviewed to capture general trends and features within your local marketplace. One could argue that mass appraisal reports are not as detailed or precise as receiving a single valuation completed by a fee appraiser. Questions do arise such as: what happens if your property does not fit the mass appraisal type of mold? There could be a likelihood that your property may be over assessed.

In theory, your assessment should reflect the current market value, matched with its base date. As previously noted, the base date in Nova Scotia is two year prior to the current year. Fee appraisers complete consultating services and we offen assist homeowners in the assessment appeal process. If you strongly believe that your assessment does not truly reflect the base date value, it is in your best interest to contact an appraiser. After the assessment notice is issued, the property owner has 21 days to file an appeal with PVSC. Once the property owner grants permission to the consultant, the appraiser contacts PVSC authorities and has the ability to work on their behalf to complete further analysis. Next, the appraiser carefully reviews the assessment file to determine if there are grounds for an appeal. It goes without saying; the appraiser should never complete an appeal that has no merit. The final stage is when the appraiser negotiates with the assessor and if that fails, the consultant can attend an appeal board hearing or to abandon the appeal.

One of the largest expenditures for commercial businesses is property taxes. There are a very limited number of firms in Canada that specialize in commercial property tax consultation. One of the most trust authorities in this business is AEC International. This organization has offices from coast to coast in six Canadian cities and has been in this highly specialized business for nearly four decades. Please view their website at:

http://www.aec-international.com/

Finally, I’ve provide a link for tax rates in each municipality throughout Nova Scotia and another link to the official PVSC website.

http://www.gov.ns.ca/snsmr/muns/fin/tax/pdf/nsmuntax2010-11.pdf

http://www.pvsc.ca/index.html

Residential Appraisal Myth Busters

2009-08-20T07:12:00.000-07:00

Most professions have myths that could tarnish an individuals reputation. I will attempt to highlight ten common misconceptions regarding residential valuations.

Myth: My assessment should always equate to the market value.
Truth: Most provinces strive to support this train of thought however in realty this is generally never the case. For example, if the homeowner has completed recent renovations that the assessor may not be aware of, the assessed value may not reflect the overall condition of the property. On the other extreme, if the property has not seen modernization or typical upkeep- which is identified as differed maintenance, all of which could create an over assessed value.

Myth: The appraised value of a property will vary, depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: If the appraiser has a vested interest in the property it is against professional standards to complete the valuation. In all assignments, the appraiser should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted. There should be no variances for the final estimate of value, whether the report is being completed for the buying party, selling party or their financial institution.

Myth: Market value should approximate replacement cost.
Reality: Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither party being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind. Replacement cost can exceed the final estimate of market value if: the property overbuilt for the market, there extreme elements within a property that a typical purchaser would not typical pay for in the local market, various forms of depreciation and so forth.

Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of a home.
Reality: Appraisers make a detailed analysis of all factors pertaining to the value of a home including but not limited to: its location, condition, size, proximity to facilities and recent sale prices for comparable properties. Unless the appraiser is dealing with a condominium development or a subdivision that offers identical style homes and identical finishes that have been completed by the same builder, a price per square foot may not represent true market norms.

Myth: In a robust economy - when the sales prices of homes in a given area are reported to be rising by a particular percentage - the value of individual properties in the area can be expected to appreciate by that same percentage.
Reality: Value appreciation of a specific property must be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. This is evident both in appreciating market and depreciating markets.

Myth: You generally can tell what a property is worth simply by looking at the outside.
Reality: Property value is determined by a number of factors, including location, condition, improvements, amenities, and market trends. The most comprehensive appraisal report requires an interior inspection of the property, which in turn identifies any common and unique variables within the dwelling and is a central characteristic when completing an appraisal report.

Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own their appraisal.
Reality: The appraisal is, in fact, legally owned by the lender - unless the lender "releases its interest" in the document. However, consumers must be given a copy of the appraisal report, upon written request, under the discretion of the particular client and/or lender.

Myth: Consumers need not be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution.
Reality: Only if consumers read a copy of their appraisal can they double-check its accuracy and question the result. Also, it makes a valuable record for future reference, containing useful and often-revealing information - including the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the vicinity.

Myth: Appraisers are hired only to estimate real estate property values in property sales involving mortgage-lending transactions.
Reality: Depending upon their qualifications and designations, appraisers provide a wide spectrum of services, which includes: advice for estate planning, dispute resolution, corporate relocation's, before / after proposed renovations, zoning and tax assessment review and cost/benefit analysis. Other types of unique valuations include: bio hazard valuations, fire loss for insurance replacement purposes, retrospective appraisals and prospective appraisals.

Myth: An Appraisal is the same as a home inspection.
Reality: An Appraisal does not serve the same purpose as an inspection. The Appraiser forms an opinion of value in the Appraisal process and resulting report. A home inspector determines the condition of the home and its major components and reports these findings.

As you can appreciate, appraiser complete a wide variety of assignment for a great deal of clients. We hope you have learned at the very least, one new element within the appraisal process.

10 Questions To Ask Your Appraiser

2009-07-22T08:00:00.000-07:00

In most service based industries, the most frequently asked question is “how much does it cost for that product”? In many cases, the price is easily identifed however for real property appraisals, no two properties are alike and likewise there are no two appraisal reports the same. It human nature to ask this question however it truly depends on a vast number of circumstances. Prior to completing a quote, an astute appraiser will ask this prospective client a series of qualifying questions regarding the property. Please keep in mind that these are general questions but are not limited to:

Where is the property located?

What is the purpose of the appraisal report?

Who are the reports being addressed to / prepared for and who will be the client relying upon the final report?

How soon do you require the report?

All of these items are critical for quotation process. As a rule of thumb, the quicker you require the report, the higher the fee. Many companies implement a rush disbursement fee.

Now let’s change perspectives. If I was a client requiring a valuation, I would ask the appraiser the following questions:

Is the appraiser licensed and/or designated? If they are, it generally implies that this individual has gone though a grueling educational and recertification process.

How much experience does he/she have on appraising properties of similar quality within this region for the requested purpose? Experience matters. We all know people who are a jack of all trades but a master of none! Make sure the appraiser has ample amount of experience appraising the classification of property along with the purpose of the report.

Will the appraiser that you are contemplating on hiring be the same individual that will be completing the inspection and write up portions of the report? In many large firms, the senior appraiser essentially reviews and co-signs the reports as opposed to visually inspect the quality, condition and finish within the property.

How long will it take to receive my report? Do not be afraid to ask for a detailed description of the report. Many appraisers skimp out of key details. Ask if the quoted fee is inclusive of ALL disbursements.

All of these are important when hiring the best individual for your requested service.

Below is an article written by Jay MacDonald and was sourced from the link below. Although it is focused toward personal property appraisers, this article provides some great insight about the key questions to ask any service provider.

http://www.bankrate.com/brm/news/advice/20030801b1.asp

10 questions to ask a personal property appraiserBy Jay MacDonald • Bankrate.com

"Did you pick your appraiser based on a friend's recommendation? Maybe you thumbed through an antiques magazine and saw an ad that caught your eye. Or, most likely, you simply picked a person at random from the Yellow Pages.
Unlike real estate appraisers, most appraisers of personal property are not licensed. So how do you determine whether the person has the skill to give you a correct quote on your heirloom? The National Institute of Appraisers says these questions should help you determine whether the appraiser fits your needs:
1. What qualifies you to appraise my property? A pro will have formal education in appraisal theory, principles, procedures, ethics and law, as well as years of experience in his or her specialty.
2. Are you an accredited member of a professional society?
3. Have you been tested and passed a certification exam?
4. Do you take continuing education through your organization?
5. Do you buy or sell objects such as mine? If so, it could be a red flag for conflict of interest.
6. How much will your appraisal cost me? If the appraiser won't provide a written estimate, shop elsewhere.
7. How is your fee structured? It should be hourly or per piece, never a percentage of the appraisal.
8. What will I receive for my money? Ask for a detailed description of the appraisal report. Better yet, get copies of some recent appraisals.
9. How long will the appraisal take? Appraisals typically take anywhere from a week to a month.
10. Do you perform on-site instantaneous appraisals? Trick question. Run if they say yes."

Jay MacDonald is a contributing editor based in Mississippi.
--Posted: Aug. 1, 2003

Does Price = Value ?

2009-07-22T06:07:00.000-07:00

A common misconception by purchasing parties is that the purchase price ALWAYS equates to the market value. If this were the case, there would never be a need to have an appraisal completed on your property.

Let’s first consider the definition of Market Value provided by the Appraisal Institute of Canada:

"The most probable price for which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus."

If a buyer is not cognizant of his/her local market and surrounding conditions, there is a likelihood that they might overpay for a specific property.

An important element within the real property appraisal process is the overall relationship between cost and value. In essence, the cost that a property may be acquired for may not be representative of the true market value or ongoing conditions within the specific market.

Motivation can be another variable within many real estate transactions. Items that can influence the final price include:

Is there is a relationship between the purchasing and selling party?

Is the seller forced to relocate and/or must sell their home quickly?

Is there undue stress or severe financial problems with the owner(s)?

Other factors that must be considered include: a purchaser might be willing to pay a premium for a property due to local amenities offered and/or being within a desired neighborhood.

In short, it is the role of the professional real estate appraiser to distinguish if the specific price that has been agreed upon is reflective within the local marketplace, keeping in mind the true definition of market value.

What is an AVM?

2009-07-22T04:59:00.000-07:00

Automated Valuation Models (AVM’s) have assisted lenders and other real estate professionals in recent times. We live in an “I Want It Now” era. An AVM would satisfy those folks who require immediate results but the conclusions can be very problematic. AVM’s are computer generated statistical data concerning values within a certain region. With a click of your computer, results are almost instantaneous however these estimates of value can vary greatly in overall quality, scope and detail.

On the surface, AVM’s may try to emulate an actual appraisal however it cannot replace the work completed by a human appraiser. AVM’s do not work well in those regions that there is a wide vary and mix of unique homes, areas that do not experience numerous sales and locations that lack property information.

Key drawbacks from AVM’s

In most cases, the appraiser is the eyes and ears for their respected client. A computer can’t determine if the property is actually physically present within its set of boundaries, overall style, condition and other social, economic and cultural variables that come to play within the appraisal process.

AVM’s are unable to quantify what specific features within a property may benefit or deter from the overall market value.

Many valuation models place heavy weight on the property assessment value, which may only be required every two to three years. This may not represent current market conditions either in a declining or developing market.

Another key variable is that the system cannot filter comparable properties as to why they may have sold. Numerous questions are difficult to answer, such as: what levels of motivation were at play? Was the property sold under duress? Did an individual overpay for a property just to reside in a specific neighborhood? Is the sale at arm’s length? Appraisers often identify these elements as an “arm’s length transaction”.

AVM’s are unable to accurately reflect current market conditions. A downturn in the economy could be overlooked and more importantly overvalued by an AVM!

The next time you require any valution advise, it is recommended that you hire a qualifed and independent appraiser. Rest assure that we are licensed and designated members that work exclusively in real estate valuations and know our markets extremely well.