Commercial Real Estate Appraisal
Posted by admin under: real estate appraisal Jun 21Commercial real estate appraisal is a combination of art and science. Knowledgeable appraisers gather and analyze data prior to making informed decisions about real estate value. The appraisal profession has developed a series of well-established analytical techniques; the cost approach, income approach and sales comparison approach. The most appropriate approaches depend upon the characteristics of the subject property.
The cost approach is considered most applicable for commercial real estate appraisals for relatively new properties and special-use properties. Commercial real estate appraisers are less likely to use the cost approach for older properties due to the difficulty of precisely calculating the amount of depreciation.
The income approach is considered most applicable for investment or income properties. Appraisers gather data regarding the actual income and expenses for the subject property, rental comparables, expense comparables, industry expense data, market occupancy, and rental market trends. The commercial real estate appraiser then estimates gross potential income, other income, effective gross income, operating expenses, and net operating income. Net operating income is converted into an indication of market value using a conversion factor termed the capitalization rate, using the following formula:
Market value = net operating income/capitalization rate. This process is termed direct capitalization.
The income approach can also be calculated using a discounted cash flow analysis. Revenue and expenses are estimated for a period of years and the resulting annual cash flows and gross proceeds from a projected sale of the property are discounted to a present value using a discount rate.
Commercial real estate appraisers also utilize the sales comparison approach to estimate market value. The sales comparison approach is often considered most comparable for owner-occupied properties. After obtaining data regarding similar properties that recently sold, the appraiser makes adjustments to generate an indication of market value for the subject property.
After considering each of the three approaches to appraisal and preparing an analysis for the approaches which are considered relevant, the appraiser reconciles the indications of value to a final value conclusion. The quality and quantity of data for each of the approaches is considered when reconciling to a final value conclusion.
O’Connor & Associates is the largest independent appraisal firm in the southwestern United States and has over 40 full-time staff members engaged full-time in valuation and market study assignments. Their expertise includes valuing commercial real estate, single-family, business personal property, business enterprise value, purchase price allocation for businesses, valuation for property tax assignments, partial interest valuation, estate tax valuation, expert witness testimony and valuation for condemnation. They have performed over 20,000 commercial real estate appraisals since 1988.
To obtain a quote or further information for a commercial real estate appraisal, contact either George Thomas or Craig Young at 713-686-9955 or fill out our online form.
The appraisal division of O’Connor & Associates is a national provider of investment real estate appraisal services including commercial real estate appraisals, comparable sales confirmation, comparable sales units of measure condemnation appraisals, due diligence, residential appraisals and investment hypotheses.
All commercial property types benefit from our appraisal services including nursing homes, discount stores, truck terminals, tennis clubs, supermarkets, country clubs, medical offices, mini-warehouses, restaurants, vacant lands, skating rinks, community shopping, centers, power centers, car wash facilities and service stations.
Patrick C. O’Connor has been president of O’Connor & Associates since 1983 and is a recipient of the prestigious MAI designation from the Appraisal Institute. He is also a registered senior property tax consultant in the state of Texas and has written numerous articles in state and national publications on reducing property taxes.
How to Become a Real Estate Appraiser
Posted by admin under: real estate appraisal Jun 21Learning how to become a real estate appraiser starts with an introduction to the work itself. Real Estate Appraisers will either work for themselves or are part of a larger company. Many work for lending institutions, including banks and mortgage companies. Appraising property is necessary before a bank or other lender will approve a mortgage for a home buyer. Appraisers will look at many factors when examining a properties value. These would include:
Size of the home and the land
Age of the home
General condition of the property
The surrounding area and neighborhood
Market value of similar homes in the same area
A real estate appraiser needs to pay attention to detail and be good with numbers. Gaining expertise through experience and training is the key on learning how to become a successful appraiser.
Training to become a real estate appraiser
Each state has criteria that must be met to become a state licensed appraiser. Most states require work experience and educational requirements, including passing state exams. Many states allow for appraisal online course learning. Taking an online course offers the flexibility to study on your own time.
Most states require a minimum 90 hour pre-license course, followed by a proctored exam. This means that after you have completed the appraisal course, the school administrator will arrange a local proctor to arrange a test setting under that person’s supervision.
These appraiser courses follow the Uniform Standards of Professional Appraisal Practices (USPAP) and their rules and guidelines. The majority of the appraiser course will teach the fundamentals of real estate appraisal and how to evaluate properties effectively and professionally.
Continuing education is required after you are state licensed. Many of these courses can be delivered online. State requirements for initial training and continuing education vary.
Real estate Appraisal Job Demand
Gaining real work experience is the most important part of becoming a real estate appraiser. The competition in this field is growing, but the real estate market continues to grow and the opportunities are there for the right person. Real estate agents, home inspectors and real estate appraisers are in high demand in many areas of the country. Many people who work in this field do it part time. This is the same for home inspectors.
Put some thought into what you want to do. Learn how to become a real estate appraiser in your state. Good luck!
Real Estate Appraiser Tips
Posted by admin under: real estate appraisal Jun 21Marketing your products and services on the internet is an effective way to promote your business. These days almost every developed and developing country has the knowledge of internet and computer. Everyone knows that internet is the best source of information, no matter what the client is searching for. The client has to just type the right keyword to get the essential and the entire information about the products and the services. If you are capable enough to fulfill their requirements, they will surely turn to you for your products and services. Here are a few tips by which the real estate appraiser can promote its services:
- SEO (Search Engine Optimization): SEO helps to improve the quality and quantity of web traffic thereby improving your ranking in major search engines like Google, Yahoo etc. The target audience reaches your website through these search engines and gets converted to a potential customer. However, you need to put in the right keywords in your website like “Real Estate Appraisers” or “Real Estate Appraisal Services” etc. These key phrases are possibly used by the clients searching for appraiser services.
- Appraiser Video Marketing: This method for real estate appraisal services speaks more about your appraiser services offered. Video marketing is been popular from several years and this technique of marketing has created a good influence on the clients. Viewers see the video and understand things better. People don’t have enough time to read the long descriptions about your appraiser services. But they will surely love to watch the video for a few minutes. They not only understand things more precisely, but also have a kind of trust factor in you as they can see the real human promoting their real estate appraiser services. Moreover, the appraiser video is always liked by people who are searching for a genuine real estate appraiser services and it will act as an added advantage over your competitors!
- Appraiser Blogging: Earlier, the appraisers used to list their services in “paid” directories, which is a thing of the past. And by doing so most of the appraisers wasted great amount of money on paid directories. Appraiser Blogging from a self-hosted Wordpress Appraisal Blog which helps to spread your appraisal business contact information all over the web so that when clients need an appraiser in Birmingham Alabama, they can easily find them on Google. Thus, appraiser blogs provide effective results for appraising real estate services.
- Local Business Advertisements: These listings show the map to your location on several popular search engines. The client can see it for free on Google, Yahoo, etc. Just be careful to mention your services, suppose your real estate appraiser services are for Miami, you need to include “Miami Appraisers” or “Appraisals Miami”. And do remember there is a great competition in this business too, so you need to be ahead of the competition.
Though, some of the real estate appraiser methods take time to materialize, but you will surely get good and potential clientele that will help you earn good income. Moreover, there are several online companies that create best and perfect appraiser video for you and your services, you can always contact a reliable company to promote your appraiser services successfully.
Real Estate Appraisal Courses
Posted by admin under: real estate appraisal Jun 21In any real estate transaction, one of the most important elements is the price of the property. To be able to determine the market value of a property, lenders and real estate brokers hire a real estate appraiser to asses its market value.
There are three types of appraisal that appraisers employ – the VA, FHA and conventional appraisals. Professional real estate appraisers have real estate appraisal licenses that allow them to practice their profession. To be able to get this license, potential appraisers must attend classes and take and pass the state exams. However, even after getting their licenses, appraisers still need to take more classes to become certified appraisers for VA loans, FHA loans and others. Apart from state accredited schools that offer courses on different subjects on real estate appraising, online courses are also available on the Internet.
Online courses on real estate appraisal
Real estate appraisal courses offered by schools on the Internet include different areas of study, which usually includes the National Standards of Professional Appraisers (USPAP), lessons on how to use the Uniform Residential Appraisal Report, Real Estate Math, FHA Appraisal, OREA Information, State Appraisal Licensing Information, and License Renewal Information. Other additional courses offered by some schools also include Residential Real Estate Appraisal, and Legal Considerations in Appraisal.
Review courses to help future appraisers pass the state exams are also offered by the schools, which come in the form of practice exams and tutorials. These courses are often delivered through various software, CDs and virtual tutorials that future appraisers can access on their personal computers right at the comfort of their homes. As with other real estate courses offered online, future appraisers are also given the opportunity to study the different appraisal laws and principles in other states.
Renewal of License
Real estate appraisers are also required to renew their licenses and they do so by taking another set of exams. Online schools also offer help in this process by helping the appraisers upgrade their skill by offering additional courses like Income Property Analysis and Home Inspection. Given all of these, it is clear that online real estate appraisal courses offer a wealth of information for appraisers that can help them practice their profession.
Who Should Hire the Real Estate Appraiser and Why?
Posted by admin under: real estate appraisal Jun 21Everyone involved in the sale of real estate has a vested interest in the results of a real estate appraisal. The outcome affects the seller, the buyer, the lender, and even the realtor.
A too low valuation of the property by the appraiser could mean a seller must lower the asking price. For a lending officer, it could mean a lesser commission or none at all. A too high valuation means the buyer could be paying more than the property is worth. For the realtor, his/her commission could go higher or lower, which is based on the purchase/sell price of the real estate.
An appraiser, who should be licensed by the state, performs the real estate appraisal. It is best to hire someone local with years of full-time experience in order to get a more accurate appraisal. The appraiser and appraisal are governed by the minimum standards, published periodically in the Uniform Standard of Professional Appraisal Practice by the Appraisal Foundation. The Foundation is chartered by Congress.
The recent real estate bubble, unfortunately, brought problems for appraisers and many involved in real estate transactions. According to Realty Times in their April 2006 issue, appraisers have been routinely asked by lenders to inflate real estate values to keep up with the ever-rising real estate market. One real estate appraiser in San Diego quit and turned in his license to the state, after being fired three consecutive times for refusing to inflate his valuations. Now, real estate appraisers across the United States are under a microscope from federal financial regulators and Congress.
The real estate appraiser may be hired by the seller to determine an accurate selling price or by the buyer to ensure the accuracy of the purchase price and mortgage; but generally, the lender does the hiring or uses their own in-house appraiser. Though buyers may assume the lender has their best interest, mortgage lenders have their own best interest at the forefront, especially some not-so-scrupulous lending officers who may be targeting a higher commission.
If I were a seller, I would hire my own real estate appraiser to ensure I was getting the most for my property. As a buyer, I would put the money out upfront to hire an independent and objective appraiser with no connection to anyone within the real estate transaction. This ensures that I do not contract for a mortgage, based on an inflated appraisal valuation, that will give me a new home with a lower or negative equity. The lender still may require a different appraiser.
If five different real estate appraisers evaluated the same property within the same timeframe and under the same conditions, it could result in five different and varying real estate valuations. Why? There is no set checklist or established value for each property feature and amenity. Though appraisals are based on prescribed standards, it is a subjective process.
If there is more than one real estate appraisal and they disagree significantly, you have options. If the value is too low for the seller, renovations may raise the value — or you can decline to sell. If the lender insists on its appraiser’s value, which disagrees with your real estate appraiser’s value, as the buyer you can look for financing elsewhere — or decline to purchase the real estate. There also is the option to bring the appraisers together to come to a common agreement on the value.
Remember, the person looking out for your best interest is yourself. Ensure the appraiser in your real estate transaction is reputable, objective with no connections to anyone in the transaction, local and experienced.