Q: Can you appraise properties as of a historical date?
Yes. Properties can be appraised as of a historical (retrospective) date, current date, or future (prospective) date. Appraisals are based on the analysis of market data. So, when appraising historical dates, an appraiser will consider comparable data that sold prior to the historical date. Data after the historical date should not be considered because of uncertainty of future events as of the historical date might impact sales after that historical date. For example, if a major employer opened or closed facilities after the historical date, if interest rates increased or decreased significantly after the historical date, the comparable sales date may be impacted.
Q: What are date of death appraisals used for?
a.) There are a few reasons for date of death appraisals. Accountants and TEP attorneys will use date of death appraisals to establish the tax basis for step-up value. These are typically properties held in trusts or estates.
b.) Lawyers also use date of death appraisals to ensure fair settlement of estates for their clients.
c.) They are also used in dispute resolution, when two appraisals have been completed and the lawyers agree to bring in a independent 3rd appraisal to settle a value dispute.
Q: When are appraisers used for expert witness testimony?
Appraisers are used as expert witnesses whenever real estate interests are at stake. Appraisers offer professional insight into markets, market trends, real estate analysis, valuation analysis, and any other questions lawyers may have in bolstering a case where real estate is in the balance.
Q: What’s the difference between a MAI and SRA Appraisal Institute designation?
Generally, MAI appraisers specialize in the analysis of commercial real estate, whereas SRA appraisers specialize in all matters of residential real estate. While there are situations where these designations cross disciplines you want to be assured you have a competent appraiser analyzing your real estate interest.
Q: How long does an appraisal take?
Appraisal inspections vary depending on the property, appraisal type, and assignment requirements (scope of work necessary to produce credible results). The appraisal inspection can take anywhere from 15 minutes to a few hours.
Q: What is a typical appraisal turn time?
Appraisal turn times also vary depending on the property, appraisal type, and assignment requirements (scope of work necessary to produce credible results). Appraisal reporting is a time intensive process that requires extensive research and analysis. The appraisal process can take anywhere from a day to months or even years depending on the assignment. Your appraiser will layout timelines in the letter of engagement (appraisal contract).
Q: How much is solar worth?
a.) Leased solar has proven to create selling pains in residential real estate due to transferability issues. Buyers will have to assume a solar lease or the system will have to be paid off prior to closing. Assuming a lease impacts the buyers leverage ratios, while paying off leases are typically extremely expensive. For these reasons, leased solar is typically damaging in the resale of real estate.
b.) Owned solar, on the other hand, increases the marketability (value) of a property for a number of reasons. Primarily, savings on utilities. The amount saved each month varies depending on use but can be a selling point in many markets. There is another benefit to solar reflected in buying trends of “green real estate”. Buyers are seeking out green “eco-friendly” homes retrofitted with energy efficient lighting, appliances, insulation, fixtures and landscapes. Solar is the most visible and expensive green “eco-friendly” improvement a builder/owner can make. However, studies have shown the payback on savings and improved marketability support an increase in value from 3-6% depending on the market. If you own a solar system, be sure appraiser with experience in green properties appraises you home.
Q: Should I have a MAI appraise a residential property?
The same way I wouldn’t have an SRA appraise a commercial property, I wouldn’t have a MAI appraise a residential property. There are exceptions, however, MAIs are highly skilled and trained in researching and examining cash flows, income, cap rates, stigma, and other factors impacting commercial properties. Commercial buyers base their purchasing decisions on factors very different than residential buyers. For this reason, I would stick with SRAs when dealing with residential properties.
Q: What is geographic competency?
Geographic competency suggests that an appraiser is familiar with the market in which they are appraising. Appraisers must familiarize themselves to the degree and expectation of their peers appraising within the same market. Technology allows appraisers to gain this competency fairly easily in most markets. Competency in general should be the concern of all users of appraisals. Low quality reports are easily identifiable by professionals and can be unraveled in the court of law.
Q: Do renovations increase my property value?
Improvements can increase the value of a property, however, there are many renovations homeowners make that are taste specific with no impact or negatively impact value. Real estate agents and brokers are valuable consultants on what improvements buyers are looking for in the market.