florida real estate directory

Expert Committee

Appraisers are licensed by the state and see your real estate directory, real estate offices, or the bank. Committee of experts often work for themselves, but also for businesses, mortgages, real estate brokers, lenders, businesses and government agencies. An appraiser is a professional, the knowledge and know-how necessary to the value of real estate. They typically work for individual clients and focus on the assessment of a piece of real estate at a time, spending much of her time researching and writing reports.

The most important step is for each of the evaluators to determine the highest and best use of a particular property. These form the basis for the evaluation of all three approaches or techniques that follow.

Highest and best use

Highest and best use is that use, to the highest value of the property. It is shown that the use of which is physically possible, financially feasible, and legally permissible. For example, if a free site is located on a busy street, is big enough for a department store, zone is for retail commercial use, and a new store is expected, in order to be successful, then the highest and best use this site is as a department store site. In contrast, that same site has a house on. If it can be shown that the value of this site is actually more of a residence as a location for a department store, then the highest and best use would be residential. Highest and best use is everything that is on the use of the property value on the market. After the highest and best use, the experts will begin for the three basic valuation methods.

The Cost Approach

The cost approach: a series of procedures by which a value indication is derived by estimating the running costs for the construction of a reproduction of the existing structure, the deduction of depreciation and provisions for adding the estimated land value. The principle of substitution is the basis of the cost approach, that no rational person will pay more for a property than the amount for which he can, through the acquisition of a site and construction of a building, with undue delay, a property of equal desirability and utility. Committee of Experts of the rule using figures published in the calculation of costs for the construction of a building. These data sources are available online and in printed form. Land value is determined by a comparison of the subject site with other similar sites that have recently sold.

The winning approach

The winning approach is usually in the valuation of income-producing properties. It is a technique in which the gross or net income of an income-producing property is activated, at a rate that a return of interest on the invested money back and investing in the improvement over a reasonable period of the investment. Activation is designed for simple houses such as apartments or duplex rented by the use of a gross rent multiplier. This means multiplying the monthly rent of a property times a number (GRM) is found by dividing the sales prices of similar properties of their monthly rents. Commercial and industrial properties with complex formulas to determine its value in the income approach, such as cash flow analysis.

The sales comparison analysis

While the costs and income are important considerations, the sales comparison analysis is the industry standard for residential real estate. Appraisers familiar with the surroundings in which they work. To ensure that all the effects (positive or negative) from its position will be reflected in the sales comparison analysis, the expert should be comparable sales from the same quarter, if possible. If this is not possible, the expert must be to "neighborhood" or "place" "adjustments for all sales that are not subject to this neighborhood characteristic.

For commercial and industrial real estate, location within a particular environment may not be as important as the characteristics of the specific physical location. A website must be in a position which is suitable for the types of companies that are looking for, but also to a suitable size, shape, and have access to the customers. For example, a gas station, a site that is large enough and that customers can conveniently and exit. As a result, sales of websites, which may be compared to a petrol station and adapted to the characteristics of the subject site.

The same applies to other aspects of a property, such as the size, quality and features of the building. Differences that the market reacts to the adjustment in the comparable sales by making it in the "Subject" property is checked. If a house sold with a fireplace and the subject is not available, but the market keeps a fireplace is important that the expert to an adjustment to the purchase price of the comparable home sold because it did have one and the property to be assessed is not the case. The opposite is the case when the home is not considered a feature that the other homes that are not have sold. The fundamental question is, what features are available in a property, buyers are willing to pay extra to receive or pay less if they do not exist? If differences exist, the expert must determine how much a typical buyer add or will be deducted.

Final Estimate of Value --

If the expert, the three techniques, it is time to decide which of them is the most reliable and closely follows the actions of the market. For residential property, the sales comparison analysis is usually the most reliable. For commercial or industrial properties, all three techniques (or parts of one or more) can be reliable. The experts on the various aspects of each technique in what he or she believes a credible and supportable opinion of value. The result is the final estimate, depending on the needs of the customer, can be expressed as a single number or a series of value.

Harry E. Davis is a Texas state certified residential appraiser in Texas and is webmaster of the FHA Appraiser Directory Appraiser. Opinions are in Austin Texas Appraiser.