APPRAISAL EXPECTATIONS
WHAT SHOULD YOU EXPECT FROM AN APPRAISAL
By definition, an appraisal is defined as the act or process of developing an opinion of value; an opinion of value. So, simply put everyone does appraisals-no one would buy or sell if they didn’t have an opinion of value.
But, not everyone is a professional appraiser licensed by the State of Florida like myself and my peers. Many appraisals are for market value which is defined generally as: The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
So what should you expect. In many ways, a professional appraisal is a due diligence document that you should be able to rely on that documents everything from the region to the neighborhood to the subject property and gives the reader all of the pertinent information from a physical and legal perspective. It should reflect what market participants are actually doing.
I once taught some appraisal courses. The first analysis the appraiser must do is the
Highest and Best Use analysis. Most appraisers spend little time with this. If they are appraising and office or warehouse, they often have a good idea when collecting the data that the value as improved exceeds the value of the land. But in our market, well located sites can be a challenge to find. Consequently, some sites that once would have traded for $40 per square foot, can get very expensive with more demand and less supply and properties that look like an office building can be a developable site based upon changing economics. Land can be a difficult appraisal with zoning, setbacks, wetlands, storm water, utilities and so on. One of my common sense meets appraisal theory was the duck test-if it walks like, sounds like, looks like…it is a duck. You won’t believe how many appraisers will compare a buffalo to a duck.
One appraiser once told me “that it is unethical for an appraiser to be involved in brokerage”. On my, can you imagine if appraisers actually walked properties with buyers and heard there reservations? Their heads would explode! Early in my career I was showing flex space to a national company President. I showed him one that didn’t meet his criteria and he said to me” do you do this for a living”. Ouch, I never forgot that and it drives my selection of properties whether it is for appraisals or brokerage.
My experience gives me a background where I will value your property with the appropriate theory and analysis but will employ decades of experience to arrive at a fair valuation.
