Talk:Real estate appraisal/Archive 1

Archive 1

International practice

I don't have time right now, but it seems like the information about UK appraisal is sprinkled at random places throughout the article, including the opening graf. Perhaps the RICS/USPAP differences should be moved to a separate section of the article, possibly including Canadian and Australian appraisal as well. Just opening thoughts. Any takers? Or am I alone at this article?--Bltpdx 08:04, 3 December 2005 (UTC)

I disagree. The information about UK valuation is NOT randomly sprinkled. There are a few sentences in the opening paragraph intended to alert readers to variations in terminology, and then there is a dedicated section, titled Valuation methods, which deals with UK valuation itself. Please note that 'Valuation methods' is the standard term used to denote the UK equivalent of 'Appraisal approaches' -- and that is why that section is titled as it is.

If there are editors who could contribute about other countries' practices, that would of course be very welcome. But why have you suggested that such information be included in the section on UK valuation? Is it always the US and the rest of the world? RCSB 09:30, 3 December 2005 (UTC)

No, of course not. In fact, my suggestion was meant to make the delineation less specific to any country, or (and I didn't specify this) to create separate pages for "appraisal" and "property valuation"...I was trying to suggest that the article be about that which is common to all appraisal/valuation first, and the country-specific differences second, in order to avoid any country-specific favoritism from any direction.

For example, and this is open to discussion: move "Property valuation in the UK is regulated by the Royal Institution of Chartered Surveyors (RICS), a professional body encompassing all of the building and property-related professions. The RICS professional guidelines for valuers are published in the Red Book." to a section called, for example, "Governing Bodies", with subheadings for USPAP, RICS, and the Canadian and/or Australian governing bodies.

Perhaps, if the UK is the only English-speaking country with a significantly different approach to this kind of thing, "Property Valuation" deserves its own page altogether. Otherwise, I stand by my statement that it could use some formatting changes to clarify that, in fact, the US approach is not the main approach.

My point was more that the UK information feels more like an afterthought than shown as "the other way to do it."

I am fairly inexperienced with wikipedia - if I make a wholesale change to reflect the kind of structural changes that I'm suggesting, and it's hated, the whole thing can be reverted easily, yes?

And, as an aside, "always the US and the rest of the world" is about the last thing in the world you're ever going to hear from me.--Bltpdx 10:29, 3 December 2005 (UTC)

I don't see why there should be seperate articles for "real-estate appraisal" and for "property valuation", since they are definitely one and the same, even if theory and practise differ on some of the finer points.

I would like to emphasise something you might not be aware of: The importance of RICS practice goes well beyond the UK. The RICS has gained a strong foothold in many European countries, perhaps owing to the international reach of UK property consultancies, such as Jones Lang LaSalle, CB Richard Ellis, Knight Frank and King Sturge. In many countries in which the RICS has a local branch, many property valuers have opted-out of their local organisations, seeking to gain RICS accreditaion instead. This is because the high professional standards of the RICS are widely regarded and an RICS valuer is likelier to be contracted by an international property developer. Note too that the IVSC -- the International Valuation Standards Commitee, of which the US Appraisal Institute is a member, has its headquarters in London. RICS practice is also standard practise in Singapore, Malaysia and Hong Kong, which have vibrant and well-developed property markets.

In Israel, where I've studied real-estate appraisal, the profession is in fact heavily influenced by American practice. Our introductory textbook was The Appraisal of Real Estate, published by the Appraisal Institute. So I am not biased towards RICS practice because of my background. But my respect for its greater rigour has grown, the more I became acquainted with it.

While it is always possible to improve any article, I suggest proceeding with caution, since I feel the article as it stands is well balanced. RCSB 12:32, 3 December 2005 (UTC)

"In the US" comments

I have been adding the "In the US" comments in the last few days, because it was apparant to me that US readers could be easily confused by the article. I am more familiar with USPAP than most, and if what was written here about the red book is valid, then there are important legal differences in how things are handled under the red book and USPAP. No problem here, I just want to be sure that readers in the US know how things are handled by law in the US.

I added an edit again today, because we have no such thing as a "fee simple value" in the US. We have n-types of values of a fee simple interest. I order appraisals constantly where we need a market value, liquidation value and insurable value of the same fee simple interest. If it is a large proposed project to be in leased fee, we still ask for the fee simple interest in case it goes under before completion.

I'm not going to write about how things work elsewhere in the world because I don't claim to know how things work elsewhere. I do know how they work in the US. From what ive seen in other countries, everyone has their own reasons for doing the things the way they do. If we need separate sections, thats fine, if we don't thats fine too. We still hav'nt covered half the most important terms. (CKK)

I am the one who has contributed the information about the Red Book. But I have nothing to do with what has been written here about "fee simple value" and the like. I believe that section was written by US contributors, so if it isn't consistent with USPAP, then it probably is simply inaccurate - I doubt it was meant to represent practice in any specific country, and in any case no such country has been specified. I suggest you change that section in the manner you have described.

I would also like to suggest that this article not be too technical. I believe an encyclopedia article should be geared more towards general knowledge of the subject. Furthermore, if we try to replicate the rigour of official publications, the reader might be misled to believe that what is written here is legally watertight. RCSB 11:56, 20 December 2005 (UTC)

Home Inspectors

Appraisers and home inspectors are two completely different things, so the reverters are right to remove the link.--Bltpdx 07:49, 14 December 2005 (UTC)

100% Correct. Home Inspectors usually don't even have to be licensed. Beamathan 07:28pm, March 12th, 2008

Overview

How about this: Why don’t we discuss this before posting (Actually I just found the discussion page a couple days ago).

How about we modify the outline. Then fill in the gaps.

1.0 What is an appraisal?

2.0 How are appraisals used?

3.0 How are appraisals done?

3.1 Defining the appraisal problem

3.1.1 Purpose of the appraisal

3.1.2 Types of value

3.1.3 Date of value (Retrospective and Prospective)

3.1.4 Property to be appraised (As Is, As If Complete)

3.1.5 Types of ownership interest

3.1.6 Highest and best use

3.2 Developing the appraisal solution

3.2.1 Three approaches to value

3.2.1.1 Cost Approach

3.2.1.2 Sales Comparison Approach

3.2.1.3 Income Approach

3.2.2 Reconciliation

4.0 AVM’s

5.0 Review appraisals

6.0 Notes on differences by country. (maybe footnotes for numbered qualifiers in the above discussions)

6.1 Country 1

6.2 etc

7.0 Citations

8.0 Links

One problem I see here is that I don’t know if this format works for other countries. The question is whether overall the process is similar or different between countries. If it is similar between the English speaking countries then a general format will work, if it is different, maybe it will be better to have a separate section for each country. (CKK)

Not a bad outline - I'd say there needs to be more discussion of the Income Capitalization Approach. This article seems to focus too much on residential home appraisals. While the volume of such appraisals far exceeds that of income producing property, the dollar value is similar. The Cost Approach is almost never utilized for commercial appraisal. Martin Heidegger 20:49, 8 November 2006 (UTC)

Actually you're mistaken the cost approach is definitely used on some commercial appraisals. It is a good support for the income approach and sales comparison. A case would be a 3 store strip mall. As Appraising theory states, why would you pay more for a strip mall than it costs to buy the land and build one from scratch?

Start of KTrimble (talk) 18:56, 1 April 2008 (UTC) I agree that this entire article needs to be rewritten, though it is a very good functioning initial draft. After some exposure, it is becomming more evident what the article needs to do. Before establishing a new outline, however, I think we need to discuss what major points need to be covered in the main article. This subject is large enough that I also think that this article needs to be broken up into an entire series of articles linked from the main article, such as an article on the appraisal process, the appraisal industry, and appraisal practice, etc. The appraisal process section would be relatively abbreviated linking to separate articles on HBU, cost approach, income cap approach, etc. which in turn might link to other articles on depreciation, cost concepts, land valuation, cap rates, etc. The section on the appraisal industry would be summarized, probably compare and contrast USA vs everywhere else, and link to other articles on appraisal regulation, USPAP, Red Book, RICS, AI, ASA, farm managers, NAIFA etc. The section on appraisal practice (which might preceed the section on appraisal industry???) might cover the uses of appraisals, how appraisers are trained or certified, and the controversies over appraisals and the role of appraisals in past and current financial meltdowns.

Taking this concept a little farther, this article on real estate appraisal needs to be referenced from a main article on the entire concept of valuation as part of economics and the real estate industry as part of the finance industry.

Basically, I think this article needs to explain

1. what a real estate appraisal is (as an introduction with some definitions, appraisal vs appraisal report, discuss common report uses and report formats, contrast with BV, MTS, personal, etc.)

2. who does appraisals (how appraisers are trained, certified, etc.)

3. how a real estate appraisal is formulated (define the property, property rights, appraisal process, HBU, the three approaches, etc., maybe contrast with appraisal process in IVS, etc.)

4. more on how appraisals are reported and used

5. describe the appraisal industry (ASC, Foundation, USPAP, certification vs RICS, IVS, etc., AI, ASA, farm managers, NAIFA, controversies and role in finance)

I hesitate to propose this as an actual outline. Most of the above proposed outline can be incorporated into this more abbrevated and structured outline to form an entire section of articles on this and related subjects. I am going to wait a couple of weeks and then probably start a major modification if I can get some feedback. KTrimble (talk) 18:56, 1 April 2008 (UTC)

property valuation surveyor

This article says that in the UK, a real estate appraiser is a property valuation surveyor. However, a Google search for this phrase finds exactly three hits, two of which are Wikipedia, one of which is irrelevant. Am I missing some detail here? --jpgordon∇∆∇∆ 04:31, 1 June 2006 (UTC)

Has been corrected. RCSB 22:25, 12 July 2006 (UTC)

work in progress

This entry needs a HUGE amount of work. Some obvious things (duplicate sections on highest and best use, lack of definition of ownership interest) and some more subtle things (out-of-date citations -- USPAP Statement 8 was retired a few years ago... I've deleted that citation). Skipping from U.S. methods to U.K. methods without a clear rationale is confusing even to the reader who understands the differences. I'll return to this entry regularly and keep working on it. --Thesurveyor 02:24, 1 July 2007 (UTC)

Organisation

The entry needs to be reorganised. For instance, there are two sections on 'Organizations' - one at the beginning of the entry, another at the end. These need to be merged. Secondly, I propose that Highest and Best Use, Market Value and Appraisal Approaches should come first. These are the most important sections, and the most interesting for the casual reader. Scope of Work and Organizations are more technical and of interest to a narrower readership. RCSB 21:43, 25 July 2007 (UTC)

I've rearranged the sections in what I believe is a more readily accessible flow. RCSB 23:53, 25 July 2007 (UTC)

No. Scope of Work is THE most important as far as the appraisal process goes. Obviously you're not an appraiser. Without the Scope of Work you can't perform an appraisal. It's that simple. I'll read the article again and add/edit the section to make sure that this is present. Beamathan 7:32pm, March 12th, 2008 —Preceding comment was added at 23:32, 12 March 2008 (UTC)

Fixed it. I'd appreciate discussion within this page before anyone tries to change it. It honestly needs to be first in this section. —Preceding unsigned comment added by Beamathan (talk • contribs) 00:55, 13 March 2008 (UTC)

Approach vs. method / Section on Germany

Section two is on approach, therefore I feel that subsection 2.4 (UK) does not really belong there. I'd suggest to insert an additional section on methods, with subsectios (and/or separate lemma) for selected countries/regions. Please let me know your opinio on that. If approved, I'd rearrange the structure and provide some info on appraisal methods in Germany.

Edit: This could very well be merged with section 5, as governing authoritites and organizations usually lead to the respective AP. Maybe such a merged section could be titled "Appraisal practice by country", giving a short summary on each and providing more detailed information in separate articles? --Sunshinemind 15:25, 13 September 2007 (UTC)

I don't think the semantic distinctions between approach and method warrant re-arranging the entry: approach was neatly defined here as a grouping of valuation methods. In any case, the approach categorisation is fast becoming universally accepted (for proof, please consult the International Valuation Standards (IVS)).

Notwithstanding, it would be very welcome if you were to add information on valuation practice and institutions in Germany; It would even be nice if you gave the German-language equivalent for various valuation terms. Feel free to locate such a section or sections as you see fit. Looking forward to your contribution. Tkeu 16:20, 13 September 2007 (UTC)

Okay, will do. Meanwhile I'll rethink the approach / method question. Regards, --Sunshinemind 13:41, 14 September 2007 (UTC)

I have inserted a German section with some information on legislation, organisation and procedures, but I'd be glad if a native speaker could take a closer look at it. As that section is quite long, I wonder if it might be useful to spin off a separate arcticle and to shorten it in this one? --Sunshinemind 10:39, 18 September 2007 (UTC)

Looks very impressive and interesting. I will take a closer look later on - but I myself am not a native English speaker. Anyway, this interests me very much as I always like to compare between countries; much can be learned in this way. Thank you for your contribution. Will return later. Tkeu 13:24, 18 September 2007 (UTC)

Sehr gut! Viel interessant. Danke fũr dein Artikel. At last we are getting an international perspective; I don't think we need to have a separate entry on the subject: maybe in future, if and when there are further countries added. Tkeu 16:53, 18 September 2007 (UTC)

Thanks. I tried to answer your questions on my userpage. Regarding the question to see a calculation example (of German income approach?), I will think about how to do that best. Maybe I'll play in my sandbox for discussion and later insert it as a separate article. Please be advised that I will be on a couple of valuation tours during the next weeks, so this might take some time. --Sunshinemind 17:41, 19 September 2007 (UTC)

Created a new article on German income approach. Kind of hard to balance between essential information and too much text. I'd be curious how other users feel about that. --Sunshinemind 11:34, 20 September 2007 (UTC)

Nothing is non-essential on Wikipedia - which is infinitely expandable. Anyway, I at least am very interested in all that can be learned about German practice. With comparison, perspective is achieved, and thereby a greater understanding of one's own traditions. Tkeu 16:19, 20 September 2007 (UTC)

German "PAP" versus German GAVP

The acronym PAP - Professional Appraisal Practice, is American usage. In contrast, the IVSC uses GAVP - Generally Accepted Valuation Principles. This is more fitting for the section on German valuation practice and I have therefore changed the wording (I also support purging this entry of the ugly word "appraisal"). Tkeu 05:10, 1 October 2007 (UTC)

The acronym PAP is rarely used outside of the acronym USPAP in the USA. Just so you know! —Preceding unsigned comment added by Beamathan (talk • contribs) 22:04, 13 March 2008 (UTC)

Appraiser's Roll in Mortgage Fraud and Predatory Lending

I'm thinking of adding a section that deals with crooked appraisers. I think the general public could really use a section like this especially in light of recent developments of the mortgage market in the USA. Any thoughts? To clarify, I'd like to also add a paragraph or at the very least a few sentences on what someone should be on the look out for. And of course this section would describe the collusion between a lender/mortgage broker and an appraiser. It could actually be a very detailed section if you guys were interested in that. Well, I'm awaiting at least one comment on this before I begin. Beamathan —Preceding comment was added at 23:35, 12 March 2008 (UTC)

The housing market and predatory lending problems that the US is experiencing were not caused by fraudulent appraisals. The problems were caused by falling real estate values, reckless consumerism (people using their house like a credit card), and loan officers offering loans with potentially rising payments to people who's income wasn't expected to rise accordingly. The appraiser's role in most residential mortgage transactions is only to provide the underwriter with the current market value at the time of the appraisal. There are systemic problems, but the wave of foreclosures we're currently experiencing was not caused by crooked appraisers.--Appraiser (talk) 20:20, 1 April 2008 (UTC)

Heh, you might not be a real appraiser then. While the lender is mostly to blame, making false income claims, or not requiring income claims at all, the appraiser who over valued the house at the lender's request is also to blame. As a working appraiser, with my own company, I have been pressured REPEATEDLY to "hit this number" and due to these nagging things called morals, I have refused and even lost clients over it. But those clients obviously just called the next appraiser. And I doubt it took more than 3 additional calls to find one who would do the job and hit that number. Ignoring this as a part of the lending crisis, is ignorant. Beam (talk) 22:59, 1 April 2008 (UTC)

Yes, loan officers pressure appraisers all the time and appraisers often succumb to that pressure, raising values, I would argue - usually within the margin of error (<5%). But this fact only comes into play when the borrower fails to make payments, and the losses that mortgagees realize are far greater than the portion of the loan caused by inflated values. When 100% LTV notes are written, any pull-back in market value becomes a loss in foreclosure. And I think the portion of this problem caused by fraudulent appraisals is small compared to the huge losses seen in the current crisis.--Appraiser (talk) 13:02, 3 April 2008 (UTC)

Appraisal fraud undermines the whole industry, but i'd agree that it was a small affect in the current crisis. But legislators at both a local and national level obviously think it was bigger than that. Beam (talk) 15:34, 3 April 2008 (UTC)

combine with property appraisal

There is a similar article/stub titled: property appraisal. Can someone with knowledge of this please check that the content of that page is covered in this article and recommend for deletion and redirect to this? OceanKiwi (talk) 16:30, 17 May 2008 (UTC)

Property appraisal is a blank page linking to Real estate appraisal. That is, the same entry loads when searching 'Property appraisal' or 'Real estate appraisal'.

Since you have raised the point, I would like to suggest moving this page to a new page to be entitled 'Real estate valuation'. The reason for this is that 'appraisal' is American nomenclature and not recognised internationally. In fact, in British usage an 'appraisal' is something quite different from a 'valuation': whilst the latter is an objective assessment of the open market value, the former is a measurement of the subjective 'worth' (RICS Red Book terminology) or value-in-use (accountancy terminology) or 'investment value' (IVS terminology) of the property for a specific user. Furthermore, 'Real estate valuation' is the preferred term used in the International Valuation Standards (IVSs) published by the International Valuation Standards Council (IVSC). That in itself is, to my mind, sufficient reason to move this page. Any objections? Tkeu (talk) 21:58, 18 September 2008 (UTC)

Is this the fourth conventional method of REA - direct capital comparison???

http://www.google.com.au/search?hl=en&q=%22direct+capital+comparison%22+%22real+estate+appraisal%22&btnG=Search&meta= —Preceding unsigned comment added by 203.190.192.130 (talk) 04:06, 15 September 2008 (UTC)

Re-write

I re-wrote several sections of this topic, as the readability was poor. The Flesch-Kincaid Grade Level was about 16+ for several sections I combined and measured in Word. This means it probably would have been 18-20 using the Gunning fog index.

It seemed wordy, confusing, and intimidating in places. So I re-wrote several sections, trying to use Plain English as my guide. I hope you agree that this improves it.

Thank you.

Jay Walker,AACI, P.App. —Preceding unsigned comment added by 205.250.96.37 (talk) 06:51, 21 May 2011 (UTC)