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Appraisal Based on Interviewing Brokers

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philsfan

Thread Starter
Freshman Member
Joined
Dec 4, 2007
Professional Status
General Public
State
Massachusetts
We have a unique property that needs to be appraised. There really aren't any comps. I have heard that there is an appraisal methodology that involves interviewing real estate brokers and coming up with a valuation based on their opinions (in the management literature this would be a delphi approach). Is there such a thing? If so, can anyone point me to any documentation that discusses the method and its validity? Thanks for any help.
 

TEL2002

Elite Member
Joined
Jan 16, 2002
Professional Status
Retired Appraiser
State
Louisiana
You could pretend you want to sell your property and ask several different real estate agents for a CMA. Done properly this will lead you to their opinion of the value of your property. It will list comparable sales, etc.

Or you could hire a good local appraiser and actually have an appraisal done on your property.
 

philsfan

Thread Starter
Freshman Member
Joined
Dec 4, 2007
Professional Status
General Public
State
Massachusetts
You could pretend you want to sell your property and ask several different real estate agents for a CMA. Done properly this will lead you to their opinion of the value of your property. It will list comparable sales, etc.

Or you could hire a good local appraiser and actually have an appraisal done on your property.

Thanks for the reply. I am perfectly willing to hire an appraiser, in fact my question had to do with whether an appraiser can do the interviews and then issue a report that would have validity. If the method is valid I fully intend to hire an appraiser to do the work, I am trying to figure out if the method is legit. Does anyone know of this being done? Is this a recognized method for an appraiser to use? Thanks again.
 
H

Hall McClenahan

Guest
Welcome and thanks for asking here!

Sounds like you are asking about a BPO, (Brokers Price Opinion) in this case.

Accuracy is tricky in this case. Generally on paper they appear very accurate because the broker is telling you what they can sell it for.

It is all about their skill and marketing. You have outstanding sales people, poor sales people, and everything in between. if you get one from each of them they will all be fairly accurate. The value however will range significantly.

Hope that helps.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
There really aren't any comps.
First, there are always comps. In unique properties, we study the market to consider if it's in interim use, look at alternative uses, and to determine the Highest & Best Use.

I have heard that there is an appraisal methodology that involves interviewing real estate brokers and coming up with a valuation based on their opinions (in the management literature this would be a delphi approach). Is there such a thing?

No, that is not a valid approach. Yes, appraisers will interview many parties to gain some insight and consider opinions from other professionals, but it is not good support for a proper appraisal. The approaches used are: Market Approach (what are other properties selling for?) Income Approach (how much $$$$ will this property generate, and how much is that income worth). And the Cost Approach (how much does it cost to build minus depreciation). A USPAP compliant report will include good reasoning and support data. It will also clearly discuss why any approach is not applicable if it is not included. If an approach is applicable, it can not be left out just to save time and for a lower fee. If it's applicable, it must be considered.
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Why does this unique property need to be appraised ? If you possessed any such appraisal report in the near future regarding that property how would it be directly used to serve you ?

Have you contacted the Massachusetts office of your Division of Real Estate and/or Appraisal....and asked them a few questions pertinent to this property ? (I assume the property is in MA). Have you done a Google search for explanation of this "delphi approach" ? That kind of sounds like the equivalent of letting parents be the judges for their daughter's beauty show competition. The outcome could be predicted quite easily.

You seem anchored on the word "validity". The equivalent to that in our profession is probably a healthy mix of "credibility" and "reliability" and "reasonableness".....according to the assignment conditions that enhance or limit the data that the appraiser will gather, analyze and reconcile.

I'm sure there is more that you have not stated or explained here.
 

C. Kevin Bokoske MAI

Junior Member
Joined
Jan 30, 2002
Professional Status
Certified General Appraiser
State
Florida
The methodology you mention is coverered under the topic of "Contingent Valuation". Most articles do not adopt it as a valid approach. The theme seems to be queries to respondents (not neccessarily brokers as the opening post mentions), with questions like, "How much more would you pay for this property, if you were buying it, if it faced the gold course?" or "How much less would you pay for this property if you knew the previous owner committed suicide or there is a sewer plant due to be built down the street?". Not very scientific.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
As you have expressed it, it is NOT a valid approach. As Leggitt says, there are always comps. You may have to go 20 or more miles away and/or back 2 or 3 years but you WILL find at least 3 comps, that, with adjustments, should support your final value. However, when you do have to go 20 or more miles and/or back 2 or 3 years, you have to support your location adjustments, if any, or date of sale adjustments, if any, with credible data. This can be done with active listings and/OR results of broker/sales agent interviews. When using statements of agents, list their names and offices along with telephone numbers and the verbatum statement so that an underwriter or review appraiser can verify you spoke with them and that they, indeed, made such statements.
 

murray stroupe

Senior Member
Joined
Apr 27, 2005
Professional Status
General Public
State
Tennessee
Re More info & it depends

First, there are always comps. In unique properties, we study the market to consider if it's in interim use, look at alternative uses, and to determine the Highest & Best Use.



No, that is not a valid approach. Yes, appraisers will interview many parties to gain some insight and consider opinions from other professionals, but it is not good support for a proper appraisal. The approaches used are: Market Approach (what are other properties selling for?) Income Approach (how much $$$$ will this property generate, and how much is that income worth). And the Cost Approach (how much does it cost to build minus depreciation). A USPAP compliant report will include good reasoning and support data. It will also clearly discuss why any approach is not applicable if it is not included. If an approach is applicable, it can not be left out just to save time and for a lower fee. If it's applicable, it must be considered.
================================================

PhilS;
I usually get a cow size kick out of M Leggetts posts;
he is an appraiser, REALTOR, & could paint a barn if he cared to.

Personally , usually use the REALTORS for initial screen estimate/listing possibility;
then use a bank approved appraiser.Especially since you have to pay for bank ordered appraiser regardless of value.

Sure if you know a trustworthy lender,some lenders may approve of a Broker
Price Opinion; but it is good way to get ripped off big if lender is untrustworthy.

Even with the insufficient info, agree also with the appraiser ,RE brokers would be like the parents free initial screen for their daughter entering beauty contest.
The appraiser,honest banker & such are best to be contest judges.

If it is a cash deal, would still use a bank approved appraiser or related.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Polling is an appropriate way to make adjustments. But polling should be done in a scientific manner and merely picking a few random brokers for an opinion is insufficient.

As a practical matter there are few methods available.

it is NOT a valid approach
USPAP requires the straight jacket of Cost, Income, Sales. That doesn't mean that another approach is excluded - historical time, statistical, delphi, etc. are methods otherwise used.

You appear to be "general public" and the owner of the property?? Have you inquired with an appraiser to see if they think it could be appraised by traditional methods or is this merely your assumption? It is not clear to me if you are speaking of residential, commercial, public, etc. type property.

Some people with "unique" homes, which don't capture the full cost of the improvement, complain their property cannot be accurately appraised [codeword for not appraised high enough.]

The purpose of the appraisal might also set limits. If you are seeking valuation for IRS or lending purposes, it will have to be rigorously USPAP compliant. If you merely wish to satisfy your curiousity then a few opinions from the Delphian Oracles might suffice.
 
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