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New Proposed Procedure in Appraising Residential Properties

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Juan Benavidez

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Member
Joined
Aug 24, 2006
Professional Status
General Public
State
Texas
Appraisers need to change the procedure in appraising residential properties in order to help prevent another subprime mess caused by excessive appraisals. We should appraise all lots in an individual community with the same price per square foot according to a a community recognized authority in land sales. The house structure should be appraised at cost, using a nationally recognized cost manual. Any excessive value arrived at by utilizing the proposed procedures would be identified as the "premium factor" or "bubble factor" that a potential buyer would be able to take into account by being warned of the situation. These new procedures would control speculative increases in the value of residential properties. The present problem with rising prices of residential properties is caused by assigning to the lot any excess value to the property when the total value of the property increases above the actual reproduction cost of the structure plus the lot value.:clapping:
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
We have a cliche in our business:

Cost does not equal value.


It's a cliche for a reason.
 

Paul Isolda

Senior Member
Joined
May 20, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
That's not appraising, that's an accounting function. And what the heck is a "community recognized authority in land sales"?
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Talk to the local builders about "cost" right now. D. R. Horton's lost 800M this year. Unless you have the builder strength to hammer your suppliers and contractors, you can't build a home for what you can buy one. You'll be upside down big-time right now on the "cost".

Then, even in good times, you've got such factors as the "cost" of building restrictions put in place by various governmental entities, which are very hard to quantify.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Appraisers need to change the procedure in appraising residential properties in order to help prevent another subprime mess caused by excessive appraisals. We should appraise all lots in an individual community with the same price per square foot according to a a community recognized authority in land sales. The house structure should be appraised at cost, using a nationally recognized cost manual. Any excessive value arrived at by utilizing the proposed procedures would be identified as the "premium factor" or "bubble factor" that a potential buyer would be able to take into account by being warned of the situation. These new procedures would control speculative increases in the value of residential properties. The present problem with rising prices of residential properties is caused by assigning to the lot any excess value to the property when the total value of the property increases above the actual reproduction cost of the structure plus the lot value.:clapping:

This is the silliest idea that I have ever read on this forum. Aside from the fact that cost does not neccesarily equate value, it is not the appraiser's job to come up with some sort of mechanism to prevent real estate prices from rising or to prevent another speculative bubble from occuring. It is not an appraiser's job to set the market or regulate the market, it is the appraiser's job to simply report the market and the value of the property which he is appraising in that market, nothing more and nothing less.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
"prevent another subprime mess caused by excessive appraisals"

See Tag Line below
 

Artemis Fowl

Senior Member
Joined
Mar 16, 2004
Professional Status
Certified Residential Appraiser
State
Michigan
So...

The 20x80 1,600SF residential site on a busy artery across the street and downwind from the tanning factory should have the same value as the interior site in a nice neighborhood bordering a park with a lake view. Hmmm. Good idea.

Or let's take all those "complicated" factors out of it and do some simple math. Let's say a 1,600SF site is worth $28,800 or $18/SF. That means a 1 acre site (43,560SF) is worth $784,080.

Why that's B(r)ILLiant!

Who are you anyways? Perhaps a ROSE by any other name...
 

hglenbetts

Senior Member
Joined
Dec 3, 2007
Professional Status
Certified Residential Appraiser
State
Michigan
So you want the government, or other entity to decide a base value of a "product", restricting free trade and eliminating market growth through supply and demand. Seems, we've heard this a lot lately...

"These new procedures would control speculative increases in the value of residential properties."

Shall we just toss the concept of value through supply and demand??
 

Smokey Bear

Elite Member
Joined
Dec 8, 2004
Professional Status
Certified Residential Appraiser
State
California
Haven't you guys figured out yet that Juan is a troll? He usually posts on Friday, he posts something provocative and then watches y'all go ape over it. And he never reposts on his threads. He just likes to stir people up.
 

moh malekpour

Elite Member
Joined
May 25, 2002
Professional Status
Certified Residential Appraiser
State
California
This might be one of Shiller's proposals in his new book. I haven't read his book but I heard him talking about new ways to do homes and mortgage transactions. He said the current model was created a century ago and is not working anymore because the culture has been changed and he is offering new proposals.
 
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