Data Collection and Verification Objective: Provide an overview to data collection as associated...
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Transcript of Data Collection and Verification Objective: Provide an overview to data collection as associated...
Data Collection and Data Collection and VerificationVerification
Objective:Provide an overview to data collection as associated with the valuation process
“The quality of the data will, more than anything else, determine the valuation accuracy.” IAAO, Standard on Ratio Studies
Data Collection and Data Collection and VerificationVerification
USPAPStandards Rule 1-4
“In developing a real property appraisal, an appraiser must collect, verify and analyze all information applicable to the appraisal problem, given the scope of work identified in accordance with Standards Rule 1-2 (f)”
The Valuation ProcessThe Valuation Process
Specific Data
Report of Final Value
Income Capitalization
Reconciliation of Value Indications and Final Opinion of Value
Land Value Opinion
Application of the Approaches to ValueCost Sales Comparison
Market Area Data Subject Property Data Comparable Property Data
Identification of intended users
Intended use of appraisal
Purpose of appraisal
Date of opinion of value
Definition of the Problem
Data Collection and Property Description
Data AnalysisMarket Analysis
General Data
Highest & Best Use Analysis
Scope of the Work
Identification of property
characteristics
Extraordinary assumptions
Hypothetical conditions
Market Area Data Comparable Property DataSubject Property Data
Data Collection and Property Description
The Valuation Process
Specific DataGeneral Data
General/Market Area DataGeneral/Market Area Data
SocialSocial EconomicEconomic GovernmentalGovernmental EnvironmentalEnvironmental
Defines issues affecting a community
General/Market Area DataGeneral/Market Area DataResources
Council of Economic AdvisorsFederal Reserve BoardDept. of HUDDept. of LaborState and Federal AgenciesLocal Information
Chamber of CommerceColleagues in the professionInternetPersonal InterviewLocal MediaPrivate research firms
Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property
DataData
Defines characteristics of:Defines characteristics of:
Subject sample & Comparable Subject sample & Comparable SalesSales
CostCost Income/expensesIncome/expenses
Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property
DataData
Analysis of Subject and Comparable Analysis of Subject and Comparable property Data establishes:property Data establishes:
Trends in construction costTrends in construction cost lease termslease terms typical expensestypical expenses vacancy ratesvacancy rates rental rates, etc.rental rates, etc.
Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property
DataData
Internal ResourcesInternal Resources
IAS DatabaseDR 219’s12D-8’sSales Use Tax (SUT)
Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property
DataData
Local ResourcesLocal Resources1) Property record cards
2) Deeds3) MLS
4) Other Appraisers
5) R.E. Agents
6) Management Co.
7) Lending Institutions
8) Investors
9) Developers
Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property
DataData
National ResourcesNational Resources
1) Internet Sites2) Published Resources (Korpacz, BOMA, Black’s Guide, etc.)
Web SitesWeb SitesGovernmental/Organizational Websites:About FMHAState of FL. Condominium Info.Florida IAAOFannieMaeAppraisal Network - Real Estate Appraisals
HUD HomepageAppraisal Institute
http://www.webdirectory.comhttp://www.epa.govIAAOCredit UnionsProperty Appraisers Assoc. Of FL.Appraisal Network - Real Estate AppraisalsAbout FMHAFreddieMac
Web SitesWeb SitesCommercial:http://www.nnndeal.com/summary.asphttp://www.property.comCommercial Investment Real EstateShopping Center WorldReal Estate Investment SourceMarket Insight Group, Corp.The National Retail FederationThe Property SourcebookData & Statistics ResourceEconomic activitywww.vandema.comhttp://server.irem.orghttp://www.uli.orghttp://www.costar.com/
Web SitesWeb Sites
Multifamily Information:National Multi Housing CouncilMulti Housing NewsM/PF ResearchHousing & Urban Development
Land Information:Site Selection Onlineconstruction.com - the construction industry marketplaceLand Boundary Information SystemDivision of Florida Land Sales
Data CollectionData Collection
AlternativesAlternatives
The road less traveled
Sample appraisal problems and possible solutions
Data CollectionData Collection
Problem 1:Problem 1: Establish a vacancy rate for an Establish a vacancy rate for an apartment sub-market within city xyz.apartment sub-market within city xyz.
Possible Solution:Post offices do weekly updates on all addresses.New construction addresses are added and address changes are notedThe data available may be used to establish the desired vacancy rate for the multifamily sub-market under study.
Data CollectionData Collection
Problem 2:Problem 2: Estimate vacancy rates for two apartment Estimate vacancy rates for two apartment complexes. The rates are critical to the appraisalcomplexes. The rates are critical to the appraisal
Solution: If the units are individually metered, the appraiser should obtain a utility company’s readouts from the past 12 months for the two complexesunder investigation. The number of electrical hookups, for example should be an excellent indicator of the number ofvacancies in the past year.
Overemphasis of historical trends rather than current conditions
Misinterpretation of data
Over reliance on data provided by the owner or developer
without cross checking the data
Reliance on insufficient transaction data
Proper confirmation of sales data
Not using common sense
Survey of Institutional Chief Appraisers
Common problems associated with Common problems associated with data collectiondata collection
Common problems associated with Common problems associated with data collectiondata collection
Common issues noted by the State Appraisal board
Failure to separate real estate from personal
property, going-concern and business values
Failure to consider and analyze current agreements of sale,
lease or prior sales
Reliance on published data without verifying its accuracy or reliability
Misinterpretation of published data
Failure to disclose conditions surrounding
or affecting the property
Current listing/pending information is pertinent to the valuation processIf referring to, or using sales information from someone outside of PTA, verification of those resources by PTA employees must be in the Master file.
Provide three land sales whenever possible in order to establish a range.
It is acceptable to go outside of the subject market area for sales in lieu of only using two comparable sales.
Recognize TPP in the valuation process and consistently address the affect it has on the valuation of a sample.
Compare apples to apples
Insufficient improvement notes
Common problems associated with data collectionCommon issues noted by the QA Team
ResourcesResources
“Market Analysis for Valuation Appraisals”
“Appraising the Appraisal”
“The Computerized Income Approach toHotel-Motel Market Studies and Valuations”“Real Estate Development”
“Appraising the Tough Ones”