News: Appraisal & Consulting

Change is happening fast: Maybe at the point of upheaval

One of the first principles an appraiser trainee learns is that of change. In the textbook The Appraisal of Real Estate published by the Appraisal Institute change, as applied to the appraisal profession, is defined as "the result of the relationship between cause and effect that affects real property value." In these times, change is happening so fast that we may be at the point of upheaval. Whether this is a good thing or disastrous depends on our reaction to the situation. At the moment, the national economy appears to have hit bottom with the anticipation of a drawn out recovery accentuated by slow job growth. Without a doubt, the "Great Recession," as our current time has been dubbed, has precipitated radical changes in property value. Almost all areas of our country have witnessed declining real estate values, increasing numbers of foreclosed properties, and decreasing numbers of actual real estate transactions. From recent statistics, the single-family residential sector exhibits signs of improvement. If economic conditions deteriorate further resulting in a continuation of relatively high vacancy rates and declining rents in the commercial and industrial sectors of the market, these sectors could take significantly more time to recover. On the federal level, members of Congress are grappling with Wall Street reform and consumer protection in the form of HR4173. In summary, this proposed legislation includes an expansive amendment modernizing Title XI of FIRREA including grants to state appraisal boards for enforcement, AMC registration requirements, and separate disclosure of appraisal and appraisal administration charges. The challenge for appraisers is to keep our fingers on the pulse of these changes. Not only do we need to have accurate data on our subject property and comparable sales, we also need to be very aware of the relevant trends in the marketplace. It is no longer adequate to know if values are stable, increasing or decreasing. We need to be aware of a much larger pool of data such as demographic trends, income trends, environmental and regulatory issues, and level of business activity, among others. Although the value we provide is as of a specific date, we do our clients a disservice if we do not make them aware of market forces that impact value. A perfect example of such a market force would be declining population easily demonstrated by analyzing U.S. Census data. Such a trend would indicate that the demand for property, particularly residential property, is most likely going to decrease which may negatively impact values. If unemployment rates are creeping upward, the affordability of property may very well be headed in a downward direction, again with the potential to negatively impact values. To maximize our usefulness to our clients, we need to keep abreast of not only changes in the marketplace, but also changes in our field. Innovations are occurring every day whether it involves a new technology, new USPAP requirements, or new methodologies. One of the ways of achieving this is a professional association such as the Appraisal Institute. Patricia Amidon, MAI, is president of Amidon Appraisal Co., Portland, ME.
MORE FROM Appraisal & Consulting
Appraisal & Consulting

Boyle of Chozick Realty negotiates $7.95m sale of 66-unit property

Barrington, MA Tom Boyle of the Hartford, CT office of Chozick Realty has completed the marketing and sale of the 66-unit Beechtree Commons Apartments for $7.95 million or $120,454 per unit.
READ ON THE GO
DIGITAL EDITIONS
Subscribe
Columns and Thought Leadership
It’s a confusing real estate world: Don’t you think? - by Daniel Calano

It’s a confusing real estate world: Don’t you think? - by Daniel Calano

The news is full of “never before” pronouncements. Never before has there been a pandemic so impactful on real estate. Never before has technology allowed for remote business meetings on such a frequent basis. Never before would people so comfortably work from home as to vacate office buildings, at least on Fridays and Mondays.
Tariffs: Existential threat, or serious real estate impacts - by Daniel Calano

Tariffs: Existential threat, or serious real estate impacts - by Daniel Calano

You must know from all the news, that “Trump tariffs” have been recently reviewed, discussed, evaluated, and as promised, implemented swiftly. But, they have also been modified, reduced or increased, just as fast and somewhat quixotically.
 Real estate without good estate planning - a troublesome problem - by Daniel Calano

Real estate without good estate planning - a troublesome problem - by Daniel Calano

I spent the better part of a day this week working with attorneys on estate planning. I am clearly not an attorney, but I have learned much over the years while consulting on real estate, its potential, its future during the life of clients, as well as, shall we say, later.