Eliott Schultz, owner/appraiser, has been a California State Certified Residential Real Estate Appraiser since 1990  performing residential real property appraisal reports  in the Northern Los Angeles and South Eastern Kern Counties.  He is also a Certified Machinist and Equipment Appraiser through the N.E.B.B. Institute; which means he can also appraise all your construction and farming equipment and machinery.Specializing in the following types of properties: Single Family residences, vacant lots, condominiums , Small residential income properties.





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QUESTIONS REGARDING THE APPRAISAL PROCESS

What appraisal approaches will you consider or use in appraising my property?

The three most commonly utilized and accepted valuation approaches include: 1) a "Reproduction" or "Replacement Cost Approach" where the appraiser estimates the actual cost to rebuild the property to near like kind. This would involve establishing a site value and an improvement value as of a specific date with allowances for physical, functional, and economic depreciation; 2) an "Income Approach" where the appraiser utilizes the actual or estimated income and expenses from an income producing property to estimate market value through gross income multipliers or the capitalization of net operating incomes supported by market indicators as of the effective date of the appraisal, and; 3) the most commonly accepted methodology for the valuation of residential properties, the "Sales Comparison Approach", where the appraiser estimates the value of the property by locating closed sales that have occurred recently in reasonable proximity to the property being appraised, that can be considered "competing" with the property being appraised, and with similar features and conditions that will tend to "bracket" the primary features of the property being appraised. After adjustment for the apparent market reaction to any such differences in features and conditions, the appraiser will estimate the market value from a weighted calculation based upon the degree of adjustment required to reflect any value impact.... where the lesser the required adjustment the greater the comparability and the greater the required adjustment the lesser the comparability. The appraiser may use one, all, or any combination of these approaches in determining an opinion of value.

Which approach will you weigh the heaviest?

Remember...the three primary approaches are the Replacement (or Reproduction) Cost approach; the Income approach; and the Market Comparison (or Sales Comparison) approach. The weight of each approach, or the exclusion of one or more approaches, is a direct result of the appraisal problem itself and the answer, while usually obvious, is at the discretion of the appraiser performing the assignment. If the appraisal does not include improvements, a replacement cost is usually excluded from analysis. When the property is improved and the improvements are new, the cost approach can be the most accurate approach available. If the property is not income producing, the income approach is usually excluded, and when the property is income producing, the approach is typically the most valuable approach to the exclusion of all others. The market comparison approach typically allows for the impact of all other considerations (income, cost, and comparable sales) when sales negotiations are concluded between a prudent buyer and seller, but the approach loses reliability when sales are infrequent or when sales are dated or less than ideally comparable to the subject property.

The appraiser will use their best judgment and consideration of the problem in determining which approaches to utilize and which to weight heaviest. There is no set rule or guideline that specifies which approaches must be included or to what degree the approach must be weighted in the final analysis.
Why does the appraiser need copies of purchase contracts, disclosures, etc.?
The appraisal of real property is predicated on the parameters of the order placed by the client. If the assignment is based on a purchase money lending decision, then it follows that the entire purchase must be clearly understood by the appraiser performing the task of analyzing all value influencing impacts. The entire meeting of the minds between buyer and seller are found in the written agreements that complete the purchase. The contract, all addenda thereto, and all disclosures made must be provided in order to assure that the appraiser is aware of any and all factors that may impact value. Examples could include a list of personal property included in the price; that old antique boat in the garage; a seller concession regarding pest control work to be done; a concession where the seller may lease back the property until a new home is built elsewhere; a new roof to be installed prior to close of escrow; and any number of other concessions that would have an impact on value. Even more important, the appraiser is obligated by the Uniform Standards of Appraisal Practice to review all applicable purchase agreements. Typically, the purchase agreement will refer to, or be conditioned upon, such items as disclosures, pest control reports, or the happening of a certain event. If such items are referenced in the purchase contract, the appraiser is obligated to review the item and consider its impact on value, if any.

 



Eliott  Schultz Appraisal Service | Certified Residential Real Estate Appraiser
PH (661) 947-7420 or Toll Free (888) 993-1735  |  FAX (661) 947-5477  | 
E-mail: 
Eliott@AppraiserEliott.com


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