Evaluating The Price of The Property

Article Tools

Image Gallery

Print

E-mail

Comments

RSS

HIRING A PROFESSIONAL APPRAISER

A professional appraiser does not have access to any information you cannot get to, but experience is on his side. The appraiser who works in one section of the country for many years should be thoroughly familiar with property values in the area and how they are set. But if you do a thorough job of comparing land prices and getting the opinions of people who have been in the area a long time, I believe you can efficiently appraise the value of the land yourself. Even professional appraisals vary between 2 and 3 percent.

Unfortunately real estate appraisers are not regulated by any state laws so you must be careful whom you select. Anybody can call himself an appraiser. However, appraisers belonging to one of several national organizations are supposed to abide by a code of ethics and pass some accreditation standards. If you look in the local telephone book under "Appraisers," those with memberships in a professional organization will be so designated. The group that seems to be preferred by professional lenders is the American Institute of Real Estate Appraisers, identified as "MAS." Other groups include the Society of Real Estate Appraisers ("SRA"), the National Association of Real Estate Appraisers ("NREA"), the American Society of Appraisers ("ASA"), and the American Society of Farm Managers and Rural Appraisers, Inc. ("AFMARA"). In USEFUL RESOURCES at the end of this chapter you will find the addresses of these organizations. If you write them they will send you a list of where their appraisers are located. Always use a registered appraiser if at all possible.

Appraisal fees are usually based on the amount of time needed to complete the job, and that depends on how thoroughly a job must be done. Undeveloped land will not take as long to evaluate as land that has a house on it. Costs vary throughout the country, but the minimum is usually around $50. A good report includes an evaluation of the house and other structures, the availability of utilities and other services, the value of the location, the potential for resale at a profit, present zoning and possible future rezoning, recorded restrictions, the expected economic and population growth in the community, and comparison figures on other similar sales in the area. The result of this research will be a figure that is the appraised fair market value of the property in question.

Never use the real estate broker who is selling the land as your appraiser, because his commission depends on how much money the property sells for. You must also be careful that the appraiser you hire does not have a personal friendship with the broker handling the deal, which might sway his evaluation.

If you are a veteran you can apply for a loan, and the Veterans Administration will appraise the property for a small fee as part of the loan. You must fill out a form called Request for Determination of Reasonable Value. You do not have to go through with the loan, but you will know that if it is approved, the asking price is reasonable. The Veterans Administration should also tell you what their appraisal is.

You can also apply for a regular commercial or FHA loan to get an inexpensive appraisal, but they generally do not tell you the results of the appraisal. They will only tell you if they accept or reject the application for the loan.

The seller might have had a professional appraisal done. If he presents you with an appraisal that equals his asking price, go to the appraiser yourself, talk to him, and try to get a sense of how honest he is.

RSS | Comments | E-mail | Print