ELLIOTT®
FILLS INCREASING DEMAND FOR
DIMINUITION OF VALUE APPRAISALS
 As
part of our specialty appraisal services, ELLIOTT® & Company
Appraisers performs a type of appraisal commonly referred to as a
"diminution of value" (DIV) appraisal. This evaluation is typically
performed when there has been a loss in property value, due to some
type of damage, such as title flaws, insurance losses and partial
property takings through condemnation. DIV evaluations are more
common today as a result of the recent economic crisis, due to
increased foreclosure activity, racetrack and airport noise, the
increased number of property-related lawsuits, more highway
construction and a higher level of sophistication among property
owners.
"Our network of appraisers possesses the highest
level of qualifications necessary to address the complex issues
associated with losses in property value, including the Appraisal
Institute designations of MAI and SRA, and the American Society of
Appraisers designation of ASA, ” said Carlyle Holt, vice president
and general manager of ELLIOTT®. “Our network includes appraisers
with a thorough understanding of relationship between land and
improvements, severance damage issues, easement problems and other
factors that diminish a property’s value.”
For more information on diminution of value appraisals by
ELLIOTT®, go to:
../../services/diminution.htm
COMMERCIAL REAL ESTATE PRICES
CONTINUE TO FALL
 A report late last month from Moody’s Investment Service noted that
commercial real estate prices declined 4.2% in March, bringing the
national property price index to its lowest level since it had
peaked in October 2009.
Moody’s, a ratings agency out of New
York, blamed the price drop on the high percentage of distressed
properties among commercial property sales.
A more recent
report by the Mortgage Bankers Association noted that the
delinquency rate for loans packaged in commercial mortgage-backed
securities was at its highest level since the bankers’ organization
began reporting on this in 1997. Such figures point to the
probability of continuing decline in commercial real estate prices.
LOWER-PRICED HOMES SUFFERING
HIGHER PERCENTAGE PRICE DROPS
A study by Zillow.com concluded that lower-tier-priced homes in the
United States have fallen a dramatic 63% in price since the
home-price peak of 2006, while higher-tier-priced homes in this
country dropped 38% in value during the same time period.
The
figures for low tier and high tier varied throughout the country in
the study. Also, all areas had a middle ground between low tier and
high tier.
Economists involved with the study gave some
explanations for the dramatic differences in price declines between
low-end and high-end homes. Daniel McCue, senior research analyst
for the Joint Center for Housing Studies of Harvard University,
pointed out that low-end housing had been increasing at a more-rapid
pace than its high-end counterpart prior to the housing meltdown.
Stan Humphries, chief economist at Zillow, noted that most owners of
expensive homes also have enough resources available to keep them in
their homes during tough economic times.
“They don’t need to
sell their homes in a bad market,” Humphries told USA Today.
HOME EQUITY FALLS ALONG WITH HOME PRICES
Along with real estate prices, home equity in the United States is
going down at an alarming rate. The Federal Reserve reported that,
in this year’s first quarter, the average percentage Americans owned
of their homes was 38%, the lowest it has been since World War II.
Ten years ago, that average was at 61%.
About 40% of the
74.5 million American homeowners own their homes free and clear -
without mortgages. The low percentage of ownership among the 60% who
have mortgages is due to the decline in home prices. Many, if not
most, mortgagees have experienced a decline of value in their home.
In fact 23% of them owe more on their home than it is currently
valued. This causes homeowners to lose equity even as the amount
they owe on it drops.
 HOTELS ARE BRIGHT SPOT IN
GLOOMY ECONOMIC PICTURE
Falling prices in both commercial and residential real estate are
presently the norm, but at least one sector of the commercial real
estate market is showing signs of improvement.
“Hotel
industry fundamentals are improving,” said Jim Butler, chairman of
the hospitality group at Jeffer Mangels Butler & Mitchell LLP.
“There is little new supply and there is virtually unlimited equity
on the sidelines.”
Butler also told MBA NewsLink that
hotels, despite the current trend in commercial real estate,
increased in value last year at an average between 10% and 15% and
that hotel values were still increasing, especially for those in the
luxury category. PKF Hospital Research reported that hotel profits
increased nearly 10% last year.
“The relationship between
price position and profits appears to be as strong as the
correlation between room rates and the ability to grow revenue,”
Mark Woodworth, president of PKF, said to MBA NewsLink.
 ASK
MARTITIA
QUESTION:
Is an appraiser allowed by USPAP to provide a copy of a previously
prepared appraisal report on property belonging to a borrower if the
lender client for the appraisal has gone out of business and can no
longer be reached?
MARTITIA:
No. The Uniform Standards of Professional Appraisal Practice does
not have a provision for ending appraiser-client confidentiality.
Martitia Mortimer, Elliott's
executive vice president, answers appraisal questions on a regular
basis in Elliott Evaluation News.
QUOTES
 “The
only limits in the possibilities in your life tomorrow are the
‘buts’ you use today.” – Les Brown
“It is often wise
to reveal that which cannot be concealed for long.” – Friedrich
von Schiller
“In Hollywood if you don’t have happiness
you send out for it.” – Rex Reed
“If we knew what we
were doing it wouldn’t be research.” – Albert Einstein
“One father is more than a hundred schoolmasters.” – George
Herbert
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