Property Valuation Columns

With recent accounting reporting policy changes and a more theoretical understanding of the value of a business enterprise, among bankers, accountants, appraisers and the general public, more appraisers are being asked to provide appraisals addressing the “Market Value of the Going Concern” (MVGC). This is sometimes more specifically referenced as “Market Value of the Total Assets of the Business”.

The scope of the MVGC exceeds merely the value of real estate. Historically, real estate has been the most common collateral used by lenders ... Read More

Real estate appraisals are not all created equally. Those using appraisals often find it necessary to request that the appraiser slice and dice the appraisal in order to solve a specific problem. It may seem like hocus pocus or value manipulation, for a user of an appraisal to request that an appraisal be prepared in such a way, as to change the value conclusion. Some have called it appraisal shopping! Having said all of this, there are perfectly legitimate reasons that an appraiser would prepare an appraisal where a value conclusion is sought, that is different from that of Market Value. Market Value is the value typically used for most appraisal applications under normal circumstances. However, ... Read More

The standard value to be addressed in most real estate appraisals is that of “Market Value”. Most court cases as well as collateral evaluation appraisals for lending purposes are based upon Market Value. That being said, on occasion appraisers are asked to determine a ‘Value in Use” for a property. How is this different and why would anyone want a value that does not conform to what the market will pay for a property? It has been my experience that many who use appraisals do not fully understand the difference in the two values. Both values are rooted in the term “use”, in spite of fact that the term “Market Value” makes no reference to “Use” in its name. Market Value is based upon the Highest and Best Use of a property, rather than the Actual Use of a property ... Read More

Determining real estate damages, resulting from title defects covered by title insurance, can be a complex undertaking. Typically appraisers will prepare a Diminution in Value Appraisal (DIV), whereby values are determined both in the impaired and unimpaired state, damages being the difference between the two. Issues such as what a property is used for, the effective date to recognize damage, and whether or not market value should be the measure of damage, among others, can make for a challenging task.

Where statutory laws are inadequate to address damages, ... Read More

One of the most talked about methods of determining property damage is the Diminution in Value Appraisal (DIV). Perhaps this Appraisal is also the most misunderstood as well. We find this to especially be the case, with inexperienced people. While DIV Appraisals apply to both personal and real property, this article will focus on that of real estate.

Occasionally I am asked, what exactly is a DIV Appraisal? Why would a simple appraisal of the lost rights to property not be sufficient, as opposed to the more complex DIV? How does one convey to the appraiser the ... Read More

One of the more interesting title claim subjects, which we as appraisers deal with, is that of restrictive covenants not having been excepted within the title policy.

The claim letter may go something like this. I purchased my single family home on 102 Oak Street last year having no idea that I would be liable for association dues and the restrictive covenants. Shortly after the closing I was presented with a bill for dues payable to a local homeowners association and also informed that I am unable to park my 1982 inoperable pickup in my driveway. The association dues are purportedly to cover services of the neighborhood such as street lights, street maintenance, association management, etc., which I expected to be covered by the city through my property taxes. My title policy ... Read More