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How to Verify the Home You Want to List

5 Steps Appraisers use in a Sales Comparison (How to Calculate the List Price of a Home)   This is part 1a of 6 – How to Verify the home You Want to List (Please note:  I realized the importance of adding step 1a after

5 Steps Appraisers us in the Sales Comparison- Part 1 of 6

Part 1 of 6 – Appraisal Techniques for Real estate Brokers Welcome to the first of a six -part blog series which shows how residential appraisers value real estate using comparable sales.  I will take the methods we use and break them down into simple

The 7 Most Common Issues and Errors with Real Estate Appraisals

The Art of Deciphering Appraisal Reports I conduct appraisal review assignments for attorneys, accountants, banks, lenders, appraisal management companies and other clients as part of my appraisal practice. There are two types of real estate appraisal reports which I review; FNMA or lender reports and

HOMESTEAD- Protect your Home

Friends of mine recently refinanced their house and the attorney pointed out that there was a change in Mass law to protect homeowners.  It raised the amount that you can protect significantly, but you must file with the county to get the protection.  The link

Prices per Square Foot, the Truth for Home Buyers

A real estate appraiser’s perspective:  Buying a house based on the price per square foot is like paying for a car based on its miles per gallon; and yet to this day I see buyers, sellers, mortgage and real estate professionals discussing and using square

How to Verify the Home You Want to List

5 Steps Appraisers use in a Sales Comparison

(How to Calculate the List Price of a Home)

 

This is part 1a of 6 – How to Verify the home You Want to List

Adam Wiener Aladdin Appraisal

(Please note:  I realized the importance of adding step 1a after writing the first blog in the series. Verifying exactly what we are valuing is the primary step and belongs right here in the sequence, so let’s take a look at how to do that now. – Adam)

Q- Who should be interested in this blog series?

A- This information might benefit anyone interested in home values but I am writing it for you the real estate agent located in Eastern MA with www.MLSPIN.com  access, with two specific needs in mind;

  • a real estate agent doing a CMA to get a potential home value for a listing appointment;
  • a real estate agent with a pending sale who is meeting the real estate appraiser.

Q- Why?

A- In both cases being knowledgeable and learning to apply the techniques will give you certain advantages that can help you to be more successful and effective at serving your clients.

 

This 6 part blog series is as follows:

 

1)      The Introduction Appraisal Techniques for Real estate Brokers

a)  Verify your Subject property

 

2)      Step 1- Selecting Comparables. Finding an initial value range.  How to select truly comparable properties (comps).  MLS filtering and research tips, tricks and techniques.  The importance of bracketing.  Letting go of price per square foot, why this is a truly misleading indicator (don’t tell your competition).

 

3)      Step 2- Data Verification.  GIGO Time saving research methods and shortcut.  free verification websites.  Reading and understanding the clues in assessor field cards.   What to do after discovering a sale is a non-comp because it failed verification (spoiler alert- toss it).

 

4)      Step 3- Sales Comparisons.  Not all differences are valued in your market.  Know which key characteristics impact value.  Understanding cost vs. market value of improvements.  How to explain this to your clients.

 

5)      Step 4- Comparable Adjustments. A brief overview of the methods; matched pairs, sequential percentage adjustment, lump sum dollar adjustments, regression analysis, depreciated cost of new.

 

6)      Step 5- Reconciliation of Comps into one value or a value range.  Never simply average the comps; learn how to do a weighted average.

 

Q- What is the house we are going to value for our hypothetical listing?

 

Campanelli Slab Ranch Home

A-In this series we will value a hypothetical Campanelli slab ranch home in North Framingham.  Why? a ranch is a simple home making explanation of the process less complicated.  Framingham had 94 slab ranch home sales in the past year. This is an adequate supply of data to work with.  Don’t worry if you have a different type of home, the steps work when you are valuing any home.

 

Assessors Field CardBefore I visit a house I always obtain the assessor’s field card and read it carefully.  This is where I begin to figure out what exactly I am valuing.  Here is an actual field card I am using as our fictitious home.  If your town does not have online cards you have to go to city hall to obtain one.  The format and information vary from town to town.

Tip: do not believe field card data, in my experience they are often inaccurate.  If you estimate a home’s the value based on inaccurate data you will not arrive at a reliable value conclusion.  That is why I personally view and physically measure each home I appraise.

Here is the #1 Mistake I see in MLS Listings. How can you value anything before you know what it is?  The most important things you should always do is to measure, or have some else measure, every single house for your CMA.   I use the ANSI Z-765 Square Foot Measuring Standard.  It is the gold standard plus the future appraiser will use it when they appraise for your sale.

I understand there are different financial and comfort levels and skills.   You could pay someone to measure and not get the listing.  If I were doing a CMA I’d have the assessor’s sketch in hand and would at least check the footprint to make sure it is correct.  How many of your competitors do that?

Our field card provided us with a few important clues.

Clue #1: The home was inspected and measured 5 months ago.  What that means to me is key information on the card regarding the living area, bed-bath count, condition and quality are more likely to be correct.  I expect not to be surprised by what I find when I arrive.

Clue #2 is that the home has a condition rating of “A” and a grade (or quality) rating of “F”.   I read that as good condition and below average quality, but quality typical for the neighborhood.  Keep in mind all the slab homes in this area are all of similar lower quality.  After all, these homes were built by for about $12,000 dollars.

Clue #3 is inaccurate information in this field card.  I am familiar with the actual house on this field card.  Error #1 is that there is actually no garage.  This is evident in the field card photo but if there was no photo I would check street view at google maps.  The “312sf garage” was converted to a finished, insulated storage room in 1998.  Error #2 is the garage footprint is deeper.  It actually extends at the rear of the former garage housing the mechanical room and oil tank.  This is not shown on the sketch so the footprint is wrong.   I would point these things out in a sales presentation adds to credibility as an expert, and it is doubtful that competing brokers will have done so.

To highlight- There is data on the field card for this house which is is wrong even though it was recently inspected and re-assessed.  This proves my earlier point,  not to believe field card data.  I do believe the 1,415 sf of living area is correct, but there are only 6 rooms inside the house not 7 rooms, and there are 3 bedrooms and 1.1 baths.

 

Floor planThe fastest way to sketch is to pre-draw the house footprint (from the field card) on the back of my worksheet before I go to the home.   I draw freehand using a pencil but used graph paper for this blog.  I recommend graph paper when you are new.  Upon arrival I measure the house and circle the correct dimensions correcting the bad dimensions, and then recalculate the actual gross living area.  I fill in interior rooms and label them as you see here.  Later I use software to make a professional sketch and calculation sheet.

Here is a tip, ask your potential clients to dig up a copy of their last appraisal and look at the sketch.   Most people had an appraisal to purchase or refinance, most appraisals include a sketch.  if they agree and provide it this accomplishes four important things for you.

  • First, their cooperation is a positive buying sign.
  • Second, if no one else asked for this they see that you think and act differently.
  • Third, if the appraisal was relatively recent you see a value which you know they have in their minds as a reference for their home’s current value.
  • Fourth , the sketch may help you expedite drawing your own sketch 

Last tip, look at the deed for the last sale in order to verify the lot size.  It is sometimes possible to see the surveyors plans if you spend the time to learn how to research the online registry.

 

At this point we have defined our subject property.  It is a typical quality, 1960 slab ranch in good condition on a 20,000sf lot with a patio.  It has a 6 room, 3 bedroom, 1.1 bathroom layout, and the ½ bath is en-suite.  There is a finished storage/laundry room with a mechanical room at the rear and it has Central Air.

To be continued, thank you for reading.

 

PS. I am seeking requests for possible blog topics, and if you have any real estate or appraisal related problem or question email me at Adam@AladdinAppraisal.com

If you found this article helpful or informative, I would be grateful if you would use the social buttons below to share, like and Google+1 it.

5 Steps Appraisers us in the Sales Comparison- Part 1 of 6

Part 1 of 6 – Appraisal Techniques for Real estate Brokers

Real Estate ValuesWelcome to the first of a six -part blog series which shows how residential appraisers value real estate using comparable sales.  I will take the methods we use and break them down into simple terms using real life examples.

 

Who should be reading this series? This information might benefit anyone interested in home values but I am writing it for you the real estate agent located in Eastern MA with MLS-PIN access, and with two specific needs in mind;

  • a real estate agent doing a CMA to get a potential home value for a listing appointment;
  • a real estate agent with a pending sale who is meeting the real estate appraiser.

In both cases being knowledgeable and learning to apply the techniques will give you certain advantages that can help you to be more successful and effective at serving your clients.

 

This series might also benefit you if you have ever;

  • Bought or refinanced a home and want an understanding as to how the sales comparison portion of your appraisal works;
  • Checked your home’s assessed value;
  • searched for a Zestimate or any other of automated “free home value estimator”.

 

The 5 steps in the Sales Comparison approach are as follows

1)      Study the market then select sales and listings most comparable to the subject (the residence being appraised).

2)      Collect and verifydata for each property e.g.; listing and sale prices and dates, physical and locational characteristics plus any special relevant conditions.

3)      Analyze and compare each comp with the subject. Consider the time of the sale, location, physical characteristics and conditions of the sale.

4)      Adjust the sales price of each comp up or down for any key differences that impact value and/or marketability.  Adjustments are derived from the market using matched pairs, regression analysis and other techniques (hang in there this will be to be demystified in part 5).

5)      Reconcile the “adjusted sales price” of the comps into one indicated value for the subject.

 

If you are a real estate agent with a pending sale who is meeting a real estate appraiser, how important is it to for you to know the steps appraisers use?  I always “comp out” my subject property but I respect and am interested in the broker’s opinion.  My usual experience is that the broker provides “comps” are unusable for reasons that will become clear.  you will be able to provide good quality comparables for use in your appraiser package.

 

If you are a real estate agent doing a CMA for a listing appointment, how important is it for you to close the appointment and leave with listing in hand?  You will be able to not only determine and support the correct listing value for your presentation, but will also be able to cut a competitor’s CMA comps to shreds.

 

This 6 part series will be as follows:

1)      This Introduction – Appraisal Techniques for Real estate Brokers

2)      Selecting Comparables- Finding an initial value range. How to select truly comparable properties.  MLS filtering and research tips, tricks and techniques. The importance of bracketing. Forget price per square foot, why you just have to let this truly awful and misleading indicator go (don’t tell your competition why).

3)      Data Verification- GIGO Time saving research methods and shortcut.  the most valuable free websites.  reading and understanding assessor’s field cards.  What to do after discovering non-comps because they failed verification (hint- toss them).

4)      Sales Comparisons- Not all differences are valuable in your market.  what are the key characteristics that impact value?  Understanding the cost vs. the market value of improvements. How to explain this to your clients.

5)      Comparable Adjustments- Matched pairs, sequential percentage adjustment, lump sum dollar adjustments, regression analysis, depreciated cost of new.

6)      Reconciliation of Comps- Why you never simply average the comps, and how to do a weighted average.

 

Do not worry if these terms are unfamiliar or seem math-scary.  appraisers have our own lexicon just like any profession.  The purpose of this series is to demystify and simplify what is going on under the hood of a sales comparison approach to value.  And to provide a simple method you can use for your CMAs and appraiser meetings.

 

See you on Monday 3/31/14 for Part 2 – Selecting Comparable

 

Tags, Real estate appraisal, sales comparison analysis, estimating home values, what is my home worth, real estate appraiser

Real Estate AppraiserI am seeking your requests for possible future topics, and if you have a real estate or appraisal related problem or question email me at Adam@AladdinAppraisal.com

If you found this article helpful or informative, I would be grateful if you would use the social buttons below to share, like and Google+1 it.

 

 

 

 

The 7 Most Common Issues and Errors with Real Estate Appraisals

The Art of Deciphering Appraisal Reports

I conduct appraisal review assignments for attorneys, accountants, banks, lenders, appraisal management companies and other clients as part of my appraisal practice.

There are two types of real estate appraisal reports which I review; FNMA or lender reports and market value or non-lender reports.  For this article I will focus on the 7 most common issues and errors with market value appraisals.  All errors are violation of the requirements set forth in an ever-changing  set of quality control standards called the Uniform Standards of Professional Appraisal Practice (USPAP) to which all appraisers are bound.

The 7 Most Common Issues and Errors with Market Value Real Estate Appraisals

  1. Using the wrong appraisal form
  2. Missing highest and best use analysis
  3. Excluding an approach to value with no explanation
  4. No reconciliation between various value approaches
  5. Lacking time adjustments
  6. Incorrect date of value
  7. Factual errors

 

Using the wrong appraisal form

Sometimes I see forms that were designed by FNMA for use with federally insured loans being used for divorce, probate, pre-listing, tax or other non-lending appraisals.  So how does this cause a problem? These lending forms have pre-printed scopes of work, certifications and intended uses and intended users that are not appropriate for non-lender assignments. 

 

Missing highest and best use analysis

Highest and best use is always that use which would produce the highest value for a property, regardless of its actual current use. It is necessary for the appraiser to develop an opinion of the properties highest and best use and then to report a summary of the analysis within the appraisal report.

No reconciliation between various value approaches

There are three approaches to value;  the cost approach, the income approach and the sales comparison approach.  When an appraiser uses more than one approach usually they won’t lead to exactly the same value.  So how does an appraiser arrive at one final opinion of value?  the process is called the reconciliation between value approaches.

 

Excluding an approach to value with no explanation

An appraiser does not have to develop all three of the approaches to value as long as the resulting conclusion is not compromised and can be relied upon for its intended use. However, the appraiser is required to explain why any of the three approaches  was excluded.

 

Lacking time adjustments

When the real estate market has increased (or decreased) since the time a comparable was sold a date of sale adjustment will help to bring the old comp up to date with the current market.  The lack of an adjustment in this case is likely to affect the final valuation.

 

Incorrect date of value

Each appraisal has an effective date of value. It can be current, retroactive (past) or prospective (future).  I primarily see this error with tax abatement appraisals.  When homes are assessed for 2014 taxes the values were based on the fair market value of the home as of January 1st 2013.  In that case the appraiser must complete a retrospective appraisal using only sales that closed before January 1st 2013, the effective date of value.

 

Factual Errors

Most appraisals tend to rely on the sales comparison approach to value. This means that fact checking comparable sales is perhaps the most important parts of the appraisal process.  The MLS data is entered by individual brokers and not policed by MLS or anybody else.  As a result it is full of errors.  As the saying  goes “garbage in, garbage out” meaning that  the use of inaccurate data will lead an appraiser to arrive at an inaccurate valuation.

 

If you have any questions or think your firm would benefit from a presentation on any appraisal issues please feel free to contact me.  If you found this article helpful or informative, I would be grateful if you would like and share it with others.

And please let me know if there is any real estate or appraisal related topics that you are interested in.

Adam Wiener, CRA

Adam Wiener

Adam@AladdinAppraisal.com

 

Tags: real estate appraiser, real estate appraisal, appraisal errors, appraisal issues

 

 

HOMESTEAD- Protect your Home

Friends of mine recently refinanced their house and the attorney pointed out that there was a change in Mass law to protect homeowners.  It raised the amount that you can protect significantly, but you must file with the county to get the protection.  The link below explains the law.

http://www.massresources.org/homestead-act.html

Under the amended Homestead Act, up to $125,000 of a homeowner’s equity is automatically protected by law.  A homeowner can protect up to $500,000 in equity by filing a Declaration of Homestead with the Registry of Deeds.

 

If you found this article helpful or informative, I would be grateful if you would like and share it with others. And please let me know if there is any real estate or appraisal related topics that you are interested in. – Adam@AladdinAppraisal.com

Prices per Square Foot, the Truth for Home Buyers

compare home valuesA real estate appraiser’s perspective:  Buying a house based on the price per square foot is like paying for a car based on its miles per gallon; and yet to this day I see buyers, sellers, mortgage and real estate professionals discussing and using square foot price as a method for comparing homes to try and determine value.

 

A 2,000 square foot home that sold for $400,000 did technically sell for$200/sf so the appeal is understandable because on the surface price per square foot takes a very complex problem and appears to deliver a simple solution but it is an illusion. Tempting as it is using $200/sf as the basis to determine the value of any other home is fatally flawed because it is what lies below the surface that counts.

 

Here is why price per square foot is misleading as an indicator of a home’s value. My real estate data comes from Boston and its suburbs but wherever you are there are certain universal truths about American real estate values.   How much a home is worth ultimately depends on the following list of key characteristics that influence market value of a home.

  1. Location
  2. Lot sizeHome Value Checklist
  3. View
  4. Style
  5. Age
  6. Condition
  7. Quality
  8. Size (square feet)
  9. Floor plan (#Room/#Bed/#Bath)
  10. Parking
  11. Other amenities
  12. Time – When the home sold

 

You can tweak or argue the completeness of the list but it is the differences in all of the various characteristics which influence the sales price and ultimately the price per square foot.  Ask yourself this; would someone pay more for a home on a quiet tree-lined cul-de-sac than they would pay for the same exact home along a very busy main street?  And since the sale included the lot upon which the house was built, how much of that $200/sf do you think was for the land?

 

Let us peel back a few layers of the real value problem. Here is a recent real life example of two similar homes that sold recently in Framingham, MA presented in matched pair format where you can see the same sized house sold for two very different prices per square foot, and it is not difficult to understand why.

Address 70 Hemenway Rd 76 Hemenway Rd
location Not a factor Not a factor
lot Size 0.56 acres 0.59 acres
view Not a factor Not a factor
style Slab Ranch Slab Ranch
age 56 years 56 years
condition significant updates 2009-2010 carpet/paint toilet oven cheap cabinets
quality upgraded K&B  quality inferior/original
square footage 1,440 1,454
Floor Plan 8Rm-3Bd-1.5Ba 7Rm-3Bd-1.5Ba (assessor says 1 bath)
Heat/AC FHW-propane/ CAC FHW-Oil/Wall AC
Parking Driveway Driveway
Other amenities Fireplace/Radiant bath/Patio Fireplace
contract date 11/22/2013 11/12/2013
closing date 12/5/2013 12/17/2013
Sale Price $348,000 $233,000
Price per sf $242 $160
2013 Assessment $282,200 $273,200

 

Why the huge difference in the price paid per square foot? These two homes have almost the exact same location, size and bed/ bath utility but there is a difference of $115,000 attributable to the superior condition and quality of the first house.  The other home needed of some repairs and the little bit of updating was of low quality.

 

I describe appraisers as trained professionals who pretend to buy houses for a living.  There is a skill set which comes from training and experience and there are practices and methodology that are brought to bear on solving the problem of; what is this hose worth?  in the end appraisers mirror the behavior of buyers in the market, and everyone; sellers, buyers, realtors and appraisers are all trying to solve the same problem. What is this house worth today?

How often do you buy or sell a home? Do not be penny wise and pound foolish.  If you are buying or selling you need a realtor to navigate through the negotiation and other complexities then hire a knowledgeable independent appraiser to develop their unbiased independent opinion of value.

 

Resource Box: Adam Wiener is a certified residential real estate appraiser in the Greater Boston area.  To see more about on expert methods, tips, and knowledge about residential real estate please visit http://www.aladdinappraisal.com  the sales information is publicly available www.zillow.com  or www.trulia.com . Framingham assessor’s database is found at http://www.framinghamma.gov/index.aspx?NID=658

PMI Removal Appraisals

Save Money

Private Mortgage InsuranceHave you given any thought to exactly what makes up your monthly mortgage payment?  If you purchased your home with less than 20% down payment, you are paying private mortgage insurance (PMI).

PMI is an insurance you agreed to pay to compensate for the higher risk the lender took on your purchase.  With favorable market conditions in our area many home values have increased.  the question to ask is; is my mortgage balance now lower than 80% of my homes fair market value?  If so, you should remove the PMI immediately and lower your monthly payments putting that money back into your pocket.

There is legislation requiring lenders to communicate about PMI but it is not advisable for you to wait for the lender to get around to contacting you.  if you’ve reached 20% equity in your home by either appreciation, home improvements or paying down the principal mortgage balance (or any combination of the three) you can force the lender to cancel your PMI.  most lenders have a brief form to fill out, and you must provide proof positive of sufficient equity over 20%.

Lenders will not accept your tax assessor’s value, a Brokers Price Opinion (BPO) or a Zestimate.  the assessed value has absolutely no supportable correlation whatsoever with the fair market value. A tax assessment is not the same as an appraisal because the intended use of the assessed value is primarily reserved for property taxation purposes. Actual sales used in the assessment process lag at least six months behind.  BPOs are not considered accurate enough for federally secured mortgages (FNMA).  Zillow publishes its own comparison of actual sales prices vs. their Zestimates which reveals an alarming rate of inaccuracy.

The positive financial impact when you halt PMI payments is similar to plugging a leak in the bottom of a bowl; your money now begins to accumulate. This simple move can give you access to a pool of funds  which can be a financial game changer for your family as you can pay down other debt, invest in retirement, start a college or a vacation fund, etc.

You need to hire the services of a professional real estate appraiser to estimate the fair market value of your properties. The appraisal should be in the form of a well-supported, professional, appraisal report. State and Federal laws require that the Appraiser and the appraisal process be independent from any influence, coercion or undue pressure. Appraisers cannot accept an appraisal assignment based on a predetermined value. This allows the Appraiser to remain an independent, third-party.

Our approach: We understand the potential positive impact to you when you remove PMI.  we offer a free initial consultation and in some cases it may be fairly obvious if an appraisal is appropriate or not.  It is typically not possible to determine in advance if you have sufficient equity in your home to enable you to cancel your PMI.

Appraisers are prohibited by the Uniform Standards of Professional Appraisal Practice (USPAP) from accepting an appraisal assignment subject to hitting a desired value. We are also bound by the ethical provisions within USPAP which guarantees our customers the highest level of confidentiality and discretion. In addition, we provide you with comprehensive appraisal reports that meet or exceed requirements of lenders, the IRS, courts and other various agencies.

Working with Aladdin Appraisal rest assured that you will get the best in professional service and courtesy, while also receiving the highest quality appraisal reports. While we cannot guarantee a value that would “work” for PMI removal  our team of exceptional appraisers will take no shortcuts in the research and comparable verification stages which can lead to comparables and other data that is expected when you hire a top quality appraiser.

Our Senior Staff Appraiser, Adam Wiener, CRA will complete or personally review your appraisal. Our extensive experience includes dealing with local and prestigious law firms in the Greater Boston area. We welcome and invite your questions about our process.

Call  617-517-3711

Contact Us

Request an Appraisal

Tags: property tax, Real estate appraiser, real estate appraisal

Tips Just For Realtors

Tips for Appraisers Coming Soon

How to Win a Property Tax Appeal

how to succesfully lower property taxIf you are a Massachusetts property owner and believe you are paying more than your fair share of property taxes you only have a limited amount of time to appeal, depending on your city or town.  Typically the appeal deadline is prior to the date of the first annual payment, although you still have to make the first payment even if you are disputing the amount.

There are only three actions available to you.

  1. Discuss your assessment request with your local assessor.
  2. Apply for a tax abatement at your local assessor’s office.
  3. Once denied, appeal to the appellate tax board.

Assessors will not accept a Broker’s Price Opinion or a Zestimate.  This is due to the fact that BPOs are not considered accurate enough for federally secured mortgages (FNMA) and Zillow publishes its own comparison of actual sales prices vs. their Zestimates which reveals an alarming rate of inaccuracy.

Most successful appeals require an appraisal done by a licensed real estate appraiser, who will provide an expert opinion of the fair market value. (MA law provides that the fair market value of property is the price on which a willing seller would sell the property to a willing buyer in an arm’s-length sale if neither party was under compulsion and each was aware of all relevant facts.  See Boston Gas Co. v. Assessors of Boston, 334 Mass. 549 (1956).)

State and Federal laws require that the appraiser and the appraisal process must be independent from any influence, coercion or pressure. This ensures that the appraiser remains a truly independent third party.  The appraisal should include a well-supported, professional report that is defensible in court.  Therefore selecting a qualified appraiser who, if needed, can also give clear testimony can be extremely important.

Did you know that in an assessment the properties must be valued as of the January 1st that preceded the fiscal year at issue?  For example, for fiscal year 2014, which runs from July 1, 2013 to June 30, 2014, the valuation date is January 1, 2013. Therefore, it is critically important that you hire an appraiser experienced in Retrospective appraisals. That is because the effective date of value of your appraisal must match the effective date used at the time of your assessment.   It is not uncommon for an appraiser to use the “current date”.  The dates must match or the appraisal you paid for will not be usable.

Our approach:  When you hire us for an assessment appeal, you’re commissioning us as an independent, third-party to perform a professional appraisal report. As such, we do our own evaluation from beginning to end. If you’re correct that your property has been overvalued our independent report will be more persuasive than any other evidence you can provide on your own. But once again it does depend on our ability to do the work independently.

Appraisers are prohibited by the Uniform Standards of Professional Appraisal Practice (USPAP) from accepting an appraisal assignment  subject to hitting a desired value. Nor are we allowed to take any research or other shortcuts.  We are also bound by the ethical provisions within USPAP which guarantees our customers the highest level of confidentiality and discretion. In addition, we provide you with comprehensive appraisal reports that meet or exceed requirements of the IRS, courts and other various agencies.

Working with Aladdin Appraisal rest assured that you will get the best in professional service and courtesy, while also receiving the highest quality appraisal reports. Our team of exceptional appraisers will be discreet and respect and protect your family’s privacy.   And if necessary Aladdin Appraisal stands behinds its appraisals and value estimates should matters advance to the need for testimony.

Adam Wiener Aladdin AppraisalsOur Senior Staff Appraiser, Adam Wiener, CRA will complete or personally review your appraisal. Our extensive experience includes dealing with local and prestigious law firms in the Greater Boston area. We welcome your telephone inquiries and invite your questions about our process.

Tags:  property tax, how to win a property tax appeal, real estate tax appeal,

If you found this article helpful or informative, I would be grateful if you would like and share it with others. And please let me know if there is any real estate or appraisal related topics that you are interested in. – Adam@AladdinAppraisal.com

Tips Just for Appraisers

Coming Soon

Bankruptcy and Appraisals, What You Need to Know

Judge

BankruptcyLocal attorneys report that most trustees overseeing chapter 7 and 13 bankruptcies will accept a simple broker’s opinion of value (BPO) or even a Zestimate. This means chances are you will not be required to get an actual real estate appraisal which helps keep your overall costs down and expedite the process; however, you should understand when it may be appropriate to obtain an appraisal.

Appraisals are sometimes necessary when determining the secured status of a claim under section 506(a) and (b) of the bankruptcy code, or when avoiding a judicial lien under section 522(f).

Under section 506, a secured claim (e.g. a mortgage, an equity line or a tax lien) is only secured to the extent of the value of the property.  For example, a house with a first mortgage balance of $400,000 and a second mortgage balance of $50,000 that is worth only $385,000. An appraisal would be used to make the case that the second mortgage is unsecured, and therefore its lien can be removed and it is treated as a general unsecured claim, which is much lower on the pecking order.

There are many nuances and caveats to how this works, but generally, an appraisal is only necessary where value is likely to be in real dispute. This is when you or your attorney needs to hire the services of an experienced professional real estate appraiser to estimate the fair market value, of the home.

According to local attorneys, Judges will not accept a Zestimate or BPO for something like this even where the creditor does not object.  This is likely due to the fact that BPOs are not considered accurate enough for federally secured mortgages (FNMA) and Zillow publishes its own comparison of actual sales prices vs. their Zestimates which reveals an alarming rate of inaccuracy.

That said, in cases where the value makes a difference, having a qualified appraiser who can give clear testimony can be extremely important.   The appraisal should include a well-supported, professional report that is defensible in court. State and Federal laws require that the appraiser and the appraisal process must be independent from any influence, coercion or pressure. This ensures that the appraiser remains a truly independent third party.

In many cases the date of the “current value” differs from the actual inspection date of the appraisal.  This requires a retrospective appraisal with an “effective date” and value estimate corresponding to the bankruptcy filing or some other relevant date in the past, depending on the case. Our team of certified and experienced appraisers at Aladdin Appraisal has considerable experience dealing with the complexities of assessing the value of a property under these difficult circumstances.

Our approach: A bankruptcy is usually one of the most upsetting and difficult times in a person’s life. we understand the need to handle these situations with the utmost care and will work hard to provide you with the best possible experience.  We are bound by the ethics provision within the Uniform Standards of Professional Appraisal Practice (USPAP) which means you are assured the highest level of confidentiality, guaranteeing you the utmost discretion. In addition, we provide you with a comprehensive appraisal report that meets or exceeds requirements of the courts, IRS and other various agencies.

By working with Aladdin Appraisal rest assured that you will get the best in professional service and courtesy, while also receiving the highest quality appraisal reports.  Our Senior Staff Appraiser, Adam Wiener, CRA will complete or personally review your appraisal.  Our extensive experience includes dealing with local and prestigious law firms in the Greater Boston area.  We welcome your telephone call or email and invite you to ask any questions you might have about the process.

Tags: Bankruptcy, bankruptcy appraisal, bankruptcy appraiser, appraisal, appraiser, Zillow, zestimate, BPO, Brokers opinion of Value, Boston Attorney

If you found this article helpful or informative, I would be grateful if you would like and share it with others. And please let me know if there is any real estate or appraisal related topics that you are interested in. – Adam

What is the Actual Square Footage of My House?

House confused

Would you believe most people don’t really know how many square feet of living area are in the home they own, are about to list, buy or sell.  Our experience with Greater Boston real estate appraisals continues to prove this truth.

ANSI Z-765 (the American National Standard Institute publication) is the go-to method for calculating square footage for single family residential buildings; however, there is no requirement that real estate agents, architects, assessors, insurance companies and appraisers use the same specific standard method for calculating the living area of a home.  This lack of a single standard creates several problems for everyone.

 ANSI Z-765 is a fair standard used by most professionals in real estate for Gross Living Area (GLA).  There are many steps to follow found in the 16 page PDF, but I have it boiled down to 4 key ides for this blog.

  1. Use exterior dimensions rounded to the nearest foot for each floor
  2. Include only areas above grade, no finished basements
  3. Openings: stairwells yes, but subtract certain stairwell and openings to below
  4. Minimum ceiling height 7’  In sloped rooms; exclude areas with less than 5’

So what is the answer to “What is the Actual Square Footage of a House?”  In actual practice, depends on who you are and what your interest are in the GLA.

  • Home Owners – Are interested in getting what they paid for and not paying unfair taxes.   I suggest you check the assessor record for your home, specifically the lot size, living area and amenities such as bathroom count, garage etc. You may be surprised at what you are being taxed on.
  • Selling Agents and FSBOs –Are interested in maximum sale price. I suggest you have verified the true GLA before you list.
  • Recent Home Buyers Too late. I  recommend that you check your appraisal sketch and GLA (you got a copy at closing). Then compare it to the original MLS advertisement and the assessor’s GLA.  Be sure you are not over or under insured since your insurance is typically based in part on the assessor’s square footage.
  • Architects and Builders– Most are on the ANSI Z765 standard. To the rest I say, please stop “accidentally” mixing up gross building area and gross LIVING area.  Just stop.
  • Assessors– Have one job.  They must hit a financial target by sharing the total tax burden across the universe of real estate in their city or town.
  • Appraisers– Don’t have to, but most use the ANSI Z765 standard. To my fellow appraisers if you don’t own and use the ANSI Z765 standard, I recommend that you buy it.

Here are some more thought on the subject.

  • Homeowners: One of the many reasons you will never be able to estimate your house value free online is that all too often the living area and other crucial data reported on public records differs from what actually exists.  Therefor all online services are using bad data.
  • Real Estate Agents & Sellers:  List a home smaller than actual and you have just left money on the table; we see it more than you would believe especially in Greater Boston.  Listing homes larger than actual (aka broker puffery) and potential buyers leave with bad feelings about you.
  • FSBOs: For Sale by Owner? See paragraph directly above.
  • Buyers: You are totally unprotected and at the mercy of the ethics of the listing broker or limits of their knowledge.
  • Architects & Builders: Typically use ANSI Z765, although we regularly catch inaccuracies with new construction for varied reasons, primarily due to plans that changed or using the Gross Building Area (GBA).  We recently lowered taxes for new home buyers in Newton and Cambridge by alerting the assessor to correct inaccurate brand new records.
  • Assessors: the world of mass appraisals comes with mass measurements and mass errors. Inaccuracies are inherent in Capes and Colonials due to use of percentages for upper stories vs. actual measurements, exclusion of an upper finished story, inaccurate subcontracted mass appraisal measuring services, field sketch mix-ups, measurements estimated due to inaccessible exteriors, and exclusion of above-grade GLA in lower levels
  • Appraisers:  FNMA appraisal requirements  for what “is” living area are 100% clear.  They require use of the Above Grade Gross Living Area (GLA) only, period.  Yes finished basement have value but they ARE NOT part of the GLA.   FNMA does not require use of ANSI Z765 but the best appraisal practice is to do so because it is a good and fair standard.
  • Finished basements: Which would you pay more for; a walk-out basement with a floor that is level with your backyard, full size doors and windows, glass sliders, abundant natural light and ventilation, or a dark walk-up basement with tiny windows?  the value per square foot of a basement varies WIDELY due to type of construction. This is why it is not part of GLA and absolutely must be broken out,  as is the case in the updated FNMA forms which now distinguish between walk-out, walk-up and interior only(finally).

Tags: FSBO, List my House, house value, Real Estate Value, Newton real estate appraiser, Newton real estate appraisal, Newton appraiser, Newton appraisal, Boston appraisal, Boston appraiser, MA appraiser

If you found this article helpful or informative, I would be grateful if you would like and share it with others. And please let me know if there is any real estate or appraisal related topics that you are interested in. – Adam@AladdinAppraisal.com

Divorce and Appraisals, What You Need to Know

Divorce AppraisalIn a divorce, the marital home is oftentimes sold, and any profits are split between the parties. Alternatively, if financially possible, one of the parties may buy out the other.  The question of “who keeps the house?” depends far more on the house value than it does on who is staying and who is going.  This may be the critical step in the divorce process. an appraisal by an independent appraiser is how parties determine home values when the home will not be sold.

You will not find a reliable answer online home value estimator when you are asking “what is my house worth.”  No one should ever buy or sell based on a Zestimate.  If you check their site, Zillow publishes its own comparison of home prices (actual sales) vs. their Zestimates which reveals an alarming rate of inaccuracy into the double digits in some areas.  you have one chance and can’t afford to leave money on the table.

Your tax assessment is not the same as an appraisal because the intended use of the assessed value is primarily reserved for property taxation purposes.  In fact, assessed values have no supportable correlation with actual property values.  sales used in the assessment process lag at least six months behind.

You can find and ask a real estate agent “what’s the value of my home?”  there are very good local real estate agents who will develop a reasonably accurate broker’s opinion of value (BPO).  But judges will not accept a BPO, they are knowledgeable and understand that BPOs’ are not considered reliable enough for use in a mortgage (FNMA).  And in most cases the both names are on the current mortgage and a new mortgage will be necessary.

This is the reason one or both parties should hire the services of a professional real estate appraiser to estimate the fair market value of the home.  The appraisal should include a well-supported, professional report that is admissible and defensible in court.  State and Federal laws require that the appraiser and the appraisal process be independent from any influence, coercion or undue pressure.  This allows the appraiser to remain an unbiased, third-party.

In some cases the divorce date differs from the inspection date of the appraisal.  This requires a retrospective appraisal with an “effective date” and a value estimate corresponding to the date of divorce, the date of filing or some other date in the past.

Our Approach: A divorce is usually one of the most upsetting and difficult times in a person’s life.  We understand and appreciate this difficulty, and we will handle your situation with the utmost care.  We are bound by the ethical provisions within the Uniform Standards of Professional Appraisal Practice (USPAP) which guarantees our customers the highest level of confidentiality and discretion.  In addition, we provide you with a comprehensive home appraisal report that meets or exceeds requirements of the court.

By working with Aladdin Appraisal, rest assured that you will get the best in professional service and courtesy, while also receiving the highest quality appraisal report.  Our team of exceptional appraisers will be discreet and respect and protect your privacy in any divorce matter.  Conversely, if necessary, Aladdin Appraisal stands behinds its appraisals and value estimates, should your matter advance to trial.

Our Senior Staff Appraiser, Adam Wiener, CRA will complete or personally review your appraisal.  Our extensive experience includes dealing with local and prestigious law firms in the Greater Boston area.

We welcome your telephone inquiries and invite your questions about our process.  CONTACT US:

If you found this article helpful or informative, I would be grateful if you would like and share it with others. And please let me know if there is any real estate or appraisal related topics that you are interested in. – Adam@AladdinAppraisal.com

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