Wednesday, May 5, 2010

Would you trade?

Would You Trade?

On April 14, Nebraska signed into law legislation that will permit brokers
to provide Broker Price Opinions and even Comparative Market Analysis for
loan origination. You read it right! Loan Origination. A broker whose
commission depends on the deal closing can now provide the estimated value
for the property. The law became effective April 15th.

In Minnesota a Broker Price Opinion can only be done for the purpose of
securing a listing. While I agree the Nebraska law is really stupid, I don't
believe all appraisers always understand property values better than
realtors. And both can be influenced to come up with a number that pleases
the client.

I got a call last week from a homeowner going through the Board of Review
process for his tax assessment. While I haven't seen his house, he told me
its an older home on 5 acres of waterfront property. The assessed value was
around $570,000 and the board of review reduced it to around $530,000 yet he
had an appraisal of $380,000 he ordered for the tax appeal.

The appraiser ignored acreage sales in the community and used comps in the
next town of similar homes on non waterfront ½ acre lots.

"Would you trade? ", I asked him. "Would you live in one of those comparable
properties instead of your 5 acre waterfront home?"


"Would you trade?" is the essence of appraising.

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