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5185 Dungannon Circle NW
North Canton, OH 44720
phone: 330-494-3444
fax: 330-499-4646
e-mail: hottleco@neo.rr.com
http://www.hottleco.com
©2004 Hottle and Co.
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Lender/Client
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Can you check comps for me? I need to know what the property is worth before I order an appraisal.
This is a common question that appraisers face every day. Lenders and borrowers don't want to waste time and money if
the market value doesn't support the loan-to-value ratio (LTV) requested. Yet, if performing an appraisal is the
method used to determine the value, how can the value be determined without performing an appraisal?
Did you know that checking comps and providing an estimate of value prior to receiving an appraisal order may be a
violation of Uniform Standards of Professional Appraisal Practice (USPAP) that could result in penalties, suspension
or revocation of the appraiser's license or certification? The current edition of USPAP is posted on the Appraisal
Foundation website at www.appraisalfoundation.org and Advisory
Opinion 19 gives some excellent examples and guidance on this issue. After taking a moment to read AO19 to understand
what licensed and certified appraisers can't do, how can lenders and borrowers get past this classic chicken and egg
scenario? One answer is to "screen" the subject property using a mathematical approach that relies on the probability
that certain features and amenities have predictable values. This mathematical method is used by countless public
auditors to evaluate property for real estate tax purposes and is statistically accurate for large groups of data.
Although less accurate for a specific property, this method can often provide a ballpark idea to help determine whether
an appraisal should be the next step. Another answer is a public domain website that is searchable for specific
information pertinent to the subject property. The Stark County website
www.co.stark.oh.us features a Real Estate icon that opens directly to property information maintained by the Stark
County Auditor's office. Anyone may perform simple searches by street name, taxing district, time, living area and
more. What could be a more relevant indicator of value than a recent sale of similar home in the same neighborhood!
An appraisal is still the most accurate measure of a property's appeal to the marketplace. A preliminary comp search
is just that---a preliminary collection of data that may or may not apply to the subject property. Increasingly
sophisticated borrowers realize that "drive by" values often do not reflect the care they have lavished on their
homes. Consequently, many homeowners request a walk-through appraisal because they believe even a "drive by" is
misleading. Lenders and borrowers deserve the confidence that their lending and borrowing decisions are based on
reliable information rather than on speculation. Customer Service is providing that confidence with thoroughly
researched information, timely reporting, and well supported appraisal conclusions at a reasonable price.
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