600 Huron Avenue
NOTE: This is 1 of 4 courses being offered on June 10th & 11th.
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This program will focus on developing and communicating credible and supportable evaluation appraisal services. The program will focus on minimum requirements outlined in the Interagency Appraisal and Evaluation Guidelines. This is the core document that practitioners must adhere to when providing this appraisal service. This program will expand specifics within that document to a related publication, the Uniform Standards of Professional Appraisal Practice.
The program will span the entire process from what is an evaluation, guidelines for requesting an evaluation, who can prepare evaluations, to the development and reporting requirements outlined in the Guidelines. The program will assist practitioners on how the appraiser can provide an evaluation and comply with the current edition of USPAP. Appraiser compliance with all relevant guidelines and standards is primary to providing credible assignment results.
Handout: Brief syllabus & student handout
- Overview of the program that will define an evaluation appraisal service, its purpose, and when a client may request this appraisal service.
Inform the audience that the basis of an evaluation service rests in the Interagency Appraisal and Evaluation Guidelines that were issued on December 2, 2010. This is the core document that appraisers need to follow when completing evaluations. The discussion will extend to aspects of Uniform Standards of Professional Appraisal Practice (USPAP).
Discuss the parameters that clients are to follow when requesting an evaluation. These parameters span real property assignments for residential and non-residential lender-client value related questions.
The Interagency Appraisal and Evaluation Guidelines expound upon who can prepare evaluations and the responsibility of both the appraiser and the client. Clarity of the appraiser’s role is essential for the appraisal community to fulfill and meet the needs of lenders in performing evaluations.
10 minutes Break
Overview of the development requirements outlined in the Interagency Appraisal and Evaluation Guidelines. These requirements span both the lender and the appraiser. This section will address the specific areas within the development requirements outlined in the Guidelines. The areas pertinent to appraisers include: possibility of a property inspection (actual or third party source); effective date of value; base line property description; and valuation methods.
The Guidelines require support for adjustments among which overtly cited are economic and market conditions. What is meant by market support will be addressed. The Guidelines also stress avoiding using any unsupported assumptions.
Overview of the reporting requirements outlined in the Interagency Appraisal and Evaluation Guidelines. These requirements are specific to the appraiser. Address the specific areas within the reporting requirements outlined in the Guidelines. These areas include many areas which are also addressed in the minimum requirements outlined in USPAP for all appraisals. They include property inspection, location, description, actual physical condition, use and zoning, methods and techniques, analysis, and sources of information and supplemental information.
Reference and stress that a Restricted Appraisal Report as presented in USPAP is not appropriate for communicating an evaluation. The format may be modified to meet the minimum requirements outlined in the Guidelines.
Define what is meant by a competitive sale and introduce the ten elements of comparison in any comparison analysis.
Sales Comparison Approach Review
Summarize the five (5) transactional and five (5) property specific elements of comparison, the order of presentation and which is done sequentially and/or cumulatively in the analysis.
Exchange of ideas about how to develop adjustments will be encouraged as well as discussion of pier tested and industry expected techniques. Examples of these adjustments are presented.
Discuss the other transactional adjustment elements of: (1) condition of sale; (2) expenditure upon acquisition, and (3) market conditions. Review core concepts and provide examples if such adjustments are necessary.
Present the rationale for the property specific adjustments and that these adjustments may be done cumulatively. Examine the use and presentation of physical characteristic subsets.
Review strengths and weaknesses of quantitative and qualitative analyses. Introduce the concept of weighting a sale and which sale or sales should be given primary emphasis in a final correlation of the data.
10 minute Break
Income Capitalization Approach Review
Discuss and review the various components within a pro-forma operating statement.
Overview of the concept of a pro-forma and the capitalization process. Emphasize the need for market support for each component of a pro-forma by identifying a property’s strengths and weaknesses to command rent, address vacancy and expenses, and capitalizing net income.
Succinctly connect the rationale for a property’s strengths and weaknesses to direct capitalization, development of an overall rate or multiplier or range of these elements.
Emphasize the need to reconcile throughout the development of the Income Capitalization Approach.
10 minutes Question & answer period