If the property is income producing, we use math to determine an investment rate of return for dollars investments, sinking fund factors, future value of a dollar, and to help determine what type of funds need to be set aside each month for repairs of items such as roofs, HVAC systems, water heaters and other components of a home. Math is used to determine the living space of a home, the size of the lot, to determine fractional increments of return on the dollar for investments made in a property. Math continues when looking at economic statistics to determine market trends ranging from basic issues such as determining if the area has an oversupply of available real state as compared to what the market has demonstrated can be sold in a given time frame, determining how much of a decline a market may see based on different rates of oversupply, using statistics such as regression analysis to determine a market’s reaction in terms of real dollars to different features or lack of a feature in a home. Initially, we have to use math to determine simple things such as how much time it takes to get from one property to another, what is the distance between them, and how many hours of daylight we have to work with to get everywhere we want or need to be in a day’s time. Contrary to what most people think, appraisers do not set the value of a property, we simply report what is going on in the area, and what a property is likely to sell for based on other recent sales in the area that are as similar as possible to property being appraised.įrom start to finish. Finally, all the data comes together into a 30-40 page report in which all the data is given to the client. This includes an analysis of the area on a large scale (city wide) relating to economics and the economic base, then a second analysis of the specific neighborhood within the city to determine what is happening in that neighborhood with real estate price trends, supply and demand, and what features or amenities are most important at this time. The job of a real estate appraiser is to determine what the property is that is being appraised: is the property a single family home, a duplex, an apartment building or something else? As well, what is the home in terms of age, size, construction quality, bedroom/bath count, and other features? Once this has been determined, the appraiser’s job then shifts to the task of analyzing the market area. Tim shows us some of the inside scoop in the field of real estate appraisal.Ĭan you explain what you do for a living? This math has a purpose, backed by meaning, and it’s hands-on. And how does Tim get to those facts? Math of course. Sometimes we may disagree with their figures, but as Tim Lane shows us, the facts are the facts. Real estate appraisers: whether you love them or hate them, they’re a necessity.
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