This book is designed to teach professionals to properly measure. Size Matters ! Measuring and Calculating Residential Square Footage is not just a book about The book also points out that many appraisers are forced to use public data, which Perfect Paperback: pages; Publisher: D. Hamp Thomas; 2nd edition .
Table of contents
- Reader Interactions
- How do appraisers come up with square footage adjustments?
- Real estate appraisal - Wikipedia
Is this custom property in a tract neighborhood? Or are there simply no recent sales? There is so much to think through as an appraiser depending on the answers to these questions. I try and let my clients know this all the time. Thanks for sharing your explanation! Thanks so much DeeDee. Good for you to communicate well with your clients. That can be a financial painful realization.
The same holds true for square footage. Asking top rated appraiser in area for appraisal review. Is this the best to do at this point? Thanks for sharing your story. If the appraiser really knows the market and the property type, hopefully that will result in a credible value. Hopefully the appraiser can give you some insight into whether the BPO is even reasonable or not. A BPO can suggest any old price, but that does not mean it will actually sell at that amount.
I wish you the best! While the total value of a property is determined by a number of factors which is why there are so many areas for adjustment on an appraisal form , the single line item of living square footage should have some sort of equation for which it is adjusted, and that equation should be based on some model.
Reader Interactions
Your approach number 4 for what to consider makes a lot of sense, as other adjustments for features, condition and amenities can be accounted for on their respective line items. I only wish more appraisers used this approach. In my area, they seem to be all over the board in the number they use to come up with square footage adjustments. Thank you for reaching out. It would be nice if there was a model or equation to apply, but real estate is so different from neighborhood to neighborhood — even in the same city. We desire models to help us extract values from markets, but there is no template or formula we can impose on a neighborhood to give us accurate results.
It might work in one neighborhood but not work at all in a different neighborhood does that sound like some of the online valuation sites? I agree that it would be nice to see more consistency among appraisers, though there is always room for some differences, and we can expect that. But point taken for sure. The big key here is 4. We simply have to put in the work to figure out what the square footage adjustment needs to be from neighborhood to neighborhood. That same adjustment might not make sense for the neighborhood at hand. I think I was a little unclear in my point.
A proper model for approaching the square foot adjustment for real estate would apply to the neighborhood in question. You would have to apply the same model to the new neighborhood. If the new neighborhood had sufficient properties that were similar to one another in other respects, you apply the same equation: I like the idea, Luke. The tricky part in all of this is to try to isolate the extra square footage to find out what that feature alone is worth.
Yet there has been a glaring mistake made here. What is the actual square footage worth? The best way to tell would be to find another house with a similar condition, similar level of upgrades, similar lot size, generally similar size hopefully, etc…. So how much is the extra sq ft worth in the resale market? I wanted to bring it up for the sake of anyone looking on and maybe wanting to join the conversation. When you figure out your model, let me know.
I appreciate your attention to detail and your desire to see more uniformity in the appraisal process. On a related noted, I know Assessors weight square footage and lot size and other factors into their valuation model. Obviously, it would need to be checked to see if the adjustment was in scope with the neighborhood and comps, but it is a good general rule of thumb for this one factor in the appraisal. This can open up a whole new world of adjustment possibilities and give you credible support for your adjustments.
Very pleased with your articles. I have been evaluated in Russia since We have a slightly different format. We compare offers afertu unlike you.
We is missing information on the real deal. Tax evasion is a national Problem. I wanted to understand. When assessing a residential house with land, you are excluded from the total value of the real estate value of the land as a nezatstroennogo? Then the cost of 1 sq. This amount is subject to adjustment and the value of sales by the pair cleared of land counterparts.
And what do you do in this case? With great respect to you, Alexander Maslov. Thanks for reaching out. Institute of Housing Technologies. Improving the Real Estate Information Network. How to Measure a Home's Square Footage. How do you measure a house? You would think that would be a fairly simple answer. But, the best answer to that question is "it depends.
However, a large percentage of homes have sloped ceilings, staircases, attics, basements, enclosed porches, closets with angled ceilings, bonus rooms, offices in garages, detached apartments, or one of a thousand other possibilities. Measuring square footage is an art. We live in a price-per-square-foot world and every square foot counts.
Why take the chance? In our humble opinions, not having a nationally mandated measurement standard is a disservice to consumers everywhere. The real estate experts cannot agree on how to measure a house? The Appraisal Foundation and Appraisers Qualifications Board, the Appraisal Institute, along with numerous other national real estate and appraisal organizations have had more than enough time to study this issue and find a solution.
But, they don't even appear to be discussing the problem. Perhaps they don't even see a problem, we're not sure. We can't imagine how in this day and time an entire industry has kept from establishing one universal standard of measurement. An advantage of the comparatively high degree of standardization practiced by professional appraisers is the greater ability to check an appraisal for inconsistency, accuracy and transparency.
BDSF [21] is the main professional organization encompassing the majority of licensed appraisers in Germany. In recent years, with the move towards a more global outlook in the valuation profession, the RICS has gained a foothold in Germany, somewhat at the expense of the BDSF. With special focus on hypothetical value, in , German banks with real estate financing activities formed the HypZert GmbH , an association for the certification of real estate valuers. Valuers must be registered with the Council, which is a statutory body set up by law, and which oversees the training and administers the national professional exams that are a prerequisite for attaining registration.
In the Council set up a Valuation Standards Committee with the purpose of developing and promulgating standards that would reflect best practice; these have tended to follow a rules-based approach. Historically, most valuations in Israel were statutory valuations such as valuations performed for purposes of Betterment Tax , a tax administered on any gains accruing to the property by way of changes to the local planning as well as valuations performed for purposes of bank lending.
Since Israel implemented the International Financial Reporting Standards IFRS in , the profession has been engaged in performing valuations for purposes of financial reporting. In the UK , real estate appraisal is known as property valuation and a real estate appraiser is a land valuer or property valuer usually a qualified chartered surveyor who specializes in property valuation. Appraisal practice in the United States is regulated by state.
The federal government regulates appraisers indirectly because if the Appraisal Subcommittee ASC of the Federal Financial Institutions Examination Council FFIEC finds that a particular state's appraiser regulation and certification program is inadequate, then under federal regulations all appraisers in that state would no longer be eligible to conduct appraisals for federally chartered banks. Banks make widespread use of mortgage loans and mortgage-backed securities , and would be unable to do so without appraisals.
But prior to the s, there were no commonly accepted standards either for appraisal quality or for appraiser licensure. In the s, an ad-hoc committee representing various appraisal professional organizations in the United States and Canada met to codify the best practices into what became known as the Uniform Standards of Professional Appraisal Practice USPAP. Savings and Loan Crisis resulted in increased federal regulation via the Financial Institutions Reform, Recovery and Enforcement Act of , which required federal lending regulators to adopt appraisal standards.
Federal oversight of TAF is provided by the Appraisal Subcommittee, made up of representatives of various federal lending regulators. TAF carries out its work through two boards: During the s, all of the states adopted USPAP as the governing standards within their states and developed licensure standards which met or exceeded the recommendations of TAF.
In addition, there are professional appraisal organizations, organized as private non-profit organizations that date to the Great Depression of the s. These organizations all existed to establish and enforce standards, but their influence waned with increasing government regulation. It was founded in One of the most recognized professional organizations of real estate appraisers in America is the Appraisal Institute AI.
Founded along with others in the s, the two organizations merged in the s to form the AI. This group awards two professional designations: The Institute has enacted rigorous regulations regarding the use and display of these designations. The primary motive for this rule is to prevent trademark dilution. The National Association of Appraisers NAA was formed with a purpose of uniting those engaged in the appraisal profession for the purpose of exerting a beneficial influence upon the profession and to advocate appraiser interests. The NAA has established an advisory group consisting of leadership at the state organizations and coalitions called the Board of Governors where those states can help guide the NAA in acting in the best interest of all appraisers.
The NAA also has a designated membership, MNAA Member of the National Association of Appraisers, who is an individual who holds an appraisal license, certification or similar appraisal credential issued by a governmental agency; and who accepts the membership requirements and objectives of the National Association of Appraisers.
How do appraisers come up with square footage adjustments?
Other leading appraisal organizations include the National Association of Independent Fee Appraisers and the National Association of Master Appraisers , which were also founding sponsor-members of the Appraisal Foundation. In Russia , on par with many other former Soviet Union economies, the profession emerged in the first half of , and represented a clean break with the former practice of industry-specific pricing specialists and with activities of statutory price-setting authorities in the Soviet Union.
Currently, property valuation, as it is called, is a specialism within general-purpose "valuation profession", which functions in a self-regulatory mode overseen by "self-regulated professional organizations" of valuers SROs , i. The principal among those is Russian Society of Appraisers , established in and presently exercising oversight over about half of the valuation profession membership. The latter categories of valuers are also allowed to value property, though valuation professionals tend to specialize.
In late , it was mandated that valuers should pass through compulsory state-administered attestation process to verify their competence, the details of which as to breakdown in specialization or otherwise remain to be hammered out.
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As of mid, Valuers in Russia, including real property valuers, are deemed to be purposely-educated individuals maintaining their Valuation SRO membership and bearing unlimited property liability for the result of their services, that is their professional status is modeled on the organization of public notaries. High-end appraisal services are principally represented by valuation arms of the International "Big-four" consultancies in the country, but there also exist reputable national corporate valuation brands.
Most of valuations in the country tend to be performed for statutory purposes envisaged by the Federal Valuation Law the latest amendment in and other related laws, such as the Joint Stock Companies Law. Such pieces of legislation provide for more than 20 so-called "mandatory cases of valuation", including valuations for privatization purposes, lending purposes, bankruptcy and liquidation etc. Valuations for corporate accounts used to be much more prominent before , when the national accounting regulator ceased to incentivize the accounting fair value option.
At present, the mass appraisal of property for taxation purposes is also starting to be outsourced by the Government to the institution of professional valuers. Adjudication of valuer-certified estimates of value in case of the onset of disputes is conducted through the Experts Councils of valuers' SROs. Official courts tend to concur with the resolutions of such Councils. In some rare instances the imprimatur of SRO's Experts Councils is also required for a valuation done by a particular valuer to enter into effect. The technical details of practice of real estate valuers in Russia are aligned with the international pattern.
Members of the Russian Society of Appraisers formerly were bound by the observance of the International Valuation Standards. There also exists a set of 14 general-purpose government-developed "Federal Valuation Standards" FSOs 1,2,3 --are the general valuation standards first adopted in and revised and covering Terms of engagement and Valuation report content requirements, FSOs are asset-specific standards adopted in , while FSO 9 is currently the only purpose-specific standard in the set dealing with valuations of property for loan security purposes; the last two FSO standards adopted in cover determination of investment and liquidation values, however, they do not touch on the methodology for determining these values, only scraping the reporting requirements.
With effect from the 1st of August , new amendements to the Federal Valuation Law came to impose the compulsory certification of valuers by a state-affiliated testing centre. Consequently, this 2 hour written-exam certification measure, aimed to counter a perception of wide-spread malpractice among the members of the national valuation profession, provides for 3 valuer-specializations: Valuers would lose a right to practice, unless they comply with the requirement to take this compulsory certification exam at or before March 31, A general assessment of this measure is that the numbers of certified valuers in Russia are set to dwindle down to some valuers nationwide across all the specialisms mentioned , i.
Established in , Institute is the only professional organisation representing the surveying profession in Hong Kong. In May , the number of members had reached 6, A general practice surveyor advises on the best use of the land, assesses the feasibility and viability of the proposed development project as well as the valuation, marketing, sale, leasing and management of completed developments. It also has a website to provide real-time property's value estimate across whole Hong Kong. The Institute has undergone several name changes over the last century as the array of services offered by its members expanded.
It serves to regulate the profession of property valuers throughout Australia. Today the API represents the interests of more than 8, property professionals throughout Australia. API members include residential, commercial and plant and machinery valuers, property advisers, property analysts, property fund and asset managers, property facility managers, property lawyers and property researchers and academics. The NZIV remains the statutory professional body for valuers in New Zealand, with perpetual succession under the Act which is under review as at The VRB has jurisdiction in relation to serious matters affecting the registration of a valuer including discipline where a valuer has acted in such a way as to meet the threshold.
The Valuers Act sets the threshold under s31 as matters where a valuer could be struck off the register of valuers. The NZIV has power for discipline for relatively more minor matters. The designations "Registered Valuer" and "Public Valuer" are legally protected under the legislation, being reserved for Valuers Registered under the Act.
Both of these bodies have a wider membership, beyond real estate valuers.
Real estate appraisal - Wikipedia
PINZ was formed in to act as the voice of the property professions. There have been 'political divisions' within the valuation profession in New Zealand, expressed at AGMs and through 'proxy wars' over the last 20 years or so.
There are various reasons in the debate and the governing legislation is under review and amendments or repeal is being considered. At present, the Act remains in force and the NZIV is legally a distinct body with statutory functions, powers and duties. PINZ now represents the interests of valuers, property and facilities managers, property advisors and plant and machinery valuers. PINZ has developed into one of the largest professional bodies for standards, qualifications and ethics across all facets of the property profession within New Zealand.
It works with government, industry and other professional associations, education stakeholders and the media to promote its standards and views. In New Zealand, the terms "valuation" and "valuer" usually relates to one who undertakes that professional role in terms of the Valuer Act requirements or the unregulated or voluntarily self-regulated if members of PINZ plant and machinery, marine or art valuers. Whereas, the term "appraisal" is usually related to an estimate by a real estate sales person or licensed agent under the Real Estate Agents Act There is a key distinction between the role of a real estate agent and a valuer, as an agent may advocate for its principal's interests, whereas a valuer must impartially and independently provide opinion as to value.
Lawyers, Conveyancers and Real Estate Agents are permitted to act in the sale of real estate under quite different legislation from that which governs valuers. The provision for the role in relation to Lawyers and Conveyancers is the Lawyers and Conveyancers In to , the number of Registered Valuers in New Zealand has generally between only around to each year. This is an ageing 'top heavy' professional with difficulty retaining new and young members due to pay, work stress and the recent advent of 'clearing houses' for banks to order valuations for mortgage purposes.
The clearing houses have largely ended the long-standing local practice of members of the public seeking advice directly from a valuer. The use of electronic estimates based on Rating Values Local Government mass appraisal for levies is also leading to a reduction in standard valuation work and is significantly affecting the viability of small valuation businesses. The profession is in the process of a wider corporate re-structuring of the valuation market due to these factors with various perceptions within profession as to the merits of the events of the last five years.
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