Data Collection and Data Collection and VerificationVerification

Objective:Provide an overview to data collection as associated with the valuation process

“The quality of the data will, more than anything else, determine the valuation accuracy.” IAAO, Standard on Ratio Studies

Data Collection and Data Collection and VerificationVerification

USPAPStandards Rule 1-4

“In developing a real property appraisal, an appraiser must collect, verify and analyze all information applicable to the appraisal problem, given the scope of work identified in accordance with Standards Rule 1-2 (f)”

The Valuation ProcessThe Valuation Process

Specific Data

Report of Final Value

Income Capitalization

Reconciliation of Value Indications and Final Opinion of Value

Land Value Opinion

Application of the Approaches to ValueCost Sales Comparison

Market Area Data Subject Property Data Comparable Property Data

Identification of intended users

Intended use of appraisal

Purpose of appraisal

Date of opinion of value

Definition of the Problem

Data Collection and Property Description

Data AnalysisMarket Analysis

General Data

Highest & Best Use Analysis

Scope of the Work

Identification of property

characteristics

Extraordinary assumptions

Hypothetical conditions

Market Area Data Comparable Property DataSubject Property Data

Data Collection and Property Description

The Valuation Process

Specific DataGeneral Data

General/Market Area DataGeneral/Market Area Data

SocialSocial EconomicEconomic GovernmentalGovernmental EnvironmentalEnvironmental

Defines issues affecting a community

General/Market Area DataGeneral/Market Area DataResources

Council of Economic AdvisorsFederal Reserve BoardDept. of HUDDept. of LaborState and Federal AgenciesLocal Information

Chamber of CommerceColleagues in the professionInternetPersonal InterviewLocal MediaPrivate research firms

Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property

DataData

Defines characteristics of:Defines characteristics of:

Subject sample & Comparable Subject sample & Comparable SalesSales

CostCost Income/expensesIncome/expenses

Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property

DataData

Analysis of Subject and Comparable Analysis of Subject and Comparable property Data establishes:property Data establishes:

Trends in construction costTrends in construction cost lease termslease terms typical expensestypical expenses vacancy ratesvacancy rates rental rates, etc.rental rates, etc.

Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property

DataData

Internal ResourcesInternal Resources

IAS DatabaseDR 219’s12D-8’sSales Use Tax (SUT)

Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property

DataData

Local ResourcesLocal Resources1) Property record cards

2) Deeds3) MLS

4) Other Appraisers

5) R.E. Agents

6) Management Co.

7) Lending Institutions

8) Investors

9) Developers

Specific/Subject Property Specific/Subject Property and Comparable Property and Comparable Property

DataData

National ResourcesNational Resources

1) Internet Sites2) Published Resources (Korpacz, BOMA, Black’s Guide, etc.)

Web SitesWeb SitesGovernmental/Organizational Websites:About FMHAState of FL. Condominium Info.Florida IAAOFannieMaeAppraisal Network - Real Estate Appraisals

HUD HomepageAppraisal Institute

http://www.webdirectory.comhttp://www.epa.govIAAOCredit UnionsProperty Appraisers Assoc. Of FL.Appraisal Network - Real Estate AppraisalsAbout FMHAFreddieMac

Web SitesWeb SitesCommercial:http://www.nnndeal.com/summary.asphttp://www.property.comCommercial Investment Real EstateShopping Center WorldReal Estate Investment SourceMarket Insight Group, Corp.The National Retail FederationThe Property SourcebookData & Statistics ResourceEconomic activitywww.vandema.comhttp://server.irem.orghttp://www.uli.orghttp://www.costar.com/

Web SitesWeb Sites

Multifamily Information:National Multi Housing CouncilMulti Housing NewsM/PF ResearchHousing & Urban Development

Land Information:Site Selection Onlineconstruction.com - the construction industry marketplaceLand Boundary Information SystemDivision of Florida Land Sales

Data CollectionData Collection

AlternativesAlternatives

The road less traveled

Sample appraisal problems and possible solutions

Data CollectionData Collection

Problem 1:Problem 1: Establish a vacancy rate for an Establish a vacancy rate for an apartment sub-market within city xyz.apartment sub-market within city xyz.

Possible Solution:Post offices do weekly updates on all addresses.New construction addresses are added and address changes are notedThe data available may be used to establish the desired vacancy rate for the multifamily sub-market under study.

Data CollectionData Collection

Problem 2:Problem 2: Estimate vacancy rates for two apartment Estimate vacancy rates for two apartment complexes. The rates are critical to the appraisalcomplexes. The rates are critical to the appraisal

Solution: If the units are individually metered, the appraiser should obtain a utility company’s readouts from the past 12 months for the two complexesunder investigation. The number of electrical hookups, for example should be an excellent indicator of the number ofvacancies in the past year.

Overemphasis of historical trends rather than current conditions

Misinterpretation of data

Over reliance on data provided by the owner or developer

without cross checking the data

Reliance on insufficient transaction data

Proper confirmation of sales data

Not using common sense

Survey of Institutional Chief Appraisers

Common problems associated with Common problems associated with data collectiondata collection

Common problems associated with Common problems associated with data collectiondata collection

Common issues noted by the State Appraisal board

Failure to separate real estate from personal

property, going-concern and business values

Failure to consider and analyze current agreements of sale,

lease or prior sales

Reliance on published data without verifying its accuracy or reliability

Misinterpretation of published data

Failure to disclose conditions surrounding

or affecting the property

Current listing/pending information is pertinent to the valuation processIf referring to, or using sales information from someone outside of PTA, verification of those resources by PTA employees must be in the Master file.

Provide three land sales whenever possible in order to establish a range.

It is acceptable to go outside of the subject market area for sales in lieu of only using two comparable sales.

Recognize TPP in the valuation process and consistently address the affect it has on the valuation of a sample.

Compare apples to apples

Insufficient improvement notes

Common problems associated with data collectionCommon issues noted by the QA Team

ResourcesResources

“Market Analysis for Valuation Appraisals”

“Appraising the Appraisal”

“The Computerized Income Approach toHotel-Motel Market Studies and Valuations”“Real Estate Development”

“Appraising the Tough Ones”