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Unformatted text preview: hat is an important consideration, but also in terms of adequacy of the income to repay the debt, in quantity and stability. ESTIMATING VALUE USING APPRAISAL METHODS
PURPOSES OF APPRAISAL IN REAL ESTATE
Appraisal is defined as a supportable or defensible estimate of a property's value as of a particular time. Buyers, sellers, and lenders all need such information in a real estate transaction. Lending – Government regulatory agencies which supervise the lending activities of banks, savings and loan associations, insurance companies, credit unions, pension funds, and other lending entities, usually require that a professional appraisal be prepared. 12-2 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 12: QUALIFYING THE PROPERTY
Basis for Decisions – Lending institutions will make underwriting decisions based on the data, analysis, and conclusions set forth in the appraisal. These underwriting decisions include: • • The loan–to–value ratio, or the amount to be loaned as a percentage of the property value. The appropriate number of years over which to amortize the principal of the loan, based on value trends in the area and the age and condition of the property. The appropriate interest rate, considering the lender's cost of money and the relative risk of suffering a loss through foreclosure of the loan. • ETHICS
The Real Estate Commissioner's Suggestions for Professional Conduct, a companion to the Code of Professional Conduct (Regulation 2875, Title 10, California Code of Regulation), encourages real estate licensees to “advertise or claim to be an expert in an area of specialization in real estate brokerage activity, e.g., appraisal, property management, industrial sitting, mortgage loan, etc., only if the licensee has had special training, preparation or experience.” USING A STANDARD APPRAISAL FORMS
For single–family residences, a form report is usually satisfactory. The government makes stringent requirements as to form and support in app...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10