real estate finance - full book (500 pgs)

The cost approach is best used for specialpurpose

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Unformatted text preview: ere is a wide disparity between the three indicators. For this reason, the reconciliation process requires a thorough review of the complete appraisal process. The appraiser must review the reliability of the data, the logic and analysis applied to the data, and the resulting value indicators. 12-16 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 12: QUALIFYING THE PROPERTY In addition to reviewing and considering the reliability of the various value indicators, the appraiser will also consider the use of the appraisal. For example, all things being equal, more weight may be placed on the value indicated by the income approach in the case of an appraisal that will be used by an investor who is looking for income property. On the other hand, if the appraisal is being used to help the owner–occupant purchaser qualify for a home loan, the sales comparison data approach may be considered the most reliable. PROCEDURE FOR QUALIFYING A PROPERTY CONVENTIONAL LENDERS Conventional lenders use a less formal process than the FHA or DVA in qualifying the property. Typically, the applicant completes a loan application and presents it to the lender. The applicant is referred to a loan officer, who asks questions about the property to see if it meets the lender's policy. The loan officer also discusses the possible loan terms, such as loan–to–value ratio, interest rate, term, and loan fee. If the requested loan meets the lender's loan policy, the loan officer asks an appraiser to inspect the property. Conventional lenders use both staff and fee appraisers. Commercial banks and savings banks use primarily staff appraisers. Mortgage companies mostly use fee appraisers. After an appraisal is completed, it is reviewed by the lender, which checks the appraisal for accuracy and completeness. In addition, the lender determines whether to proceed with the loan request. With the completed appraisal in hand, the lender i...
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