Monday, July 16, 2007
Recertification of Value
What is a "Recertification of Value"?
Advisory Opinion #3 says:”A Recertification of Value is performed to confirm whether or not the conditions of a prior appraisal have been met. A Recertification of Value does not change the effective date of the value opinion”
A "Recertification of Value" is what most appraisers and lenders call a final inspection or completion certificate. If the client wants a current value, it is an “Update of an Appraisal”.
A “Recertification of Value” is often used when an appraisal is done using plans and specs or when the house is partially complete. A “Recertification of Value” is also used when an appraisal is subject to repairs or alterations.
A “Recertification of Value” is actually intended to say, “I appraised this house last year for $300,000. Had it been complete (or repaired) at the time of the appraisal, it would have been worth what my appraisal said it was worth.” In other words, the conditions of the prior appraisal have been satisfied.
A "Recertification of Value" and an "Update of an Appraisal" are not interchangeable assignments as many believe. The appraiser must know the intended use before deciding which service to provide.
Thursday, June 21, 2007
Boat Slip
Scenario:
The subject property is in a subdivision which includes boat slips on the Willimette River. The price of one comparable sale included the boat slip. The comparable sale is across the street from the subject property and does not have a river view.
Boat slips can only be sold to owners in the subdivision. If a buyer does not want the boat slip, the homeowners’ association takes control of it and sells it to someone else who lives in the subdivision or to a buyer moving into the subdivision.
Discussion:
The HOA sells the right to use the boat slip to anyone who lives in the subdivision or is buying in the subdivision. If a homeowner already has the right to use the boat slip, the homeowner can sell the right of use anyone buying his house. If the buyer does not want the right of use, the homeowner can sell the right of use to someone else in the subdivision. If no one wants to buy the right of use, the homeowner can sell it to the HOA who resells it to a property owner in the subdivision.
The right to use the boat slip is personal property and does not convey with the house. If the contract to sell the real property includes the sale of the boat slip, the value of the boat slip must be subtracted to from the contract to determine the sale price of the house.
Standards Rule 1-4(g) states: "When personal property, trade fixtures, or intangible items are included in the appraisal, the appraiser must analyze the effect on value of such non-real property items."Conclusion:
The value of the boat slip is not a part of the sale price of the comparable sale and must be subtracted from the sale price as a sale concession.