Data Collection and Verification 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 Verification USPAP Standards 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 Process

Market Area Data Comparable Property DataSubject Property Data Data Collection and Property Description The Valuation Process Specific DataGeneral Data

General/Market Area Data General/Market Area Data  Social  Economic  Governmental  Environmental Defines issues affecting a community

General/Market Area Data Resources  Council of Economic Advisors  Federal Reserve Board  Dept. of HUD  Dept. of Labor  State and Federal Agencies  Local Information  Chamber of Commerce  Colleagues in the profession  Internet  Personal Interview  Local Media  Private research firms

Specific/Subject Property and Comparable Property Data Defines characteristics of: Ø Subject sample & Comparable Sales Ø Cost Ø Income/expenses

Specific/Subject Property and Comparable Property Data Analysis of Subject and Comparable property Data establishes: Ø Trends in construction cost Ø lease terms Ø typical expenses Ø vacancy rates Ø rental rates, etc.

Specific/Subject Property and Comparable Property Data Internal Resources  IAS Database  DR 219’s  12D-8’s  Sales Use Tax (SUT)

Specific/Subject Property and Comparable Property Data Specific/Subject Property and Comparable Property Data Local Resources 1) Property record cards 2) Deeds 3) MLS 4) Other Appraisers 5 ) R.E. Agents 6) Management Co. 7) Lending Institutions 8) Investors 9) Developers

Specific/Subject Property and Comparable Property Data Specific/Subject Property and Comparable Property Data National Resources 1) Internet Sites 2) Published Resources (Korpacz, BOMA, Black’s Guide, etc.)

Web Sites Governmental/Organizational Websites: About FMHA State of FL. Condominium Info. Florida IAAO FannieMae Appraisal Network - Real Estate Appraisals HUD Homepage Appraisal Institute IAAO Credit Unions Property Appraisers Assoc. Of FL. Appraisal Network - Real Estate Appraisals About FMHA FreddieMac

Web Sites Commercial: Commercial Investment Real Estate Shopping Center World Real Estate Investment Source Market Insight Group, Corp. The National Retail Federation The Property Sourcebook Data & Statistics Resource Economic activity

Web Sites Multifamily Information: National Multi Housing Council Multi Housing News M/PF Research Housing & Urban Development Land Information: Site Selection Online construction.com - the construction industry marketplace Land Boundary Information System Division of Florida Land Sales

Data Collection Alternatives The road less traveled Sample appraisal problems and possible solutions

Data Collection Problem 1: Establish a vacancy rate for an 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 noted The data available may be used to establish the desired vacancy rate for the multifamily sub-market under study.

Data Collection Problem 2: Estimate vacancy rates for two apartment complexes. 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 complexes under investigation. The number of electrical hookups, for example should be an excellent indicator of the number of vacancies 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 data 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 process  If 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 collection Common issues noted by the QA Team

Resources