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Development of Appraisal Practices and More Discussed
in Latest Issue of The Appraisal Journal
CHICAGO, IL - The Summer 2007 issue of The Appraisal
Journal continues the Appraisal Institute’s
yearlong salute to its diamond anniversary by
providing featured articles that examine a bevy
of unique valuation topics. Highlights include
articles addressing topics from an overview of
the development of appraisal practices to conservation
subdivision developments, from property rights
compensation statutes to government land auctions.
In addition, a special article developed by Appraisal
Institute staff explains circumstances where errors
frequently occur and how appraisers can avoid
these errors.
The spotlighted article in the Summer 2007 issue,
“Voices in the Evolution of Appraising:
Hindsights and Insights,” was written by
John D. Dorchester, Jr., MAI, a former president
of the Appraisal Institute (1982) and past chair
of the International Valuation Standards Committee.
In his article, Dorchester traces the movement
toward professionalism and the founding concepts,
appraisal principles and appraisal processes that
are the foundation for the appraisal profession.
A historic reprint illustrating early views on
the appraisal process and the basic elements of
valuations accompany this article.
The article “An Economic Analysis of Real
Estate Conservation Subdivision Developments,”
by Alan K. Reichert, PhD, and Hsin-Yu Liang, compares
the property values of similar homes located in
open space design subdivisions in Northeast Ohio
to property values in traditional subdivisions
and finds no significant difference between the
types of subdivisions. Their findings contradict
studies of other areas of the United States that
have found conservation subdivisions command higher
prices and have greater appreciation in value.
The authors suggest that local factors, such as
land prices, preferences for large lots, traffic
concerns and lifestyles may explain their findings
and caution developers, appraisers and homebuyers
to recognize regional differences when investing
in or appraising alternative types of housing
developments such as conservation design.
In “The Appraiser’s Role under Property
Rights Compensation Statutes,” by Charles
C. Carter, PhD, and Marcus T. Allen, PhD, the
authors compare the property rights compensation
statutes in Texas, Florida, Louisiana, Oregon
and Arizona. These statutes entitle property owners
to compensation when local land use regulations
lower the value of their property. The authors
believe that these types of statutes will become
more common as additional states enact laws allowing
compensation for regulations that limit property
rights. The authors advise that although the appraiser’s
mission in these situations is not very different
from many other appraisal assignments related
to litigation, the appraiser should be aware of
the nuances of property rights compensation laws
in order to provide quality service to their appraisal
clients.
The accuracy of precaution valuations is the topic
of “An Empirical Study of Valuation Accuracy
and Variation in Hong Kong Land Auctions,”
by K. F. Man and C. W. Ng. The authors looked
at the precaution valuations of government land
and found that the pre-auction appraisals by public
sector appraisers differed from the actual transacted
price by 56 percent, while private sector appraisals
differed from transacted price by 15 percent.
The authors suggest that public sector valuations
may be intentionally low to trigger the auction
process. The authors attribute the variance in
the private section valuations to the interpretation
of data, lack of comparables and constraints that
prevent full-fledged appraisals.
The Summer issue of The Appraisal Journal also
includes a special article on “Common Errors
and Issues in Reports,” by Janice F. Young,
MAI, SRA, the Appraisal Institute’s Director
of Experience Review (Admissions), and Stephanie
Coleman, MAI, SRA, the Appraisal Institute’s
Director of Screening (Ethics & Counseling).
In this article, the authors explain circumstances
where errors frequently occur and how appraisers
can avoid these errors.
The Appraisal Journal, published quarterly by
the Appraisal Institute, serves as a forum for
advancing appraisal theories and practices. Containing
articles, columns and letters written by experienced
appraisers and educators, The Appraisal Journal
presents ideas, concepts and analytical techniques.
Geared toward appraisers, educators and other
real estate professionals, each issue offers alternative
valuation methods for serious thinkers seeking
creative solutions to appraisal problems.
For more information about The Appraisal Journal
or for review copies, please contact Nancy Bannon,
Managing Editor, at 312-335-4445.
The Appraisal Institute is a global membership
association of professional real estate appraisers,
with 22,000 members and 92 chapters throughout
the world. Organized in 1932, its mission is to
support and advance its members as the choice
for real estate solutions and uphold professional
credentials, standards of professional practice
and ethics consistent with the public good. Members
of the Appraisal Institute benefit from an array
of professional education and advocacy programs,
and may hold the prestigious MAI, SRPA and SRA
designations.
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