CHICAGO (July 31, 2007) – 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.