Valuing Flood-prone Buildings Poses Challenges: The Appraisal Journal

CHICAGO (Dec. 20, 2017) – Remodel and repair of structures along coastlines and in flood zones requires valuation professionals to have extensive knowledge, according to an article published this week in The Appraisal Journal.

The Appraisal Journal is the quarterly technical and academic publication of the Appraisal Institute, the nation’s largest professional association of real estate appraisers. The materials presented in the publication represent the opinions and views of the authors and not necessarily those of the Appraisal Institute.

“The 50% FEMA Rule Appraisal,” by Patricia Staebler, SRA, discusses the unique aspects of these appraisals, as regulated by the Federal Emergency Management Agency. These 50% FEMA Rule appraisals provide building owners an understanding of how much money they are permitted to spend to improve or repair grandfathered structures without triggering compliance issues with the latest FEMA standards. The article outlines the components that should and should not be incorporated in the appraisal, as well as common errors in FEMA appraisals.

Read “The 50% FEMA Rule Appraisal,” in the Fall 2017 issue of The Appraisal Journal.

Also in The Appraisal Journal’s Fall 2017 issue:

“Benford’s Law in Appraisal,” by Mark Pomykacz, MAI, AI-GRS, Chris Olmsted and Katherine Tantinan, provides a method for using Benford’s Law, which is frequently used in forensic financial work as an appraisal review technique to detect data error or manipulation.

“The Impact of Water Clarity on Home Value in Northern Wisconsin,” by Thomas Kemp, Ph.D., Irene Ng and Haikal Mohammad, demonstrates how the cost of water quality improvement initiatives can be recouped in increased tax dollars from higher property valuations. The study looks at 20 Northern Wisconsin lakes and estimates a three-foot improvement in water clarity could produce a 9 to16 percent increase in average lakefront property values.

“Market Equilibrium Analysis,” by Richard L. Parli, MAI, and Norman G. Miller, Ph.D., looks at how vacancy and rental rates influence each other. The article explores market equilibrium and offers a new definition using stable rental rates as the key indicator. Research on the new definition is provided and a second definition – equilibrium vacancy – is proffered as an indicator of future rent change. 

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The Appraisal Institute is a global professional association of real estate appraisers, with nearly 19,000 professionals in almost 60 countries throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Individuals of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA, SRA, AI-GRS and AI-RRS designations. Learn more at www.appraisalinstitute.org.

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