Today’s first speaker was Genie Reynolds of Magic Genie Realty and Property Management in Lakewood, Colorado. Genie took her time today to discuss “Appraiser Primer”. If you are looking into selling your home or need an appraisal for re-financing Genie has some helpful tips for how the appraisal process works and things you need to keep in mind for your particular situation.
Some Basic Concepts:
- An Appraisal tries to establish the “MARKET VALUE” for the “HIGHEST AND BEST USE” of the land.
- When you buy a house you really buy the LAND with the “improvements” on it!
THREE TYPES OF VALUATION
- SALES COMPARISON
- COST APPROACH – gets at replacement costs
- INCOME CAPITILZATION APPROACH – for properties that generate income only
SALES COMPARISON: “paired” sales analysis
SEQUENCE OF ADJUSTMENTS – P F C M L P
P – Property Rights
F – Financing Terms – time from date of sale
C – Condition of Sale (Seller motivation)
M – Market Conditions
L – Location (off-site features)
P – Physical
- RECENT SALES – 6 months
- Neighborhood or immediate vicinity
- Site characteristics – location, lot size, topography, availability of utilities, presence of trees/plantings
- Property – style of house, age, number of rooms, number of bedrooms, number of bathrooms, lot size, size of building, terms of sale, type of construction, general condition
TERMS/ CONCEPTS TO BE AWARE OF:
- ARMS LENGTH TRANSACTION – neither buyer nor seller are operating under duress, but also from related parties
- FUNCTIONAL OBSOLESCENCE – defects in a building or structure that detract from its value or marketability, usually the result of layout, design, or other features that are less desirable than features designed for the same functions in newer property.
- BEDROOM DEFINITON – A bedroom SHOULD only be counted when it has a CLOSET for clothing, preferably with a rod.
- LEGAL EGRESS – the ability for a normal sized person to exit through a window from below-grade space in a property.
- NON-CONFORMING BEDROOM – A bedroom in a basement with “old” casement windows where “legal egress” is not possible.
- APPRECIATION – permanent or temporary increase in monetary value over time due to economic or related causes. Can’t remember the term BUT remember that IF you own the “cheapest” property in the neighborhood, your value will “benefit” from more expensive properties surrounding you. And the opposite is true.
- OVER IMPROVEMENT – an improvement to the property that is more than warranted by the property’s highest and best use and thus not likely to contribute its cost to the total market value of the property.
- Genie’s Corollary – just because you “put” $40,000 into the property doesn’t mean your house will sell for $40,000 more than your comparable neighbor’s property.
- SQUARE FOOTAGE – what is counted? Above grade vs. below grade/basement, garage, porches, patios. Total square feet vs. Finished Sq. Feet.
- PRICE PER SQUARE FOOT – NOT an appropriate way to compare properties. This is ONLY valid if EVERY square foot in each property is of LIKE and SAME condition.
WEBSITES like ZILLOW – CAVEAT EMPTOR
Genie Reynolds * Magic Genie Realty & Property Management * 303.942.1320 * email@example.com
Today’s second speaker was Helen Masterson of Masterson & Friends Communications in Arvada, Colorado. After finishing the Restaurant Guide for Estes Park, Helen took her time to share facts about Colorado that she went through in finding information for the magazine. Helen asked us if we knew what “baggin’” a fourteener means, many of us knew the term. It means that you have climbed to the top of a 14,000 mountain. Then Helen asked us if any of knew how many fourteeners we have in Colorado – the answer is 54 mountains here are over 14,000 feet above sea level. The tallest is Mount Elbert at 14,433 feet in the Sawatch Range in central Colorado. Perhaps the most famous Pikes Peak at 14,115 feet right outside of Colorado Springs, from point Katherine Lee Baker wrote the lyrics to America the Beautiful and the shortest is Mount Huron at 14,003 feet in the Sawatch Range. When you get into the 13,000 foot range there are 637 mountains that fall with in this range. Denver and the Front Range are just below the Foothills, which is any mountain in the 6000-7000 foot range. The reason Denver is classified as the “Mile High City” is that the steps of the Capitol Building is at an altitude of 5280 feet. In Colorado, we have an “Attitude about Altitude”, when coming into a city or town instead of a sign about population we have signs that state the altitude. Most people assume living at a higher altitude you breathe less oxygen – but that’s not really it – it is actually the atmospheric pressure that we less of – actually 40% less. This reduction is atmospheric pressure is something you notice mainly when cooking – in Colorado it is not a 2 minute egg and baking a cake can be a real challenge if you don’t follow the recipe for high altitude cooking! Running down the middle of Colorado is the Continental Divide which runs from Canada to Mexico and when standing on the Divide you can watch rivers run east on the east side and west on the west side. Another fun fact that Helen shared is that no rivers flow into Colorado – they all flow out. In 1922 they started creating water laws to help other states with their irrigation and power, and the statement “Whiskey is for drinking – Water is for fighting.” With all of the wonders here in Colorado Helen’s last remark was from a speaker she just heard “ Know this: Colorado’s surface is not flat. Nothing here is as close as it looks – twisting up, switchbacking down. Look back and you’ll see where you have been around the last turn. Look forward and you can see all the glorious experiences that are waiting for you!
Helen Masterson * Masterson and Friends Communications * 303.467.3946 * firstname.lastname@example.org