How many appraiser calls a day is normal in this market?

Real Estate Broker/Owner with Fitzgerald Realty, Inc.

I got three calls today from real estate appraisers.  Now that's a high number -- I usually average about one call a day but these calls were interesting in that the appraisers were not calling to verify specific sales comps from transactions that I brokered.  These appraisers were calling to inquire with me to see if I knew of any comps at all for land sales in Henry, Clayton and South Fulton Counties.

Now I suspect the recent uptick in appraisal activity has to do with the 4th quarter and for that matter the year coming to an end.  The problem is that the land market has been at a standstill for so long, the sales transactions of record are now too old to use in appraisals.  Most appraisers don't want to use sales that occured more than 12 or 18 months ago.  Some counties don't have a single transaction in this timeline and about half of the transactions that I've reviewed are not arms length sales -- they are deed in lieu transactions or transactions between related parties.

Unfortunately, those ordering these appraisals -- the banks who have foreclosed on land and subdivisions -- are quickly finding out that the only way to truly know the value of their property is to sell it.  Appriasers use three approaches in valuing real estate: replacement cost, income approach and market comparables.  The first approach does not apply to land since land cannot be "replaced."  The second approach very rarely applies to land since most land in northern Georgia produces no income in its undeveloped state.

When no comparable transactions exist, the only way to know the value of land is to make the market by accepting offers for properties that have received reasonable market exposure.  Once this starts to happen, we may start to see land trade hands again after over a year of almost no activity.

Comments (2)

Alix Pinzon
Open Mortgage, LLC NMLS # 2975 - Downey, CA

Sounds like they're in a pickle.  Land appraisals are high risk to start, they're really risky when there's no recent sales.  You need to start charging them for your time.

Dec 08, 2009 02:57 PM
Mike Fitzgerald
Fitzgerald Realty, Inc. - Atlanta, GA

That's not a bad idea -- maybe i could get one of those 1-900 numbers where the caller pays by the minute -- I'm joking of course.  Usually, I request the appraiser provide me with a copy of the comps they find in exchange for my time.  I then use those comps when preparing broker price opinions for my clients.

Dec 08, 2009 03:05 PM