Appraisers discuss the economy and their profession

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While many current property owners, and those in the market for a new properties, know they must have desired property appraised before it can be financed, they may not realize exactly what an appraiser does or the vital role appraisal plays. |ret||ret||tab|

Hayden Harrison owns two appraisal companies in Springfield. |ret||ret||tab|

Harrison & Company performs commercial and industrial appraisals in nine states. |ret||ret||tab|

His second company, the Hospitality Valuation Group, is a hotel development, consulting and evaluations company that does work throughout the country. Both companies are located at 4772 E. Trailwood Way.|ret||ret||tab|

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Role of appraisal|ret||ret||tab|

According to Harrison's Hospitality Valuation Group, home buyers and homeowners who are seeking financing are required by their mortgage lenders to underwrite the cost of an appraisal, which is then used to determine loan limits for the property.|ret||ret||tab|

According to Harrison, the following three approaches are used to determine value:|ret||ret||tab|

The cost approach. Harrison defines this as "an analysis which looks at the reconstruction or depreciated price of an improvement plus the underlying land value."|ret||ret||tab|

The income capitalization approach. Harrison said this is when an appraiser "looks at the earning potential of real estate and deducts operating expenses such as real estate taxes, property insurance premiums and maintenance costs to arrive at a net operating income. We then convert that income stream (the net operating income) into an estimate of value."|ret||ret||tab|

The sales comparison approach. "The appraiser endeavors to find property similar in use and character that has recently sold and then applies adjustments to sold property when comparisons warrant adjustments." |ret||ret||tab|

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Analysis|ret||ret||tab|

When Harrison does an appraisal, he looks at the property, if it already exists. If it's a proposed project, he looks at the plans and specifications to complete a hypothetical analysis.|ret||ret||tab|

"If the building existed, what would it be worth?" he said. "An appraisal is a snapshot of a point in time. I'm not looking at a continuum of time."|ret||ret||tab|

Norma Vinson is the owner of the Norma Vinson Appraisal Service, 2049 E. Cherry. The 14-year-old company employs three appraisers and does commercial, residential, industrial and right-of-way for partial acquisition appraisals.|ret||ret||tab|

"The partial acquisitions are for streets, highways and utilities," she said. "An appraisal is done to determine how much we're taking away from the property."|ret||ret||tab|

Vinson believes that the cost approach is best for determining the value of new buildings that haven't depreciated, and that the sales comparison approach is best for rentals and income-producing properties.|ret||ret||tab|

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Real estate classes|ret||ret||tab|

Vinson became interested in the appraisal business after taking real estate classes at Drury University. After spending more than 10 years as a real estate agent, she became an appraiser.|ret||ret||tab|

Vinson does careful research to find out about a building before she makes an inspection of it. |ret||ret||tab|

"Once I'm at the property to be inspected, I talk to the homeowner about how long they've owned it, what changes they've made to it and what improvements need to be made," she said. "While I'm at the property, I also take photos, take measurements outside, and look at the function of the floor plan," she said.|ret||ret||tab|

Vinson said that after inspection, she researches such data as how close the sales price is to list price, the days on the market, how convenient the property is to stores and schools, and the supply and demand of homes in the neighborhood. |ret||ret||tab|

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Market influences|ret||ret||tab|

After this research phase is done, she gets into the actual evaluation process. "I use the information I've gathered to determine a well-supported conclusion that reflects a study of all influences on market value," she said.|ret||ret||tab|

Jerry Glor works as a commercial, residential and agricultural appraiser in Springfield as well as throughout southwest and central Missouri. His business, Jerry Glor Appraisal Service, is located at 4545 N. Farm Road 189.|ret||ret||tab|

Before Glor goes out to appraise a property he finds out if it's residential, commercial or agricultural then locates a comparable property.|ret||ret||tab|

Glor said that appraising a farm can be more difficult than residential or commercial properties. "That's because it can be harder to get close compatibles. The farm I'm appraising may be 10 or 20 miles away from another farm. I may have to go to another town to find a comparable."|ret||ret||tab|

Glor said he feels good about the recent state of the economy.|ret||ret||tab|

"It's had no negative effect on what I do," he said. "It hasn't brought me more business because I don't just do residential appraisals. But I'm never without something to do." |ret||ret||tab|

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Interest rates|ret||ret||tab|

According to Vinson, this is "a real busy time" for appraisers because of the Federal Reserve's lower interest rates. "People are buying, selling and refinancing, and real estate tax assessments have been increased," she said.|ret||ret||tab|

Harrison notes that the economy directly affects what appraisers do.|ret||ret||tab|

"When the economy is tight and interest rates are on the rise, the economy slows down," he said. "That means fewer borrowers which means fewer loans which means fewer appraisals."|ret||ret||tab|

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