Real Estate Analysis and Commentary in Hampton Roads

January 25th, 2014 7:52 PM

When looking at residential values in a given market region, school districts will generally play a large role in what consumers are willing to pay for a home. The Wall Street Journal published an article in 2008 about this, and stated, “Even for buyers and owners who don’t have school-age children, good schools can ensure consistent demand for properties — and strong prices. Taxes are also a big factor when talking about schools and home prices because in many states property taxes fund education (Peck, 2008).”

Brendon DeSimone, a well-recognized realtor recently wrote in a blog on Zillow blog that:

1. You’ll pay more to live in a good school district

2. A good school district might protect you from the real estate market’s ups and downs

3. Though it may cost more to buy near a good school, it will be good for resale (DeSimone, 2013)

So how does that apply to the market here in Charlottesville? We are fortunate to have six school districts here that are all accredited and test well per state metrics. I ran some basic metrics on an array o f sold properties from 2013. All sales occurred in 2013, all are detached homes.


You will notice that Venable, Burnley-Moran and Jackson-Via lead the city with most sales per school with 72, 79 and 72, respectively. The chart is arrayed from highest price per square foot to least (Above grade finished). Venable leads the pack in price per square foot at $225.48/SqFt.

So how does this data speak to the local real estate agents? Does this reflect your understanding of the school district relationship to sales price? Are there any inherent biases that may influence this method of data metrics?

I would love to hear any comments related to this topic. I would also be open to looking at other unique ways to analyze residential data within the city markets, if you have a thought of two of more data points that are worth looking at, please suggest them. I will happily see how that data reacts when I run it through some charts.

Remember if you need any residential valuation services please give me an email:

Works Cited

DeSimone, B. (2013, October 4). 3 Reasons to Consider School Districts When Buying a Home. Retrieved from Zillow Blog:

Peck, E. (2008, February 20). Wall Street Journal. Retrieved from Buying a New Home: How Important Is the School District?:

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Posted by Woody Fincham, SRA on January 25th, 2014 7:52 PMLeave a Comment

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January 21st, 2014 4:48 PM

Reprinted from Appriasl Buzz


It is with a good deal of lament that I am writing this post. I opened my email this morning to see an announcement from Appraisal Advisor (AA) stating that they that would be ceasing operation as of February 1, 2014. For those that did not know about them, they were, to my knowledge, the only source for appraisers to post reviews about working with Appraisal Management Companies (AMCs). AA also developed credit ratings based on appraiser reviews of working with each rated AMC. Appraisal Advisor was truly a tool that was of great use to me and many other appraisers that worked with the AMCs.

This tale is common in the appraisal profession. Appraisers can be a testy lot to deal with, even more so when they are asked to pay for anything. I am an appraiser, and I get that money is tight in the profession. My comment is not an admonishment to appraisers, but rather a fact. In this case, I see where the thousands of appraisers have signed up but have failed to participate. Matthew Biggers, Co-Founder of AA, wrote in his announcement of the forthcoming shut down:

“Unfortunately, the lifeblood of Appraisal Advisor – appraisers submitting client reviews – fell prey to the age-old “80/20” rule. Over 79% of our many thousands of ASC-verified appraiser members submitted zero reviews, while only 3% submitted more than five reviews.

That was far below what we needed to support a revenue model of non-appraisers paying to access and advertise on the site. And since appraisers had already spoken loudly that they wouldn’t pay directly for it either, that cut off the only two sources of funding for Appraisal Advisor (Biggers, 2014).”

I wish it were not so, but we must bid adieu to yet another concept that is designed to help the profession at large; mostly, as a group, we cannot see the forest for the trees. The AMCs won out here at the expense of residential appraisers. Matt did share some interesting information about a yet unnamed AMC that was very pleased to know that AA was going off line. If I ever get a chance to update this blog with that information, I will share the relevant information pertaining to it. I am sure many AMCs will be happy to see that as well because the less transparency between independent professionals means more fracturing. More fracturing means more leverage for the AMCs.

Thanks for Trying Mr. Biggers!!

Works Cited
Biggers, M. (2014, January 21). Important announcement about Appraisal Advisor; Email. Atlanta, GA, USA.

- See more at:

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Posted by Woody Fincham, SRA on January 21st, 2014 4:48 PMLeave a Comment

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Competition, in a free market, is a fierce catalyst: one that can effectively sort out the bad apples from the bunch. Capitalism works, it is simple when left unfettered and when all parties are ethical in their approach to business. It works until politicians, however well meaning they try to be, step in with a”solution”. Through the Dodd-Frank reform and the Andrew Cuomo created Home Valuation Code of Conduct that predates Dodd-Frank, congress effectively went anti-small business again. I liken this profession’s recent undermining by congress to how they saw to sort out the small-family farmers by paving the way for companies like Monsanto and ConAgra.

Competition is fierce in the valuation profession these days. For competition to work, it does require a level playing field. Presently, in residential valuation, there is no such thing as a level playing field. There are still lots of mortgage-use reports to do, but these reports are being filtered through appraisal management companies (AMCs). The AMC model chooses the cheapest appraisers competency is a distant second to cost, and like most things, you get what you pay for.

The quality of appraisal reports ordered thorough AMCs is getting bad enough that members of the Appraisal Foundation (TAF) have been quoted recently in the media with some interesting points. In a recent Chicago Tribune, John Brenan, director of appraisal issues, is quoted as stating:

"First, there is no additional revenue to fund AMCs, so the fee that an appraiser would earn is now divided between the AMC and the appraiser. Appraisers are making less money, and they have a new middleman they wind up working through. They're looking to engage the cheapest and fastest appraisers. So, we're seeing appraisals done across the country where the appraiser does not have what is, in fact, required under standards we write for geographic competency" (Glink & Tamkin, 2013).

By Mr. Brenan’s comments, it is obvious that enough emphasis was not placed on the things that matter. Instead of requiring the banks to pay for the alteration, a market was enhanced for non-appraisal entities to make money. Instead of enhancing the appraisal process, they provided a market that actually counters retaining well-qualified appraisers. It is a pretty big deal when an organization like TAF is drawing attention to the deficiencies found in the appraisal profession. One should give pause when history has proven repeatedly what happens when the collateral of mortgages is not properly vetted. The recent mortgage bust was partially created by issues with appraisals.

I would also supplement that most of the problems fell squarely on the big banks and how they retained and utilized appraisal services. Instead of requiring lenders to do the correct thing with retaining qualified appraisers, AMCs were given preference as a means to outsource the responsibility or at least the appearance of responsibility. The lenders got the advantage of AMCs seeking out minimally qualified appraisers that follow narrow scope of works (SOWs). Rather than hiring appraisers that are both competent and confident, they hire those that are prone to following without question. They effectively dictate to a large section of these appraisers how to do their job.

I know what you are thinking: Fincham your title says non-lender valuation, so why are you writing about Dodd-Frank and AMCs? Good question…

Non-lender valuation is the last bastion of market share that exists where appraisers can actually bill at a commensurate rate. These types of assignments will include appraisal reports performed for many situations such as wealth-management, divorce, and other litigation related needs. Oftentimes, intended users need to find the most qualified and experienced appraisers. Well-vetted experts are most applicable when testimony is needed. As litigation and divorce proceedings have evolved over the years appraisers are not needed as much for testimony; a report will satisfy the streamlined processes. In these situations, attorneys are not as involved with selecting appraisers as they were in the past.

Attorneys understood the need of retaining the best appraiser he or she could find. They needed someone that could write reports well enough to be seamless and defensible but also handle cross-examination in a trial or handle the craziness that can be a pre-trial deposition. It takes a good professional to write the report, but an even greater one to be effective on the stand or to help with pre-trial preparation. In the case of wealth management: to talk to an accountant and walk them through a report or analysis on the phone.

With less emphasis placed on the interview skills of the appraiser, many attorneys have relegated the retainer of an appraiser back to the client. Most consumers do not really understand what they need. The consumer makes a call, or does an internet search, to find an appraiser based on the only criteria that the do understand: cost. They also negate the importance of selecting the right professional in case they may need testimony later in time.

They can contact a well-qualified appraiser that understands the work involved with their situational needs, or they can contact an appraiser that does mostly government sponsored enterprise (GSE) work. Appraisers that do mostly lender-use work within a very confined box, and unless they have a background in non-lender work, will likely not have the problem solving skills needed for thinking outside of that box. AMCs often provide such detailed instructions to their roster appraisers, that the appraiser is boxed into a very narrow scope of work (SOW). These appraisers are experts at meeting the SOW established with the AMC. However, what happens when these narrow SOWs are removed? You introduce someone that specializes in filling out a form to a world full of variables and possibilities.

An appraiser is only as valuable as their experiences allow them to be. Part of this value is knowing and recognizing the strengths and weaknesses of the approaches to value. An even bigger part is thinking in the abstract and knowing that in trials and depositions, an attorney will exploit a weakness in a report. They will discredit an otherwise good appraiser if that appraiser is incapable of dealing with questioning effectively. Appraisers that concentrate solely on mortgage-use reports have no background to be effective in these types of situations.

So How Does Dodd-Frank Tie In?

Therein lies my problem with the AMC bred and conditioned appraisers. The fees have been beaten down so low for mortgage work that the appraisers that only do AMC related work are now trying to compete in the more lucrative non-lender market. Here we have members of TAF acknowledging that the lender market is using less-than-optimal appraisers. That alone is enough to make a normal person pause and pay attention. This was Washington’s answer to a problem they did not understand, and by stepping in, they created waves that extend beyond their intended design. They destabilized the market for established and trusted professionals.

These same mortgage-use appraisers have discovered that non-lender work pays better: in some cases, much better. They capitalize on the naivety of the consumer base. In a sense, they are capitalizing on a competitive advantage, but only an artificial one that was created by the meddling of politicians. In a very real way, Dodd-Frank is now affecting the valuation profession outside of the mortgage business.

In that same Chicago Tribune article, David Bunton the president of TAF stated "Most appraisers not going to turn around a top quality appraisal in 24 hours, for half of the normal fee. So you get people who are less experienced, who have less business clientele, and they may end up driving 4 to 6 hours for $150. We're concerned about quality" (Glink & Tamkin, 2013).

Mr. Bunton, we are all concerned over quality. Those of us that have refined our toolsets and experience are being passed over for appraisers that have been subsidized by a flawed mortgage market that is propped up by the AMC model. The weak links of that subset of appraisers are now matriculating into non-lender work. In a way, the biggest user of appraisal services, the mortgage companies have once again undermined the appraisal process. By law, appraisers are required to abide by USPAP to preserve the public trust. Until lenders and AMCs are required to follow it, it will remain nothing more than a very effective tool to make those that claim to be ethical blend in with those of us that actually are beholden to our professional integrity.

The bottom line for appraisers, attempt to educate your attorney clients and colleagues on the differences between what a true professional appraiser is and what a primary mortgage-use appraiser is. Reach out and network with your bar associations and other professional organizations. Distinguish yourselves from the group through education and networking opportunities.

The bottom line for consumers: be careful whom you attempt to retain. Be willing to ask an appraiser why they are a better pick than market of other appraisers. Be willing to check references and ask for a resume. Take your time and make sure this appraiser is well qualified and not just minimally qualified. The inverse to you using a well qualified can actually cost you more money. If you end up in a trial, the cost to have your attorney reorder a better report, or pay a well qualified appraiser to assist in pre-trial analysis. Even worse, you may find that across the courtroom, your opponent hired the appraiser you should have, and now your mortgage-use appraiser will be in contrast to a superior professional.

Works Cited

Glink, I., & Tamkin, S. (2013, December 26). How do you get a great appraisal? Try eliminating the AMC. Retrieved from Chicago Tribune real estate:,0,4405990.column

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Posted by Woody Fincham, SRA on January 18th, 2014 6:52 PMLeave a Comment

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Results: Amendment to limit eminent domain passes

By Jillian Nolin
The Virginian-Pilot
© November 7, 2012


Voters overwhelmingly approved a constitutional amendment that some officials contend will make it nearly impossible for Virginia localities to seize private property for redevelopment.

As of 10:30 p.m., the statewide amendment had 76 percent approval, which was enough for The Associated Press to call it.

"When you give the voters a chance to affirm their constitutional rights, they take it," sponsor Del. Rob Bell, R-Charlottesville, said late Tuesday night.

"You don't really own your property if the government can take it from you and give it to someone else," he added.

The amendment's passage shows that property owners are fed up with the "abuse of power," said Central Radio business owner Bob Wilson, who is fighting the Norfolk Housing and Redevelopment Authority's efforts to seize his property. The housing authority is attempting to acquire five properties for a private, mixed-use development project near Old Dominion University.

"It's going to put it right back to where it was supposed to be from the start," Wilson said Tuesday night. "They're going to have to negotiate in good faith with property owners."

Virginia Attorney General Ken Cuccinelli visited Norfolk in September and cited Central Radio as an example of why the amendment was needed. At the time, Cuccinelli said housing authorities have been the "most aggressive at grabbing property" in the commonwealth, and he pointed to southeastern Virginia as being the worst.

The amendment won't alter Wilson's case. But it will force localities, or their agents, to compensate property owners for lost profits and access in addition to purchasing their land. Governments will also have to prove that the seized property would be used for public use.

The General Assembly passed limitations on the use of eminent domain in 2007, two years after a controversial U.S. Supreme Court ruling that public entities could take private property and transfer it to a private business for economic development. Bell said the high court's 2005 decision was a "wake-up call."

The amendment goes further than the 2007 legislation did and requires a future constitutional amendment to undo the new restrictions.

"You've literally taken the power away from the politicians and given it to the voters," Bell said.

Local officials, such as Norfolk Mayor Paul Fraim, have said that the amendment would greatly limit their use of the legal tool. In Hampton Roads, Norfolk and Portsmouth have been particularly reliant on eminent domain.

Norfolk used it to transform the neighborhood of East Ocean View; Portsmouth leaders used the threat of eminent domain to acquire the abandoned Mid-City Shopping Center in the mid-2000s.

Norfolk officials also say MacArthur Center would not have happened without the power of eminent domain.

Jillian Nolin, 757-446-2326,

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Posted by Woody Fincham, SRA on November 14th, 2012 8:35 AMLeave a Comment

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Reprinted is a web posting of some of the economic impact the new arena may have.  Sourced from


NBA Team & New Arena Creates 3,712 Jobs in Virginia

VIRGINIA BEACH, Va. – A new economic impact report showcases the statewide economic impact from an arena and a potential NBA franchise in Virginia Beach would create more than $502 million a year in economic impact once the arena is operational in 2015.

The impact of an NBA franchise would be comparable with other major economic development projects in the state, according to the study. In 2008, Virginia attracted Rolls Royce to Prince George County resulting in an annual average economic impact of more than $200 million in Virginia’s Gateway region. The estimated economic impact of the arena and team is more than double the Rolls Royce project.

Other highlights from the study, prepared by Chmura Economics & Analytics, include:

  • Adding ripple economic impact to the direct impact, the annual total economic impact (direct, indirect, and induced) of the NBA franchise in Virginia is estimated to reach $502.6 million, which can support 3,712 jobs in the state.
  • From the 2015-16 season onward, the Virginia state government can receive $10.9 million tax revenues from team/arena operations and visitor spending, with $4.4 million in sales tax, $5.2 million in individual income tax, and $1.3 million in corporate income tax.

The study focuses on the potential impact of a professional NBA team and a new arena on the state economy. Outside the 44 NBA games (three pre-season, and 41 regular season games), the arena can potentially host more than 150 other events per year. The economic impact is based on a conservative estimate that 85% of the seats would be utilized for the NBA games at the proposed 18,500-seat arena.

An earlier study, prepared by James V. Koch, Board of Visitors Professor of Economics and President Emeritus, Old Dominion University, estimated the economic impact of a new arena as more than $98 million to Hampton Roads alone.

More details, including both studies, are available at

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Posted by Woody Fincham, SRA on November 14th, 2012 8:25 AMLeave a Comment

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April 6th, 2011 8:16 AM

Tuesday, December 28, 2010

Are You Thinking About Suing A Real Estate Appraiser?

The bottom line is that suing an appraiser is generally a waste of a borrower's time, emotional energy and money, not to mention that it causes emotional and financial suffering to another person -- the appraiser.  Here are several reasons why suing an appraiser is a bad strategy, based on my experiences and observations as a lawyer who has seen hundreds of these cases: 
  • Most claims by borrowers against appraisers are unsuccessful -- the borrower either recovers nothing against the appraiser or an amount smaller than the cost of the lawsuit.  These days we see more judges and juries finding in favor of appraisers than borrowers.  Whether the borrower feels the appraisal for his or her mortgage lender was too high or too low, judges and juries recognize that the real issue is a declining real estate market and that the damages alleged were not the legal responsibility of the appraiser.
  • A borrower who loses a lawsuit against an appraiser can be held financially liable for the court costs incurred by the appraiser.  These costs can be several thousand dollars and, in some cases, much more.  In a few very frivolous cases, the appraiser has won and then sued back for malicious prosecution.
  • Being a party to a lawsuit can negatively affect an individual's ability to obtain a mortgage loan, credit status, and employment in the future.
  • An appraisal is not a guarantee of present value or a prediction of future value. The appraiser's opinion of value is usually defensible as of its effective date.
  • The borrower was almost always not the appraiser's client or an intended user identified in the appraisal report -- in other words, the appraiser was working for the bank, not the borrower.  Borrowers are always free to hire their own appraisers if they are concerned about the value of a property purchase or their loan-to-equity, but 99% of the time, borrowers do not do so.  (Residential borrowers can determine who the appraiser's client was by looking at the data box entitled "Lender/Client" near the top of the first page of standard appraisal forms.)
  • If a borrower provided false information when applying for the loan (such as about income or occupancy), the borrower's fraud will likely be exposed during the lawsuit.  Mortgage fraud is a felony for which many borrowers have been prosecuted.  See

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Posted by Woody Fincham, SRA on April 6th, 2011 8:16 AMLeave a Comment

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August 3rd, 2010 10:23 AM
Mortgage Brokers to Undergo Criminal Checks under New Rules

Mortgage brokers in all 50 states will be required to undergo criminal background and credit checks, as well as licensing exams, by Jan. 1, 2010. The new rules will assign brokers identification numbers to enable regulators and borrowers to track their lending histories, according to a July 21 Bloomberg story.

Some states, such as California, are getting a head start on enacting the legislation. Other states, including Illinois, New Jersey and Virginia, already have adopted the rules.

Previous to the passage of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, or SAFE Act, about a third of states didn’t require mortgage sellers to have individual licenses. But after record mortgage defaults and foreclosures triggered the financial crisis, Congress adopted new rules to embed accountability into a sector of the market that lacked it.

By next year, states must have established systems in place to monitor and enforce broker rules. California’s rules take effect July 31. The only exception to the testing requirements is for mortgage brokers at federally regulated lenders, who have been exempted because they are “already regulated and overseen by a number of federal agencies,” Sen. Dianne Feinstein, D-Calif., co-sponsor of the law, told Bloomberg.

Under the provisions of the SAFE Act, the Conference of State Bank Supervisors has been assigned responsibility to maintain the licensing system and national registry for brokers. Pete Marks, vice president for mortgage-testing programs at the CSBS, told Bloomberg that so far about 71 percent of people who have taken the national broker exams have passed on the first try.

Brokers impacted by the SAFE Act also face new regulations from the recently passed financial regulatory reform bill. Under provisions of the financial overhaul bill, brokers’ fees will be capped at 3 percent for most loans to eliminate incentives to issue costlier and riskier mortgages. Also, adjustable-rate mortgages won’t be allowed for borrowers who can’t afford to repay the maximum cost of the ARM based on current income, according to Bloomberg.

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Posted by Woody Fincham, SRA on August 3rd, 2010 10:23 AMLeave a Comment

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FHA Board Slaps Mortgage Lenders for Non-Compliance

The Federal Housing Administration’s Mortgagee Review Board announced dozens of administrative actions against FHA-approved lenders on July 26 for failing to meet its requirements. The recent sanctions bring to nearly 1,500 the number of administrative actions taken against lenders this year.

"Lenders should know by now that FHA will not tolerate fraudulent or predatory lending practices," FHA Commissioner David Stevens said in a news release. "Any FHA-approved lender that does business with us must follow our standards. If we determine that our partners are not playing by the rules, we will take action – it's that simple."

This year’s actions against lenders have included reprimands, probations, suspensions, withdrawals of approval and civil money penalties. The Board’s recent actions were part of an effort to further protect homeowners from abusive or unfair lending practices, reported.

FHA's Mortgagee Review Board sanctions FHA-approved lenders for violations of the agency's program requirements. For serious violations, the Board can withdraw a lender's FHA approval so that the lender cannot participate in FHA programs. In less serious cases, the Board enters into settlement agreements with lenders to bring them into compliance. The Board can also impose civil money penalties, probation, suspension, and issue letters of reprimand, the FHA’s release said.

The FHA has been instrumental in a number of programs aimed at preventing foreclosure, including the Hardest-Hit program, recently launched to provide more than $1.5 billion to states most heavily affected by the housing crisis. Nevada, Michigan, California, Florida and Arizona are among the states that have received funding to help create programs for homeowners defaulting on their mortgage loans, reported.

For a full listing of the actions taken by the Board, see the Federal Register notice at .

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Posted by Woody Fincham, SRA on August 3rd, 2010 10:21 AMLeave a Comment

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June 6th, 2010 10:04 AM

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Not All Home Improvement Projects Yield Returns, Appraisal Institute President Warns Homeowners

CHICAGO (May 10, 2010) – Homeowners looking to upgrade or sell their home this spring should realize that not all remodeling and renovation projects will yield a full return on their investment, the president of the Appraisal Institute said today. The Appraisal Institute is the nation’s largest organization of real estate appraisers. 

“When it comes to home improvement projects, especially in today’s economy, not every renovation or remodeling effort will pay off when the owner sells their home,” said Appraisal Institute President Leslie Sellers, MAI, SRA. “Consumers need to be aware that cost does not necessarily equal value.” 

For consumers looking to upgrade and possibly sell their houses this spring, Sellers has put together a quick list of advice that real estate appraisers often share with homeowners. 

Here are “Leslie Sellers’ Tips for Home Sellers”:
  • Emphasize the essentials over the extras by investing in basic upgrades, such as fresh paint (use neutral colors) and new fixtures.
  • Know that curb appeal is vital; exterior projects can sometimes provide a greater return on investment than interior projects.
  • Avoid over-improvement by sticking to what's proportional in your neighborhood.
  • Consider adding a bathroom, bedroom or renovating the kitchen, which are appealing features for home buyers.
  • Projects that add square footage to bring a house up to – but not significantly beyond – community norms typically yield good returns.
Sellers also recommends that homeowners who are serious about knowing their home’s value hire a professional real estate appraiser. Appraisers can help by providing honest, ethical valuation advice regarding which renovation projects will yield the greatest return on investment. 

“Smart financial choices start by knowing what’s standard in a community and how to improve a home so that the homeowner can maximize return on investment while limiting liabilities,” Sellers said. “Getting accurate knowledge of how different improvements can impact the value of your property is where hiring a professional real estate appraiser with local market knowledge can help determine which home renovations make the most dollars and sense.” 

Appraisers provide unbiased, data-supported opinions of value that are governed by a federally-mandated professional code of practice. An appraiser can help a homeowner consider different renovation options by conducting a feasibility study, in which the appraiser will analyze the homeowner’s property, weigh the cost of rehabilitation and provide an estimate of the property's value both before and after the improvement. 

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Posted by Woody Fincham, SRA on May 11th, 2010 10:34 AMLeave a Comment

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