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60 better than another because reporting methods are different." Because of this, Del Rey suggests obtaining a good valuation report starts with choosing someone from the subject market area with specific knowledge of the area and property type, who can provide good data to support an accurate valuation. In addition, Del Rey said, "You have to analyze and reconcile the data. is is the key to producing a good valuation report. Sometimes the broker believes the value of a property is lower, but the appraiser thinks it's worth more. After analyzing all of the data, you have to decide which comparables place the greatest weight on the value determination and why." YESTERDAY'S APPRAISAL PRACTICES DON'T CUT IT TODAY Everything has value. e question is, "Have yesterday's practices caught up with the market today?" According to Jordan Petkovski, chief appraiser for TSI Appraisal, a division of Title Source, they haven't. "A lot of data is available today that we didn't have yesterday, and it is more easily accessible than in years past," he said. "However, the methodology used by appraisers when valuing residential property has yet to fully evolve." He suggested the appraisal industry is not doing enough to embrace and leverage technology that would enable appraisers to identify a property's value objectively through the expanded data available. is would greatly assist in quantifying a property's value potential. "Sometimes, the way appraisers identify value leads to inconsistencies," he said. "ey may send out inquiries and get several different values because someone is misinformed or the supporting technology may not be accurate." Petkovski said appraisers are doing their best, but not as efficient as they could be by developing new methodologies to supplement the old ones. "I suggest a melding or a co- mingling of concepts and ideas to develop the appraisal technology that works best," he said. "A lot of really great analytical tools are available on the backend of the appraisal process, but they are not being deployed to the field appraisers," he explained. "We must provide more sophisticated analytics to residential appraisers. Otherwise, they are likely to continue struggling to identify an objectively derived value conclusion." Another challenge appraisers are faced with in today's market is trying to understand and adhere to ambiguous regulatory guidelines. "e various agencies that impact appraisal practice are a disparate group," he said. "ere are many guidelines we must adhere to that are not always consistent with one another. Although we are beholden to a number of groups, there is not sufficient parity between them." If everyone were willing to communicate and work together, that would be ideal, according to Petkovski. However, he said he has never seen more than one agency agree with another. "ere is so much inconsistency," he explained. "All we're looking for is guidance in how to improve, but that guidance must be specific, and it's not something we get as often as we'd like." He explained a lot of rules are left up to interpretation, a lot of them are new, and many industry participants are still trying to figure out the recent Dodd-Frank legislation. However, he doesn't think regulation is the biggest detriment to getting more credible values. "There needs to be more collaboration between the agencies, and appraisers need to be more comfortable in working with data and analytics than they have been in the past," he said. So, what's the best method to use in determining accurate values? Petkovski thinks it's a hybrid of utilizing technology and data analytics, combined with the subject matter expertise of the residential appraiser. "at's the best way to determine value, not just using an AVM or an appraiser's opinion without having data to support those findings," he explained. "A combination of both would be best." Petkovski is chairman of the newly organized National Appraisal Congress. He said the goal of this group is to bring professionalism to appraisers and help them develop greater knowledge and skills in their industry. VALUE AND PRICE ARE NOT ALWAYS THE SAME e marketplace is changing, and new assets are being created because of unique market conditions and favorable tax laws and regulations. In addition, there are so many unique ways to create assets and market those assets, according to Alice Sorenson, CIO of LRES Corporation, based in Orange, California. "It's a challenge for today's appraisers to know how to keep up with valuing these new assets," she said. "Using the old way, a discounted cash flow model, and restating it for today's values doesn't work anymore." Sorenson said she uses appraisals and BPOs the most, but she also uses AVMs when appropriate for certain types of transactions. "Each is appropriate given the cost-benefit results of any analysis. In valuing a single asset, probably an appraisal would do," she said. "In bulk trade, when you need to worry about keeping costs down so you can price it correctly, an AVM would be the way to go. If you're concerned about sales more than value, then a BPO would do." Each methodology is appropriate according to the circumstance, Sorenson advised. "However, if you don't know how to read and interpret these valuation tools, you will be in trouble," she said. "You have to be able not only to read the aggregate data given by an AVM, but also to be able to interpret and compare it. You need to understand how all the points in an appraisal, AVM, or BPO connect to the subject property. If you can't do that, then all the tools will not help you." Although a lot of knowledge can be obtained by going to school to learn about appraisals and methodology, Sorenson said she learned the most about appraising through experience. "I've read tens of thousands of BPOs, and I've probably sold several billion dollars of assets," she said. "I can't put a figure on it, but these experiences are invaluable and have had the most impact on my career." One thing she has learned through her experience is there is a huge difference between the value of something and the price. "I happen to be into horses," "It's a challenge for today's appraisers to know how to keep up with valuing these new assets. Using the old way, a discounted cash flow model, and restating it for today's values doesn't work anymore." –Alice Sorenson, CIO of LRES Corporation

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