Relocation Appraisal – hire an expert

The reason hiring a RAC member matters

 

Agents, employers, potential transferees; do you know what RAC is? Do you know why it would be important to consider appraisers who are members of this organization for the employee taking a buyout? In short, RAC is the organization that is dedicated to Relocation appraisals. RAC is the acronym for Relocation Appraisers & Consultants, and it is made up of peer reviewed experts in relocation work or those who have demonstrated expertise in complex residential appraisal assignments.

 

Why does this matter? It matters because the transferee has the option of taking a buy-out from their employer, facilitated by a third-party company that specializes in seamless employee transfers. The buy-out offer is made after two independent appraisals are obtained that address the positives, negatives, market conditions, and any unusual features of a property. These appraisals are not market value based, but based on a definition called “anticipated sales price”.  Anticipated Sales Price (ASP) is actually a projection into the future, as to what a house will sell for within a specified period of time. It is not market value, which is back in time, forward to the date the appraiser views the property.

 

Appraisers who have expertise in this type of work are aware of the nuances in a market relating to what buyers expect, what types of repairs or improvements need to be made to put the property in the best position to sell, and exactly where it is positioned in the market as of the date of value. This means that odd floor plans are addressed. Dated cabinetry or flooring is addressed. Special features which may sway buyers to that property over others are addressed. The appraiser pays close attention to the market at the time of the valuation, and in particular the competition.

 

RAC member appraisers have this expertise and are the natural choice for any relocation assignment.  When offering advice to your clients on choosing the right appraisers to complete these assignments, asking for RAC members to be included should be one of the first questions the client asks. It makes the transferees life easier, as well as your job as agent who will be handling the transfer.  Don’t cut corners, go straight to the best, hire a RAC member today!

 

The RAC website is www.rac.net and I recommend that it be consulted in addition to the WERC website, with a search for “Worldwide ERC® Appraisal Trained” appraisers. The directory is found at https://directory.worldwideerc.org/18.aspx

 

Competency in Relocation

 

Am I competent to complete this relocation assignment? Who on earth wants to ask themselves that question? Who on earth thinks they may be incompetent?  We have to remember to ask ourselves whether we have the competence to complete an assignment, or whether we can gain the competency to do so by the time we deliver our appraisal report.

 

The Uniform Standards of Professional Appraisal Practice addresses competency as its own rule, which stresses how important this rule is.  The appraiser has to be competent to perform the assignment, or if lacking, acquire the necessary competency to perform the assignment.  The appraiser must inform the potential client before accepting the assignment about any lack of competency as well as address it in the report and what they did to become competent. If the appraiser will not be able to perform in a competent manner, they have to decline or even withdraw from the assignment. It does happen occasionally that in the midst of an appraisal, a problem arises that the appraiser will not be able to solve. At that point, they will either need to get assistance or withdraw.

 

What happens when the property type and location are something that we have familiarity with, but there are assignment elements that we do not? How about accepting a relocation assignment without understanding that the definition of Anticipated Sales Price is not Market Value, and that there are steps that are involved in this type of assignment that are not found in a mortgage report?

Relocation work is fascinating, and allows the appraiser to apply their knowledge of the market, and what drives value in a very detailed manner.

Being in touch with trends within your own community related to what buyers want in various market segments is key, as well as understanding supply and demand, and the fact that the past may not dictate the future is important. Understanding and being able to measure what is happening in the market, right now, as well as what is likely to happen in the very near future related to the listings that are on the market and competing with your property are critical.  At the very least, an appraiser who takes on relocation work who has not taken classes or learned the process, needs to disclose this to their potential client. Let the client decide if they want to use the appraiser, or chose someone who does understand this work and has the experience to do it properly. Relocation work does allow the appraiser to gain competency while working on the assignment, as long as the report is competently completed by delivery.

 

There are appraisers who have made this type of work one of their primary specialty, and most are happy to help someone who sincerely desires to learn and understand the vagaries of the product type. The first place to start if you have not completed this type of work, is to visit the Worldwide ERC website and sign up for the Relocation Appraisal Training Program https://academy.worldwideerc.org/relocation-appraiser-resources/the-relocation-appraisal-training-program/. There is a cost for this program, but if the desire is there to take on a different type of assignment, this is a small price to pay, and a good foundation of knowledge.  In addition to the training above, WERC sells the guide for relocation appraisal, found at https://erc.org/Resources/USRealEstate/Pages/Relocation-Appraisal-Guide.aspx. The cost for the guide is $95 for members and $195 for non-members, but is a “must-have” for the new relocation appraiser. Another option is to go to the ERC 2010 form report itself, and study the first page. This first page lays out the requirements of the form and helps the appraiser understand the process.

 

Asking relocation appraisers for help is another great way to learn, but please be respectful of their time as well, as they are likely helping without any compensation. Much of what we need to become competent in this type of work is readily accessible, and there are articles written addressing the differences between Market Value and Anticipated Sales Price, and elements that may be important in a relocation assignment. Some things to watch for related to this work is that we do not use UAD language; condition and quality is relative, not absolute; floor plans are cross-examined by a peer appraiser’s work; and colors, modernization and property oddities might be extremely important here, as well as general upkeep. Anticipated Sales Price does require the analysis of forecasting, and listings and pending sales are very important in the relocation process. Where the subject property is positioned in relation to the listings is something to consider and address, and the appraisal report WILL be compared to another appraisal report (or two).

 

Relocation work is rewarding and interesting work, but the appraiser has got to be competent in the product, not just the property type and location.  If a call comes in to complete a relocation assignment, and you have never done one, let the potential client know. It is possible that they will be fine with someone new to this field, but will want to ensure that the work was completed in a manner that meets the needs of the client. Although it is uncomfortable to admit that we may lack competency in a type of assignment, this is one where we can actually gain it during the process. That is, if we are open to learning.

Thanks to Chip Wagner for the assist on this. Originally posted at the RAC website here