International Real Estate Consultation
And Forensic Valuation

Top 10 Appraisal Red Flags


1. UNVERIFIED OR UNSUBSTANTIATED SIZE INDICATORS

Make sure square footage (or number of units) is reliable.


2. INCONSISTENT HIGHEST AND BEST USE

Make sure the highest & best use is similar for the comparable data.


3. INCONSISTENT MARKET TRENDS OVERVIEW

—Make sure market information reflects risk.


4. LACK OF BRACKETING OF SUBJECT VALUE INDICATORS

—Make sure the data reflects the market – i.e., inferior, superior, and similar.


5. LACK OF DISCUSISON OF SUBJECT SALE, LISTING OR OFFERS

—Make sure the subject property history relates to the final value.


6. DISPORPORTIONATE FINAL VALUE TO THE MARKET

—Make sure the market reflects buyer purchasing power.


7. ALWAYS KNOW THE UNDERLYING LAND VALUE

—Determine whether the improvements do – or do not – have value.


8. LOPSIDED INCOME OR DCF ANALYSIS

—Make sure the assumptions are reflected in the risk rate.


9. EXTRAORDINARY OR HYPOTHETICAL CONDITIONS ABUSE

—Make sure these are not used to skew or slant the conclusions.


10. INAPPROPRIATE COMPARABLES

—Make sure the comparables reflect the subject’s buyer profile.


Copyright © 2010-2017 The Dore Group