Recently in Real Estate Category

Oregon lawmakers are considering whether to set new rules for appraisal management companies — a growing but unregulated sector in the real estate industry. Known as AMCs, these companies act as middlemen, taking money and appraisal orders from mortgage lenders and then hiring appraisers.

Richard Hagar, a Washington appraiser and real estate expert witness, says about 10 states have already passed new rules for AMCs, while 10 others are following suit. He says the company Valuation Logistics demonstrates the problems of leaving AMCs unregulated.  There have been complaints about nonpayment by the firm, the address listed on its Web site is no longer valid, and the company appears to be the target of a criminal investigation

For more, see www.bendbulletin.com.

In Conservation Easements, the Good, the Bad and the Greedy, real estate expert Charles B. Warren, A.S.A. writes on value:

Now, let’s dip our toes into the question of value, fundamental land economics. Basically the right to build a replica of the World Trade Center in the middle of the Badlands of the Pine Ridge Indian reservation, South Dakota, would probably not have a large value. The right to extract coal from a property where there is none would probably not have a large value. The right to raise alfalfa on land without a supply of water would probably not have a large value. The converse of those propositions would probably also be true. The right to build the World Trade Center, on Port of New York land, was valuable. While the actual value of the right to rebuild it may be in doubt, that there is a value there is likely. By extension the right to build homes in a region with a static or declining economy and population is likely to be small. If the right attaches to land which is remote from that economic activity and its associated population centers, then it is likely to be lower. It may still be higher than alternative values if, for example, the land in question is timberland which was logged 30 years ago and regrowth takes 60. But timberland re-use to country vacation home development has not been widely or wildly profitable, so the net value to the undeveloped land is still usually a small number.

First rule of thumb: trade level. If someone presents a value for a wholesale commodity based on its retail value, that may be bad or greedy.

More to follow:

In Conservation Easements, the Good, the Bad and the Greedy, real estate expert Charles B. Warren, A.S.A. writes on three dimensions in the process of sorting out the good from the bad and the greedy.

Now let us consider rights in property. Generally the “whole property” includes all private rights; the right to transfer, to borrow against, to inherit, to rent, to mine, to plant, or to build upon for example. Public rights include police power, to regulate private activity using land, taxation, condemnation for public use (or purpose?), and escheat. There is a continual change in the actual boundaries of the private and public rights. At one point, conveying mineral rights in a property allowed the owner of those rights to mine in a manner that ultimately caused the surface of the ground to collapse. Generally police power now prohibits that, tipping the scale from the owner of the underlying mineral rights to that of the surface. A century ago urban development was left to private contract, CC&Rs, rather than public planning. In Houston it still is. At Lake Tahoe there was a dramatic shift in the late 1970’s where land which had previously been planned, zoned, developed, and sold to the public for construction of detached homes was declared to be unsuitable for that purpose. This was an expression of what was termed “The Police Power Revolution”. The affected Tahoe landowners recently lost on part of their claim for compensation. Last year (Kelo) the U.S. Supreme Court validated government use of eminent domain to transfer property from one private owner to another. But while the government has moved the boundary of rights in its favor in some cases, Oregon recently passed a law requiring compensation to property owners if land is “downzoned”, limiting its development. And in Kelo the Supreme Court noted that states could restrict eminent domain to public use, rather than public purpose, and many have or are in the process of doing so.

In Conservation Easements, the Good, the Bad and the Greedy, real estate expert Charles B. Warren, A.S.A. writes on three dimensions in the process of sorting out the good from the bad and the greedy.

The first is a perspective of the broad tapestry of land economics, focused down to the question of conservation rights. The second is a brief review of value and price in this area. The third is a look at motivations in particular transactions. So, first, let us consider land and its value. Basically, land is valuable based on the sort of income it can generate. In the urban core, land zoned for high rise development is generally more valuable than lower density. In the suburbs the land values are more uniform, particularly if police power has tipped the scales against, say, detached single family residential. Purely market forces tend to value industrial more highly than agricultural, with exceptions, of course. Detached residential is next, followed by multi-family residential and commercial, in ascending order. This schema is deliberately simplistic.

More to follow.

In Three Rules for Forensic Real Estate Damage Valuation: Deductive, Adductive, or Reductive Rule? (analysis) real estate appraisal experts Wayne C. Lusvardi and Charles Warren write:

Forensic Valuation: What Is It? Forensic real estate valuation is the application of economic principles and methodologies to answer questions of fact as to whether real estate values have suffered a permanent damage. Forensic real estate valuation contrasts with the prevailing valuation theory in the real estate industry that often fails to distinguish permanent loss from the following:
Situations Where Damages Are Impermanent or Non-recoverable
* The market has already provided "implicit compensation" for a pre-existing "foreseeable" condition (i.e., the "foreseeability damage test").
* The purported loss reflects the real estate market cycle.
* The loss was insured and thus recoverable.
* The loss is a brief, temporary loss of marketability.
* The loss was mitigatable or avoidable.
* The loss is speculative or stems from a self-interested claim of "stigma."
* Any diminution in value reflects a changed highest use of the property rather than full economic loss.

Saint Joseph's University has appealed before the Philadelphia Zoning Hearing Board over the "similar use" to which the university is entitled in renovating and improving Maguire Campus.   Testimony was heard from both sides concerning the extent to which the university can modify Maguire's existing athletic facilities to meet NCAA standards.  Saint Joseph's presented Dennis Glackin, of Glackin, Thomas Panzak, Inc. as a land use expert and the Merion Community Coalition brought Charles Guttenplan as an expert witness to argue that Saint Joseph's had overstepped its similar use agreement.

Saint Joseph's appeal is based on the assertion that does not need to make a special request to the Zoning Board to move forward with plans for certain projects beyond the permission it has already been granted. These include the upgrade of the public address system at baseball and softball fields, the construction of press boxes and dugouts, and the four-foot excavation of the baseball field among other things.

A plan for a new residential development in Silverthorne, CO, won initial approval from the Silverthorne Town Council despite its location in a 100-year floodplain.  “We’ve hired a flood-engineering expert...,” said Silver Trout Estates project manager Jeff Volkert. He pointed out that the construction would need approval not only from the Town but also from the Federal Emergency Management Agency.  SummitDailyNews also writes:

Silver Trout Estates, which would be located on a 12-acre parcel between the Blue River and a private fishing pond in Eagle’s Nest, would require developers to use fill dirt to raise the buildings and road by at least one foot.  “If a 100-year storm event occurs, this property would have water in it, on it and across it ... If this were to be developed, they’d need the residential units above the 100-year floodplain,” said Michael Johnson, planning manager for the town.

Get your Silver Trout Estates duplex modeled after rustic fishing camps for approximately $900,000.

Will real estate expert witnesses determine that the "Arizona Homeowners Bill of Rights" is damaging on homeowners and the housing industry?  The Tucson Citizen reports on Prop. 201 with analysis by the Arizona Legislative Council:

Current law provides an alternative process for purchasers and contractors or sellers to resolve issues related to the design, construction, condition or sale of a dwelling prior to filing a lawsuit. Proposition 201 makes mandatory changes to the legal procedures for any purchaser dwelling action and for the time to sue on any improvements for real property:

4. After receiving notice of alleged defects, the measure would require rather than allow the seller to conduct an inspection of the dwelling to determine the cause of the alleged defects and what repairs or replacements would be necessary, if any, to remedy the alleged defects.

5. The seller would be required to send the purchaser a written response within 30 days, instead of 60 days, after receiving a notice from the purchaser of the purchaser's intent to file a court action against the seller. If an offer to repair or replace any alleged defects includes an offer of compensation, the purchaser would be given the sole power to choose compensation instead of repair or replacement.

6. A seller would be required to hire a qualified licensed contractor to complete any and all repairs to the dwelling. In order for the licensed contractor to be qualified, the registrar of contractors could not have had an order against the licensed contractor in the preceding 10 years.

Will real estate expert witnesses determine that the "Arizona Homeowners Bill of Rights" is damaging on homeowners and the housing industry?  The Tucson Citizen reports on Prop. 201 with analysis by the Arizona Legislative Council:

Current law provides an alternative process for purchasers and contractors or sellers to resolve issues related to the design, construction, condition or sale of a dwelling prior to filing a lawsuit. Proposition 201 makes mandatory changes to the legal procedures for any purchaser dwelling action and for the time to sue on any improvements for real property:

1. Expands existing law to grant "prospective buyers" the rights to sue over a dwelling action.

2. Prohibits sellers or purchasers from agreeing to or allowing any "reasonable alternative dispute resolution" procedures in sales contracts.

3. A purchaser would be required to give 60 days' notice, instead of 90 days, to a seller about the alleged defects before filing a court action against the seller. The notice must currently contain a "detailed and itemized" list of alleged defects. Proposition 201 replaces that standard with a requirement that the notice contain a description in "ordinary, nontechnical terms" of defects that a purchaser of "average experience" would be expected to observe.

In Three Rules for Forensic Real Estate Damage Valuation: Deductive, Adductive, or Reductive Rule? (analysis) ForensisGroup experts Wayne C. Lusvardi and Charles Warren redefine the three conventional approaches for damage valuation:

Neither law nor real estate appraisal has thoroughly clarified the different damage valuation methodologies that are applicable under tort law, condemnation law, regulatory takings law, and inverse condemnation law in various political jurisdictions. Real estate appraisal generally relies on three cardinal valuation methods: the Cost, Sales Comparison, and Income Approaches. This article shows that there are three methods of damage valuation that generally comport with the three conventional methods of valuation.

The three conventional valuation methodologies have been incorporated into damage law under different terminology and computation formats. Two rules predominate and have mostly been applied to damage situations involving use of eminent domain powers by public entities:
Existing Nomenclature for Damage Valuation Rules:
* The Federal Rule or Before and After Rule (Comparison Approach)
* The State Rule or Value of the Take Plus Damages Rule (Cost Approach)

More to follow from ForensisGroup experts Wayne C. Lusvardi and Charles Warren.