Real Estate Experts: Some Further Observations

By Tarantello, Rocky A. | Real Estate Issues, Fall 1999 | Go to article overview

Real Estate Experts: Some Further Observations


Tarantello, Rocky A., Real Estate Issues


In the December 1994 Edition of Real Estate Issues, I presented several issues pertaining to the proper role of real estate Counselors as expert witnesses and suggested how Counselors could resolve the real estate expert versus client advocate conflict. This manuscript attempts to go one step further in distinguishing how real estate counseling differs from real estate appraisal and how attorneys may better utilize real estate Counselors as experts.

The great majority of real estate Counselors are not real estate appraisers. They typically do not write or certify appraisal reports. However, they are still real estate valuation, feasibility, and investment experts. They frequently offer expert advice regarding the valuation of fee interests, mortgage instruments, leaseholds, easements, cash flows, rights of way, profitability, feasibility, pricing strategies, phasing plans, and a myriad of other opinions regarding the value or the investment performance of real estate assets. I think the time has come to clarify the common view that valuation analysis and appraisal are one and the same. They are not! Most real estate analyses are not drafted as certified appraisal reports. Frequently, the total work product consists of nothing more than a summary of data, statement of assumptions, calculations, and conclusions. On other occasions, a certified or narrative report may be inapplicable as the following case illustrates.

A few years ago, a moderate oil spill along the Southern California coastline had forced the closure of several miles of public beaches. In addition to direct clean-up costs and lost tax revenues from temporary business closures, the city attorney felt the city was also entitled to the value of the temporary loss of use (i.e. recreational use) of the public beach. As with any claim for damage, appropriate technical analysis and foundation is requisite to establish a defensible claim. It so happens that there are economic theories, specifically hedonic pricing theory, which deal with the valuation of "lost recreational pleasure" or "use." Standard appraisal methodology is not designed for or even remotely applicable to this unusual case. The case ultimately settled, eliminating the need for each side to prepare the necessary analysis. Despite the "land use" character of the claim, an appraisal report employing traditional appraisal methods would hardly apply to the valuation of such a claim. And although hedonic pricing and property values have been considered in appraisal literature before, it is doubtful that even the most accomplished appraisers have even considered its use, much less applied it as a possible valuation tool. I am not advocating hedonic pricing or any other specific analytical methodology. But I do believe that valuation analyses go beyond "appraisal" and often require the education, skills, and experience of real estate analysts, institutional managers, or real estate forensic specialists outside the appraisal profession.

All appraisals are founded on the principles of economic valuation theory. But the vast majority of real estate analyses do not require strict adherence to appraisal standards or methods. Perhaps the best example of this point is the valuation process exhibited by the public securities markets. On any given business day, every publicly traded business enterprise is revalued resulting in the repricing of all classes of outstanding stock. Reappraisal would require adherence to prescribed appraisal methodology and documentation. For each issue traded, every parcel of property, business asset, and expected earnings stream is revalued on virtually a minute-to-minute basis. Various securities analysts, researchers, and economists collect and interpret the new information; make assumptions about future economic conditions; and apply stringent economic models and theories as every shred of new market information is instantaneously digested and repriced with each stock transaction. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Real Estate Experts: Some Further Observations
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.