Can someone please explain to me how county appraisers differ from independent ones? In my beginning evals of property I have been using the county to start with. Will the independs be signifcantly higher? or about the same because they look at the same things. I am trying to find out how to value an apt. complex. I know about he cap rates, and how they play the role, I just want to know how to genuinely put a price on this property.
Thanks much,
Michael
Do not rely upon the county property appraiser’s valuation in your final decision process. It might be good for ballparking but it is not typically a true appraised market value. Each municipality differs on their procedures for valuing local real estate but their final numbers are usually lower than market. For instance their guidelines might require that all properties be assessed at no less than 75% of fair market value etc. Remember they have thousands of properties to evaluate each year they do not have the time or resources to perform a complete appraisal.
Valuing an apartment complex is all about the numbers; gross rent, vacancy rate, operating expenses etc. With these numbers you can estimate the market value by using the NOI/cap rate formula or you can discount the cash flows over your expected holding period and add to this the reversion value based upon the NOI/cap rate formula on a future stabilized vacancy rate.