Introduction: Mobile Technology Evolution and Real Estate Appraisal

Introduction:

Real estate appraisal is a cornerstone of real estate markets, providing an objective estimate of property value, crucial for informed decisions in buying, selling, financing, insurance, and investment. The practice of real estate appraisal has undergone radical transformations with technological advancements, especially with the emergence of mobile technology.

Importance of Real Estate Appraisal:

• Helps in determining the fair price of a property when buying or selling and contributes to determining the appropriate amount of real estate financing.
• Assists financial institutions in assessing the risks associated with providing real estate loans.
• Required in some legal cases such as taxes, division, and inheritance.
• Helps in determining the value of land and buildings for planning and development purposes.
• Used in resolving disputes related to real estate ownership.

Definition of Real Estate Appraisal:

Real estate appraisal is the process of estimating the value of a specific property at a specific date, based on an objective analysis of relevant data and information. It can be defined as:

• An opinion expressing the expert appraiser’s point of view regarding the value of the property.
• An estimation of the market value of the property, or any other type of value required.
• A combination of science and art relying on scientific, mathematical, and economic principles, while also requiring the appraiser’s experience and skill in analyzing data and drawing conclusions.
• Involves collecting and analyzing data and applying different valuation methods to reach a value estimate.
• Providing consulting services related to real estate, such as analyzing the economic feasibility of real estate projects.
• Reviewing other real estate appraisals to ensure their accuracy and reliability.

History of Real Estate Appraisal:

The development of real estate appraisal evolved through history, starting from simple value estimations in ancient societies, up to complex methods used today. The main stages in this development can be summarized as follows:

1. Traditional Estimates: Based on personal experience and local knowledge.
2. Emergence of Financial Institutions: Led to the need for more accurate and reliable estimates.
3. Establishment of the Appraisal Foundation: Contributed to setting unified appraisal standards and principles.

Purposes and Uses of Real Estate Appraisal:

Real estate appraisal is used in a wide range of purposes, including:

1. Real Estate Financing: Determining the value of the property for the purpose of granting loans.
2. Buying and Selling: Determining the fair price of the property.
3. Insurance: Determining the value of the property for the purpose of insuring it.
4. Taxes: Determining the value of the property for the purpose of calculating real estate taxes.
5. Investment: Analyzing the value of the property to determine the feasibility of investing in it.
6. Inheritance and Division: Determining the value of the property for the purpose of dividing it between heirs or partners.
7. Standards: Complying with professional standards (USPAP) and local laws.
8. Data: Collecting and analyzing market data.

Distinguishing Between Real Estate and Personal Property:

It is important to distinguish between real estate and personal property because real estate is subject to different laws and regulations. They can be distinguished through:

• Method of Attachment: Real estate is permanently attached to the land.
• Adaptability: Real estate is specifically designed for the location.
• Relationship of the Parties: In case of dispute, the buyer is favored over the seller.
• Intention of the Interested Parties: Whether the intention is for the item to become a permanent part of the real estate.
• Agreement of the Parties: The parties can agree on whether an item is considered real estate or personal property.
• Trade Fixtures: Considered personal property even if they are installed in the real estate.

Real Estate Ownership:

Real estate ownership includes a set of right❓s, including:

• Bundle of Rights: The right of use, sale, lease, mortgage, and inheritance.
• Estates: Fee Simple and Leasehold.
• Encumbrances: Mortgages, easements, and other rights that limit ownership rights.

Governmental Restrictions on Property Rights:

Governments impose restrictions on property rights to protect public interest, including:

• Eminent Domain: The right of the government to seize private property for public benefit in exchange for fair compensation.
• Taxation: The right of the government to impose taxes on real estate.
• Police Power: The right of the government to set laws and regulations that regulate land use.
• Escheat: The right of the government to seize real estate that has no legal owner.

Appraisal in a Mobile World:

Mobile technology has revolutionized the field of real estate appraisal, leading to improved efficiency, accuracy, and transparency.

• The Early Days of Appraisal: Depended on traditional and manual methods, which were time-consuming and prone to errors.
• Garn/St. Germaine Act: Allowed financial institutions to provide adjustable-rate mortgages, which increased the need for accurate and reliable appraisals.

Evolution of Technology:

The field of real estate appraisal has witnessed significant technological developments, including:

• Cell Phones, Answering Machines, and Fax Machines: Contributed to improving communication and information exchange.
• Personal Computers: Provided powerful tools for data analysis and report preparation.
• Job Losses: Led to increased efficiency and reduced need for some traditional jobs.

Opportunities in the Field of Appraisal:

The field of real estate appraisal still provides promising opportunities for qualified professionals, especially with the increasing demand for accurate and reliable appraisals.

• Education Requirements Increase: Requires obtaining professional certificates and accreditations.

A Look at the Old Days:

Despite technological developments, there are still challenges facing the field of real estate appraisal, including:

• Automated Valuation Models (AVMs—Not Appraisals): Cannot be fully relied upon and do not replace professional appraisals.
• Bad Lending Practices: May lead to inaccurate and misleading appraisals.
• Increased Regulation: Aims to protect consumers and ensure the quality of appraisals.
• Management Companies Take Over: May affect the independence of appraisers.

Current Status in the Field of Appraisal:

The field of real estate appraisal is currently experiencing a shortage of qualified appraisers, which increases the pressure on the profession.

• Fewer Appraisers: Requires attracting more new professionals to the field.

The Technological Revolution in Appraisal:

Technology has revolutionized all aspects of real estate appraisal, from data collection to report preparation.

• Early Morning - Getting Started: Using mobile applications to access market information.
• Mid Morning - Mobile Maps: Using digital maps to locate properties and analyze neighborhoods.
• Afternoon - Payment Apps in Use: Using mobile applications to facilitate payment processes.
• Early Evening - Backing Up Work Information: Using cloud services to protect data.
• The Future: Using artificial intelligence and machine learning to improve the accuracy and efficiency of appraisal.

Examples of Practical Applications of Mobile Technology in Real Estate Appraisal:

• Data Collection Applications: Allow appraisers to collect field data using smartphones and tablets.
• Data Analysis Applications: Help in analyzing market data and identifying comparable properties.
• Report Preparation Applications: Allow creating professional appraisal reports quickly and easily.
• Using Drones: To capture aerial images of properties and their details, providing a comprehensive view of the property and its surrounding location.
• Augmented Reality: To display additional information about the property on images or videos of the property.
• Artificial Intelligence: To analyze large amounts of data and identify patterns and trends, helping to improve the accuracy of the appraisal.

Equations and Mathematical Formulas Used in Real Estate Appraisal:

• Net Operating Income (NOI):
  NOI = Potential Gross Income - Total Operating Expenses
• Capitalization Rate (Cap Rate):
  Cap Rate = NOI / Property Value
• Market Value (MV) using the Sales Comparison Approach:
  MV = Sale Price of Comparable ± Adjustments
• Replacement Cost using the Cost Approach:
  Cost = New Construction Cost - Accumulated Depreciation

Conclusion:

Mobile technology has revolutionized the field of real estate appraisal, leading to improved efficiency, accuracy, and transparency. As technological development continues, the field of real estate appraisal is expected to witness more radical transformations in the future. It is necessary for real estate appraisers to keep up with these developments and adopt new technologies to improve their performance and provide better services to their clients.