10/20/2008 - Appraisal of Residential Properties: Make-or-Buy?
When appraising real estate portfolios, transparency is a major aspect. Real estate corporations, for instance, require it in order to convince potential investors of the recoverability of their portfolios and of their future potential. This brings up the “make or buy” question for real estate companies: the decision whether they want external appraisers to determine the value of their portfolio or whether they want to identify it themselves.
If they select an external appraiser, the reason given for this choice is often the lower cost factor. But in the long-term, continuous internal value appraisal pays out as well: It is an excellent basis for a value-based portfolio control. Important decisions can be made quickly, need for action as regards the recoverability of real estate portfolios is identified at an early stage.
A crucial factor that determines the quality of the real estate appraisal is the quality of input data. “Internal appraisers have an advantage here”, Markus Bolder, CEO of Servicing Advisors, says. “Detailed knowledge of the portfolio, gathered over years, cannot simply be passed over to external appraisers.” When external appraisers are appointed with the property appraisal, it is therefore necessary to find ways via portfolio control and portfolio management systems to provide them with all relevant data.
Another important criteria for a successful appraisal is reliability. In general, those appraisals are considered to be more reliable which were created by an independent appraiser. However, a well-founded internal appraisal can be proven as well, for instance by publishing appraisal assumptions and results for individual properties. This makes it easy to review the values. Another possibility is to appoint external appraisers for another sample analysis of the results. This way, portfolio management gains trust as well, in public as well as within the company.
