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What is a Diminution in Value Appraisal?
The purpose of a diminution in value appraisal is to determine the loss in market value due to some adverse condition or circumstance affecting the property being appraised. It involves two values on the subject property as of a single date of value. One value is called the before value. It is the value of the property as though there were no adverse circumstances existing. The second value takes into account the adverse circumstances. The difference between the two is the diminution in value due to the adverse condition or circumstances. Theoretically, the loss in market value perceived by the market due to an adverse factor is determined by comparing sold properties that are identical except for the presence of the adverse condition. This is called a "paired sales analysis." These are not the sales compared to the subject property in the Sales Comparison Approach - that comps later. This exercise is only to quantify the market's reaction, if any, due to the adverse condition or circumstances. The difference in their sales prices represent the affect on value due to the adversity. If for example a property without a certain construction defect sells for $300,000 and an identical property with a certain defect sells for $200,000, the loss in value for a certain construction defect can said to be $100,000 and represents the market adjustment applied to the sales compared to the subject property in the Sales Comparison Approach. These types of assignments in all actuality are usually highly complex. Seldom are there sales available that are identical to each other except for a particular adversity, and furthermore the type of adversity affecting the subject property. Furthermore, many of these types of "paired" sales must be analyzed for a reliable estimation of the market's reaction to the effect on marketability due to a particular type of adversity. Often these types of appraisals are done as of a retrospective effective date of market value because the harm occurred in the past. Retrospective valuations present their own challenges. They require the skill and expertise of a real estate appraiser who can not only explain in written format, but by oral testimony, concepts, terminology, and methodology in real estate appraisal and construction to the trier of fact in simple terms that would not otherwise be easily understood. Nelson Boswell, Jr., JD, SRA, CGC has performed many of these types of assignments and has an excellent command of real estate, appraisal and construction terminology, as well as poise and preparation in the techniques of expert witness testimony so that the trier of fact grasps the material issues at hand. Each assignment is unique and complex in their own right due to the amount of time that has passed, regardless of the complexity of the property type. In many cases, our independent, supportable analysis has allowed clients to settle cases without going to court. The cause of the adverse condition or circumstances can be virtually anything, physical or economic, internal or external to property in question. Examples are construction defects, site subsidence, nuisance, seller non-disclosure (i.e. Johnson v. Davis cases), the list goes on and on. The potential causes of diminution in value to real property and the causes of action brought by property owners is virtually limitless. Attorneys especially appreciate working with an expert who can provide clear, enlightening testimony that is technically accurate and scientifically supportable. EXAMPLES OF APPRAISAL ASSIGNMENTS, VALUE DIMINUTION ASSIGNMENTS, CONSTRUCTION COST ESTIMATION AND REMEDIATION ASSIGNMENTS Appraiser Malpractice Diminution in Value Appraisals Valuation of "Stigmatized" Properties Valuation as of a past date (Retrospective) Appraisal Review - USPAP / Dodd-Frank Compliance Remediation Cost Estimation in Construction Defects Remediation Cost Estimation in First Party Homeowners Insurance Claims Cost Estimation from Plans, Specifications, and Blueprints New Construction Progress Inspection New Construction Draw Inspection Commercial Real Estate Cost Estimation Cost Approach - Cost New less Accrued Depreciation plus Land Value Estimation Cost Estimation of Sinkhole Remediation Accrued Depreciation Analysis Actual Cash Value Analysis (ACV) pertaining to Insurance Claims Deficiency Judgments Federal Bankruptcy Court Complex Hypothetical Condition Complex Extraordinary Assumption Complex Residential Valuation and Cost Estimation Appraisal Review - USPAP Compliance Professional Liability Cases Cost Analysis of Unique and One of a Kind property Trial Preparation & Consultation Assignments Seminars & Presentations for Attorneys on Dodd-Frank & Appraisal Law Seminars & Presentations for Real Estate Professionals on Valuation Topics Examples of Courses and Continuing Education Completed (these are just a small sample). In Addition to a Full Law School Course Curriculum Appraising the Appraisal Wind Mitigation Methodology Retrofits Advanced Wall Framing Florida Laws and Rules 61G4 FAC Fair Housing: An In Depth Study of Advanced Building Code 5th Edition Advanced Building Code 6th Edition (2017) Evaluation: Today's Residential Appraisal That's a Violation: Appraisal Standards Limited Scope Appraisal Documenting the Appraiser's Workfile Supporting Your Adjustments - Techniques National USPAP Update (2018 - 2019) Florida Appraisal Laws and Regulations Millennials Are Changing Real Estate The New FHA Handbook for Real Estate Litigation Appraising Residential Applications USPAP Update Every Two Years Xactimate Cost Estimation Defining the Hidden Cost When Estimating & Bidding Reading Commercial Blue Prints Florida Appraisal Law update Appraisal Institute Business Practices and Ethics Cam-Tech Construction Law and Technical Applications Property Tax Assessment Litigation Appraisal Specialized Topics and Applications Relocation Appraisal Private Appraisal Assignments Mortgage Fraud – Protect Yourself Lockout Tagout Lead in Construction Energy Efficient Roofs Daylighting for Energy Efficiency Building for Energy Efficiency Advanced Florida Code Permits and Applications Active Solar Energy Systems Appraising the Odd Ball Appraising FHA Today Solving Tough Appraisal Problems Residential Marshall Swift Elements of Heating and Air Conditioning Annual Construction Case Law Update State Court Trail Components Active Solar Energy Systems ADA Guide for Small Towns Advanced Florida Building Code Permits Building for Energy Efficiency The Energy Star Qualified New Home Florida Construction Laws and Rules - Chapter 489 Mold Remediation in Schools and Public Buildings The Building Envelope Wind Mitigation Methodology - Retrofitting Existing Homes Workers Compensation - Understanding Chapter 440 Organizations: Appraisal Institute – www.appraisalinstitute.org Hillsborough County Bar Association - www.hillsbar.com Greater Tampa Association of Realtors – www.gtar.org More Qualifications - Click on Home. |