Relocation Appraisals

What is a relocation appraisal?

When a corporation or government agency transfers an employee, relocation assistance is common. The assistance often includes moving costs, temporary housing at the new location, advice on jobs for spouses, etc. If the employee (transferee) owns a home, the company may offer a home buyout to get the employee to agree to transfer. When a buyout is agreed to, a relocation appraisal is required to determine the buyout price.

Mortgage Appraisal vs Relocation Appraisal: How is a Relocation Appraisal Different?

A mortgage appraisal is based on a retrospective analysis of past sales transactions and reflects normal market conditions. In contrast, a relocation appraisal is based on an anticipated sale of the property during a defined, reasonable marketing period. This analysis considers what market trends and conditions may impact the property while it is exposed for sale.

What Role Does the Appraisal Play in Relocation process?

The appraiser develops an objective opinion of the “Anticipated Sales Price” of the residence. It based on a thorough analysis of factual market data without favor to the company or the employee. The valuation should correspond to an offer the homeowner would receive if their house was on the market as of the date of the appraisal. The appraiser is graded on the accuracy of their valuation and the client should expect a realistic opinion of the “Anticipated Sales Price” based on current market conditions.

The intended use of the relocation appraisal is to help an employer facilitate the employee relocation process. The intended users of the relocation appraisal are typically the relocation management company and the employer. A mortgage appraisal’s intended use is to assist the lender in evaluating a property for purposes of mortgage/bank loan underwriting.

A relocation appraisal is completed on the ERC Summary Appraisal Report which employs techniques similar to those used for the mortgage appraisal. However, the appraiser provides a much higher degree of analysis in the narrative portions of the form. The mortgage appraisal uses the URAR Form, which is a summary of the analysis of the property’s site, physical characteristics and comparable sales.

Considerations

As with most professions, not all appraisers operate on the same level or professionalism. You may be wondering how to select a good appraiser. After all, the selection of the appraiser can make or break the appraisal process for a relocation transaction. It is imperative that you do your due diligence to select the most qualified appraiser.

Pertinent questions include:

• How long he or she has been involved in relocation appraisals and what percentage of time is devoted to relocation appraisals?
• Does the appraiser have professional designations? Designations demonstrate the appraiser’s commitment to the industry and ability to perform well above minimum standards. State certifications and licenses denote minimum competency. ERC’s CRPTM designation indicates that the appraiser has a solid foundation of knowledge concerning the relocation industry.
• Is the appraiser familiar with the property’s neighborhood? Questions regarding the subdivision, school system, and community may offer insight into the appraiser’s familiarity with the area. It certainly is appropriate to ask, “How many appraisals have been conducted in the community in the past year.