FEC RECOMMENDS:

*An OBJECTIVE NARRATIVE REAL ESTATE APPRAISAL and/or OBJECTIVE PROPERTY APPRAISAL by a licensed and experienced Professional Real Estate Appraiser (experience with comparable subject properties preferred).

and/or

*An OBJECTIVE BUSINESS VALUATION by accredited CBV or CBA, or an equivalent experienced Professional.

Why does a business owner need an Professional objective appraisal or valuation?

CERTIFIED APPRAISALS OR VALUATIONS ARE AN ADVANTAGE WITH:

1) Sale, purchase, lease or merger

2) Financing & Bonds

3) Financial and Estate Planning

4) Legal decision

5) Retirement, illness, death, family situations or a new venture

AND CONSIST OF A PROFESSIONAL OBJECTIVE OPINION OF THE VALUE  OF REAL PROPERTY AND/OR ATTACHED OR UNATTACHED PERSONAL PROPERTY:

1) Depreciated replacement value

2) Comparable sales value

3) Income value

CERTIFIED BUSINESS APPRAISALS-VALUATIONS ARE AN ADVANTAGE FOR BUSINESSES WITH OR WITHOUT REAL PROPERTY.

A CBA or CBV utilizes EBIDA (cash flow) formulas to value the business operation less property. 

One should know one's business's value by an objective professional. Generally, there is too much time and money invested to speculate about value.

Financial Exchange Corp. consultants will assist clients and the experienced Appraiser or Valuation Professional.

Contact Financial Exchange Corp. for a FEC approved Professional Appraiser/Valuator list.

Protecting Your Interests
An appraisal can be key to protecting your interest in many financial dealings. When there is a question as to the value of your property, there's also a risk involved.

Value oriented risks may include:

• selling too low

• paying too much

• being over or under insured

• not getting your fair share in a division of property

• paying too much in taxes

• being audited when claiming a deduction for a charitable contribution or a business loss

A professional appraiser helps you manage your interest by providing a well developed and documented unbiased estimate of value upon which you can base your financial decisions.

Appraisals are used for:
Appraisals are used for many purposes. Some common uses of appraisals are:

Mortgage Lending
Most mortgage transactions involve an appraisal. Generally, financial institutions will only approve a mortgage after contracting for an independent appraisal to document the value of the property which serves as collateral for the loan.

Donations and Insurance
Art donated to a museum is often appraised to establish the appropriate tax deduction for the donor. Also, furniture and fixtures, gems, fine art and other valuables are often appraised to identify appropriate insurance coverage.

Investments
Pension and investment fund managers, corporations and other investors generally require professional appraisal services prior to acquiring investment real estate, art or other property.

Property Tax
Ad Val Orem appraisals or assessments are conducted by many jurisdictions to establish real estate taxes.

How Does An Appraiser Estimate Value?
Appraisers are taught to estimate value by following three recognized approaches to value.

Sales Comparison Approach
Compares similar, recently sold properties (homes, farms, machinery, jewelry) to the property.

Income Approach
Estimates what a prudent investor would pay for the property base on the income the property produces.  Business appraisers and valuators specialize in this approach utilizing cash flow, earnings before interest taxes, depreciation and amortization (EBITDA) and capitalization rate.  Since many businesses have no ownership of real property the income approach dictates a specialist in this valuation method.

Cost Approach
Estimates the cost to replace or reproduce the property being appraised. See Business Appraiser - Valuator.

Through consideration of results of the analysis conducted, an appraiser then develops a final estimate or opinion of value.

Appraisal: A Profession of Professional
There are many specialties in the appraisal profession. Just as expertise or specialty is important in selecting a doctor or attorney, the same is true in selecting a professional appraiser.

Real Property Appraisers
Appraise all types of real estate including residential, commercial, rural, urban and agricultural properties.

Personal Property Appraisers
Perform appraisals of antiques, decorative and fine arts, residential contents and collectibles.

Machinery and Equipment Appraisers
Appraise industrial equipment, aircraft, computers and high-tech machinery, agricultural chattels and public utilities.

Jewelry Appraisers
Appraise diamonds, other gems and antique or contemporary jewelry.

Business Appraiser-Valuator
Appraise public and private corporations and partnerships, trademarks and copyrights. Business valuation professionals provide independent unbiased opinions of value for businesses and business interests of all sizes, from small proprietorships, such as medical practices, to large multinational corporations. They also value specific intangible business assets such as patents, trademarks, employment agreements, copyrights, securities and goodwill. These professional appraisers prepare merger and acquisition studies, employee stock ownership plan feasibility analyses and other similar financial studies. They may be involved in appraisals performed for estate and gift tax returns, buy-sell agreements, securities litigation, equitable distribution in matrimonial matters and many other purposes.

Assessors
Value all types of real estate, machinery and personal property for governmental tax purposes.

Choosing a Professional Appraiser
It is important for consumers of appraisal services to exercise care in selecting a valuation expert. In the case of real estate appraisers in the United States, current good standing as a State Certified or Licensed Appraiser should be verified. In engaging an appraiser, you may want to consider the following:

Affiliation with a professional association
You may wish to look for an appraiser who is affiliated with a non-profit professional association which requires on-going education and adherence to generally accepted technical and ethical standards. Most associations offer special designations for professionals who have demonstrated a higher level of education, experience and dedication to the profession.

Competency
Look for an appraiser who has experience in appraising properties similar to yours by reviewing his or her job-history, resume or other qualifications material.

Reputation
Check references or recommendations from financial institutions, insurance companies, museums, and government bodies for whom the appraiser has performed appraisal services. Also, the recognition the appraiser has received for professional activities is often an important criterion for selection.

Independent Objectivity

For your financial health search for the professional appraiser who has no affiliation with property sales entities or appearance of gain by the appraiser or his/her associates.

Setting the Highest Standards:  The Mark of  a Professional Appraiser
A key question to ask prior to engaging an appraiser, is whether or not her or she performs services in compliance with the current annual edition of the Uniform Standards of Professional Appraisal Practice (USPAP).

USPAP, published annually by the Appraisal Standards Board of The Appraisal Foundation, is the generally accepted set of standards of professional appraisal practice in North America. In addition, many professional appraisers in Europe, Central and South America, and Asia are also beginning to practice in compliance with USPAP.

In the United States, USPAP is recognized by state real estate appraiser licensing agencies, Federal bank regulatory agencies and many other Federal, state and local authorities.

Selecting an ethical appraiser who complies with USPAP is the consumer's best assurance that he or she is working with a professional who will provide quality services.

Any concern regarding the work of an appraiser should be reported. Contact the professional association(s) to which the appraiser belongs and, in the case of real estate appraisers in the United States, state appraiser licensing agencies for more information. These groups investigate complaints and assess disciplinary measures where wrongdoing is confirmed.

Independence, high standards and quality services are the marks of the professional appraiser!

FINANCIAL EXCHANGE

310 Northeast Ewing Street

Grimes (Des Moines), Iowa 50111-3002

E-mail 

Voice Phone-National: 515.309.1538

You may Fax your questions/information to 888.898.6009

or, complete and submit the  

Information Request Form.

One's property of value inevitably transfers ownership, with or without one's wishes.  

Prepare now to save your family wealth.  Ken Wheeler

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January 02, 2011
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