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In Florida, more than some other states, there is a real need for property managers because so many owners are absentee owners, persons who own real estate but do not reside in that real estate. Property managers are licensed Florida real estate brokers who, under law, perform duties and services on behalf of the owner. Generally, a property manager is defined as one who preserves the value of an investment (by an owner) while generating income as an agent for the owner. The property manager's specific duties will be contained in a Property Management Agreement.
Services a Property Manager May Provide
The Florida Property Manager may provide many different services for the owner. Specific duties should be spelled out in a Property Management Agreement and signed by both parties. A sales associate acting as a Property Manager must be under the direction and guidance of a real estate broker.
Some Specific functions would be to:
Budget expenses for the property
Evaluate the rental market
Advertise and market the property
Rent the property under the guidelines of the owner
Maintain good relationships with the tenants
Handle any environmental concerns
Adjust the rates with the market and the consent of the owner
Show property/ies
Maintain the property in good repair
Act as a Fiduciary to the owner
Fiduciary means: a person having a duty to act primarily for another's benefit. It involves duties such as good faith, trust, special confidence and candor. A breach of fiduciary responsibility would make the fiduciary liable for any damage caused by any such action.
Do not confuse the duties of a property manager with those of a Community Association Manager (CAM). CAMs are licensed specialists tasked by the state to manage Community Associations, Homeowner Associations, and Cooperative Associations in their day to day business practices and the maintenance of their common areas.
The first measurement of value is called an appraisal. An appraisal is an estimation of value. It is done by appraisers using specific techniques and is done for a variety of reasons including obtaining a loan, obtain insurance value, obtaining a divorce settlement and determining capital gain. The appraiser does what is usually called a fee appraisal. An appraisal is performed in circumstances where a property's value must be determined for the purpose of a loan, an insurance value, or to determine a viable sale price based upon current sales in the area.
There are three levels of appraisers for the state of Florida: Registered Trainee appraiser - must work under guidance of a Certified Residential Appraiser or a Certified General Appraiser; Certified Residential Appraiser - Appraises residential properties; Certified General Appraiser - may perform any type of commercial or residential appraisal.
Any appraisals that involve a federally related real estate transaction must employ a state licensed appraiser.
Important - effective January 2015 the National Appraiser Qualification Board has set out new criteria for Appraisal training for all states. The training criteria for all appraisers must comply with the standards within the board. The AMC was also intended to put distance between the local lender, licensee and the appraiser. Effective October 2012, the Appraisal Management Company must register with the Department.
Most appraisals for purposes of a loan in a federally related transaction are ordered by the mortgage loan originator through an Appraisal Management Company (AMC). These companies were created as a result of the huge demand for appraisal that occurred with foreclosures and short sales in the U.S. Appraisers are regulated by the Florida Real Estate Appraisal Board. The Florida Real Estate Appraisal Board (FREAB) is headquartered in Orlando and consists of nine members. The FREAB administers and enforces the real estate appraiser license law, Chapter 475, Part II, Florida Statutes.
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The Florida Real Estate Appraisal Board
(2) 475.612 This section does not preclude a Florida licensed real estate broker, sales associate, or broker associate who is not a Florida certified or licensed real estate appraiser from providing valuation services for compensation. Licensees may perform real property valuation services in Florida as long as they do not represent themselves as a certified appraiser. Such persons may continue to provide valuation services for compensation so long as they do not represent themselves as certified, licensed, or registered under this part.
The final approach to determining value of a property is called the Comparative Market Analysis. Generally, real estate licensees do not do appraising because of its rigorous standards and regulations. Usually what licensees do is called a CMA. It is called either a Comparative Market Analysis or a Competitive Market Analysis, depending on local custom and broker. A CMA does not follow the techniques of appraising; rather it is method of valuing homes that looks at:
recent home sales
homes currently on the market
homes that were listed but did not sell
Real estate brokers use special computer programs, such as the Multiple Listing Service (MLS), usually connected to local taxing and recording offices to obtain this information. The CMA is used by the broker with the seller to set the listing price and to determine what probable price the property will bring. The real estate professional can help sellers determine what they will net from the sale.
A CMA can also be used by a broker representing the buyer to determine the price the buyer wishes to offer for the property, to determine if the property is worth the listed price being asked by the seller, and what other properties in the same neighborhood have sold for recently. The data presented with current properties on the market and average days on the market are also useful in creating an "Absorption Analysis" which is useful in assisting the possible days on the market for a property to sell within the range of current active properties.
In all cases of property valuation, it is imperative that the broker use current information (preferably one year or less) and use the same neighborhood, model and type of home as the property in question. At least three comparables in each category should be used to create a valuable CMA. After looking at all the comparables, the broker determines a price range that a buyer will probably pay for the property, rather than a specific price as an appraisal does. A CMA is exempt from USPAP standards.
Real Estate Professionals do CMAs and may not call a CMA an appraisal.
Appraisal for any federally related transaction is done by licensed appraisers who follow USPAP.