Evening star., 1937-01-23
PLAN SUBMITTED
FOR APPRA|SALS
Mortgage Loan Data Method
Reviewed in Current
Institute Journal.

WIN business property duFdlCliS
in demand, the question Of how the
appraiser for a financing institution
may judge such property on which
a mortgage loan is asked is reviewed
in the current journal of the American
Institute of Real Estate Appraisers.
just off the press. Other phases of
mortgage valuation with which the
issue is concerned include:
Presentation of a new method Of
analyzing the value of guaranteed"
mortgage.
Discussion of the usefulness to other
Institutions of the property appraisal
form recently developed by HOLE
for use in completing the inventory
and appraisal of residential and small
business properties acquired by the
corporation.
Discussion of the way in which
the recent development of classical
ton Of properties for mortgage risk
rating opens "a new approach to the
solution Of the appraisal problem"
Here are some of the guides" pre-
sented by Fred L. Chapman of the
First Minneapolis Co.. Minneapolis,
for Judging the outlook for busl-
ness property, when it comes to the
question of making mortgage loan
upon it:
First question to ask the man who
says, II wish to borrow some money
on my store?" Not how much he
wants-not who is he-and not what
the property earns-but, Where is
your property located?" ut is the
district. the community in which the
store is located, that is the primary
factor in determining whether or not
you or your client. some bank, in
surance company, or individual Will
make a loan upon this property" Mr..
Chapman states.
Business Properties.
Next to choice residential loans
there is no better investment for the
distant investor than loans on typical
business properties in the smaller out
lying but stabilized business districts
What must an appraiser look for
in ascertaining whether or not such
q business district is stabilized? First,
for him, comes the question OF being
certain that the residential district
surrounding the business location has
become fairly we'll stabilized. Outside
OF this, among other questions ne
should ask, Mr.. Chapman says, Is:
"Is there a key tenant in this busl-
ness community who is the primary
factor in making the community at
the present moment an apparently
stabilized location?" Such a tenant
may make or break the location?"
If this is an important factor. the
appraiser should check very closely
into the probability that this key busi-
ness enterprise will continue III that
location. But he adds, it frequently
happens that such a neighborhood
business district has grown so large
and so successfully that the key tenant
is no longer a vital factor in sta
bilization.
I'm a business district that is de-
teriorating. if you have high land
value, even though the buildings may
be old and have little value. there
Is a very reasonable possibility that
capital might be interested in making
a loan. Best prospect for such loans:
An individual in the city familiar with
conditions and willing to put small
part of his money out at a slightly
higher rate Of interest, or an owner
of adjoining property who could use
the mortgaged property should it be
acquired under foreclosure" In such
a district. Mr.. Chapman gives this
as one guide for the lender: "The net
income on the property under ap-
praisal must be sufficient to liquidate
the loan within the length of time
that the appraiser feels certain that
such income could be maintained"
Even though the deteriorating district
appears to be in line of greater ulti-
mate development, with very rea-
sonable possibility of enhancement in
value some time in the future. the
same rule should apply, Mr.. Chap
man holds.
Appraisers Responsibility.
WTltlIlS III Illc SdIlc Ioouc, bCoiioiu u
Downie of Washington, manager OF
the appraisal section of the Home
Owners Loan Corp. discusses the ap-
praiser's responsibility under the prop
erty appraisal report form recently
drafted by H o. L. C. for use in COM
pleting the inventory and appraisal
Of residential and small business prop
critics acquired. He analyses the form
from the point of view of its useful
ness, with slight notifications, to
other institutions. Excerpts: THE
form provides for city data on popu-
lation and trends, followed by the
more important detail of neighbor-
hood influences. The block then is
brought into prominence and finally
the details of the structure itself.
The form provides further for a COM
plete analysis Of the general condi-
tions surrounding the property as re-
duced to dollar relationships.
Reviewers, officers OF corporation,
attorneys, or the clients themselves
are given vivid description of the
ma ior Influences lIpon which the