Orange County NC Website
legitimacy and accuracy. How do they compare with the <br /> established guidelines and norms? Are they consistent with <br /> the expenses incurred by comparable properties? <br /> Management refers to the cost of administration. These <br /> charges should realistically reflect what a real estate <br /> management company would actually charge to manage the <br /> property. If no management fee is shown on the statement, a <br /> proper allowance must be made by the appraiser. On the <br /> other hand, if excessive management charges are reported, as <br /> is often the case, the appraiser must disregard the reported <br /> charges and use an amount which he deems appropriate and <br /> consistent with comparable type properties. The cost of <br /> management bears a relationship with the risk of ownership <br /> and will generally range between 1% to 10% of the gross <br /> income. <br /> General expenses in that they include such items as the <br /> cost of services and supplies not charged to a <br /> particular category, unemployment and FICA taxes, <br /> Workmen's Compensation, and other employee insurance <br /> plans are legitimate deductions. <br /> Miscellaneous expenses is the "catch-all" category for <br /> incidentals. This item should reflect a very nominal <br /> percentage of the income. If the expenses reported seem to <br /> be excessive, the appraiser must examine the figures <br /> carefully in order to determine if they are legitimate <br /> expenses and, if so, to allocate them to their proper <br /> category. <br /> Cleaning expenses are legitimate charges. They are for such <br /> items as general housekeeping and maid service and include <br /> the total cost of labor and related supplies. All or a <br /> portion of the cleaning services may be provided by outside <br /> firms working on a "contract" basis. Cleaning expenses vary <br /> considerably and are particularly significant in operations <br /> such as offices and hotels. "Rule of the thumb" norms for <br /> various operations are made available through national <br /> management associations. The appraiser should have little <br /> difficulty in establishing local guidelines. <br /> Utilities are generally legitimate expenses and, if <br /> reported accurately, need very little reconstruction by <br /> the appraiser other than to determine if the charges are <br /> consistent with comparable properties. Local utility <br /> companies can provide the appraiser with definite <br /> guidelines . <br />