All Forum Posts by: Account Closed

As a multifamily appraiser, I am trying to think outside the box and come up with a service for multifamily owners (most likely targeting properties with 20 units or more).

A current idea I have is to provide a "value monitoring system" that would initially provide a complete "as is" appraisal, then keep an owner informed of their property's position in the market on a quarterly, semi-annual or annual basis. When the owner does decide to sell and an appraisal is performed (most likely by another appraiser if the buyer is securing bank financing) my service would review this appraisal and challenge any errors.

The fee for this service would likely be a subscription model, with monthly contact in the form of market updates/research, transactions, and such.

Please let me know your thoughts - is this something you can see as a viable service in the marketplace? What can you see going wrong with this? What do you like about it?

Thanks,

Cam

It is hard to find a good appraiser.

If you are getting a loan, the bank will order the appraisal, thus choosing an appraiser is out of your hands. The bank will typically only honor the appraisal they ordered. 

If someone is buying your property and they are getting financing, it is the same story - the bank will order their own appraisal and disregard others (in most cases).

I see where you are going with that idea, but I would encourage you to go through the underwriting process yourself and get comfortable doing it. This will give you confidence, especially when it comes time to negotiate.

To your original question, the answer is no. If you want to get the basic concepts, do what @Zach Mitchell is suggesting. In my experience, there are only a few great commercial appraisers in a given area - and they are all in demand. They also think and speak more like investors (and likely network with investors or are also investors themselves). It is not only the education, but the years of experience that are needed to understand how commercial property works and how to prepare and defend opinions of value.

Investing isn't just about numbers - its about networking, determination, and the ability to put together and sell a deal. You don't learn about that in appraising.

There are two sources I would start with. One is the local Appraisal Institute chapter. Once you are a member, you have access to their network (some of the most qualified appraisers in the state). They would likely know of someone.

The next option is to contact the Washington State Department of Appraisal (or Licensing - whatever it is called in your state) and ask for a list of appraiser supervisors. These appraisers have been approved to take on trainees. Start contacting them and see who is available.

Hope that helps. I don't know who you already know up there or what efforts you have already made, so hopefully this advice is not repetitive.

Cam

@Bill Gulley gave some great points and I agree with him. I would send it.

I think @Joe Fairless  is familiar with that area too. He is a great resource.

I couldn't give you a range on an appraisal fee for projects less than 10 units. I can tell you we are currently appraising a 24-unit for a $6,500 fee, but that is through HUD financing. Typically, I see fees range from $4,000 to $7,000, with the tendency around $5,000. This is for projects typically with 100 units or more.

I have been browsing through comments relating to appraisers and investors and have seen some interesting conversations. Would it be helpful to anyone to have some dialogue that would help investors and appraisers understand each other better? Do you feel there is even a need for that? Please, if you have any ideas or questions, post them here and I will respond as best I can.

Also, I could not find a category for "appraisers" specifically under the "Real Estate Professional" forum list. Is this something we can add? Or is this something that is already there and I just don't see it?

Thanks!

Cam

So you have retail, auto/industrial, and residential all in an 8,600 SF building? Wow, that is unique. My inclination would be similar to yours - the most reliable conclusion for value would probably be supported by the income approach, but an appraiser would not know for sure until they looked at the detail. Maybe secondary support would come from the cost approach (if you had good data for that), especially if you do not have any sale comps.

Different income streams are valued by different cap rates (as I can tell you probably know because of you comments). In any case, this is a  complex property and if you decide to have it appraised, be willing to pay a good fee to get the right appraiser involved.

Cheers,

Cam

Hey Everyone! I have read these comments and wanted to respond. Thanks @Joe Fairless for looping me in to this conversation.

@Account Closed , congrats on starting your job as a CRE appraiser! Just like @Bill Gulley  said, it speaks volumes that you have asked these questions. I wish more appraisers would do this. I am still learning myself.

The comments from @Joel Owens  and @Mark Creason  are spot on. As a profession, valuation is fairly young, especially with how it is being regulated and defined. And unfortunately we do have people in our profession who do exactly what @Joel Owens  and @Mark Creason  and @Bill Gulley  have said. Of course every industry will have these types of people, but hopefully you and I can begin to make that even less so for ours.

Appraisers can get paid a salary or fee split within their office (it's a split of the appraisal fee). No appraiser should accept an assignment where their compensation is based off of the performance or sale of the real estate being valued – this is a big violation of USPAP (which I am sure you already know).

@Kyle Kelley , the fee for an appraisal varies depending on the complexity of the real estate in question and also (in my opinion) what type of appraisal you are asking for. For appraisers, the process whereby we determine this is generally called “scope of work”.

In response to more of what @Bill Gulley  said, I agree that adjustments should be justifiable, either in terms of quantifiable data or qualitative relationships. Both have to be supported and reasonable. In my opinion, we should take in all the data available we can, and that includes understanding what the owner/investor thinks are the best comps. There is nothing wrong with taking in all the data we can. It is our responsibility to sift through the data, verify it, and use it in the report if it applies.

Typically, real estate is valued separately from any business component. If a business component is being valued, that appraiser must be competent in that area. It is also extra work and the fee should reflect that. In any assignment, the appraiser must state that they are either competent to complete it or will be by the time the assignment is completed to ensure credible results. They should state this upfront to the client before they start.

If you would ever like to talk, feel free to call me at 480-993-7488. And @Account Closed are you certified or working toward certification? What about the MAI designation?