Appraisal Matters

At first glance, the skill sets between residential and commercial appraisers seem very similar. They share property inspection, building measurement, comparable selection, sales comparison adjustment, building description, site description and sketching skills. Shouldn’t it be easy to transition? Well, just like Apple and Intel are both in the computer industry and yet their motherboards are very different, the same analogy applies to residential and commercial appraisers.

Some commercial appraisers consider residential appraisers stigmatized when they want to transition to commercial. Here’s why:

• Over-reliance on canned comments - commercial appraisals require dynamic writing skills, so if writing is not a major strength of a residential appraiser, it hurts them when they move to commercial. Do residential appraisal too long, and the residential appraiser may loose the skill of dynamic writing.
• Over-reliance on adjustment rules - some residential appraisal firms have a sheet they use for adjustments. A bathroom is worth $1,500, a bedroom is worth something else, etc. This just doesn’t work in commercial.
• No verification skills - yes, you must verify sales on the commercial side and most residential appraisers have done few or no verification phone calls. If you don’t practice a skill, you loose it.
• Need for more inspection skills - You need to understand the building features of a much wider range of properties in commercial.
• No market analysis skills - Most commercial appraisals have a market section, something that is nothing more than checkboxes on the residential side. Determining what’s salient for a commercial property type and an individual submarket is a tough hurdle for a transitioning residential appraiser.
• Lack of understanding of adjustment factors - residential appraisers writing narrative reports don’t have a form that itemizes the adjustments to make and they vary by property type. Sometimes, they vary among property types. For instance, ceiling height in an industrial property should be adjusted in a warehouse building in Maryland, but not in DC where it’s not expected that you’ll get a high ceiling. A better example is using a different unit of measure for a two-story mixed-use building in Baltimore where the second floor of the buildings on the street are all boarded up (your unit of measure is price per square foot of footprint only, not both floors together when second floors are not financially viable or financially feasible per your highest and best use discussion).
• Lack of experience with the income approach - this is a core foundation of commercial appraising, but one rarely used at all by residential appraisers.
• Core residential appraisal skills that don’t translate into commercial appraising - the best example is a residential appraiser can be successful being a "two finger typist" but it’s highly unlikely they would get past a job interview for commercial where you need to type 35+ words per minute. The same applies to math skills, although you don’t need to be a calculus major.
• Lack of basic computer software knowledge - the transitioning appraiser must know Word and Excel (or their equivalent) quite well. The same goes for knowing the basics of the operating system. It is annoying to ask the senior appraiser where in Word to find some functionality or how to use some operating system function that would be covered in the first few chapters of a Dummies book.

The sad thing from the above is that most commercial appraisers will read the resume and cover letter of the transitioning appraiser, decide they don’t have enough of the above (especially the typing speed requirement), and not even grant a job interview. So if you are a transitioning appraiser, make sure you have the extra typing and computer software skill sets and craft your cover letter and resume so that you overcome the objections above. Sell, don’t tell, your skills and abilities!

John Simpson, MAI