Appraisal Matters

During the past few years of explosive growth, the highest and best use for marinas very often was NOT as a marina.  Many traditional marinas changed to mixed use or condominium developments, especially in the southeast.  Now that that the real estate bubble has burst, development is often not the highest and best use of [...]

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I’ve worked with John for 13 years and although I am an appraiser, for marinas I am a data gatherer and general muse for him.  I’m also the one that begs and pleads for data in a market that is very closed to providing income information.
Over the years we’ve come across tons of marinas that [...]

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Over the past month, we’ve gotten a huge number of bid requests for marina appraisals all over the country.  I inspected a marina yesterday that typifies the problem.
Marinas are facing top-down and bottom-up pressure that’s squeezing profitability.  From the top-down perspective, the reduction in slip demand is causing higher vacancies in many marinas.  Many marina [...]

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The effect of the recession has highlighted how much retail owners and purchasers have relied upon steady or annually improving rents, cash flows and projections. Perhaps it’s not possible to completely prepare for a change in future market conditions, but not adapting to them when making financial decisions can crush cash flow. This two-part blog [...]

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Like my blogs on ceiling height and sprinkler adjustments, appraisers frequently misjudge how to adjust for refrigeration in industrial buildings.  In demonstration appraisal reports for the Appraisal Institute’s MAI designation, I’ve seen it treated as a super adequacy.  This is considered more the rule than the exception, yet appraisers run the risk of appraising by [...]

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Like my prior post on ceiling height, sprinkler adjustments should not be done by rote.  Here’s why:

Most brokers I’ve met say that sprinklers do not matter.  Developers only put them in when they have to because they do not get extra rent for them; why incur the cost?
Sprinklers are now generally required by code and [...]

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I’m a consumer so I understand that commercial appraisals are expensive for many people. We are generally the most expensive item for a loan and certainly expensive for many estates.  It is a great leap of faith for someone to order an appraisal and not know if a "value will be made."
Again, like the last [...]

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Too many times, appraisers adjust by rote, which in the case of ceiling height, can be incorrect.  The following needs to be considered before applying a ceiling height adjustment to a comparable sale:

Differences in ceiling height may not be functional obsolescence.  If the subject is in a small industrial building manufacturing market, lower ceiling heights [...]

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As appraisers, we apply a market condition in our appraisals when property values go up and down. But does that mean the adjustments apply to an entire class of properties and that there are no exceptions?
T    Thinking back to Economics 101, price is set at the intersection of the supply and demand curves. [...]

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Some jurisdictions require the petitioner in a tax appeal case to prove that a property is unfairly assessed in relation to other properties . We appraisers call this tax comparable analysis and it’s done on a price per square foot basis.
There are many problems with tax comps. It is not uncommon for one or [...]

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Too often, market participants rely on assessments as reflective of a commercial property’s market value. What could be easier than relying on the assessment as market value? The problem is too few market participants do not understand what is not included in the assessed value. Here are some of the most obvious and important omissions:

Assessments [...]

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We’ve had some interesting round table discussions about reserves in the office. The big question is why don’t we see reserve line items on income statements or as a separate deposit/bank account on the balance sheet? For marinas, this is an even more important question because it seems that lenders don’t understand how [...]

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Bar and restaurant appraisals are interesting assignments. Unless you are going for an SBA loan, the lender only wants to lend on the "bricks and sticks." They are not interested in the bar equipment (AKA FF&E), business value or good will. The hardest part of this type of assignment is how to [...]

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Looking at the latest round of resumes, I have to ask how some prospective employees figure their appraisal trainee licensing classes are worth the cost, about a thousand dollars. Remember the book "What Color is Your Parachute"? It should be required reading in the first appraisal trainee class.
What a job search boils down to is [...]

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Although most appraisals are done well, from time to time I’m called on to review a report that misses the mark. I started thinking - what is the one thing that makes getting the value right or wrong? What is the one thing the separates a poor appraisal from a good appraisal?
In a word, [...]

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We are constantly being asked for "comp runs." Lenders and buyers don’t want to spend money for an appraiser’s expertise. They want to KNOW what a value will be before engaging our services. Although I can appreciate that the cost of an appraisal fee is significant, we just cannot take assignments with [...]

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In this market, it is getting pretty tough out there for people. On the commercial side, many loans have balloon payments and the owners NEED their values to keep rising. Right now values are at best flat. Over and over I see owner occupied real estate investors who banked on their values [...]

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So often when we appraise properties where the business is tightly held with the real estate, it is very difficult to separate the business from the real estate. This is most common in restaurants, bars, marinas and hospitality properties. When a business is dependent on its real estate to function (an office could [...]

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