A client recently texted me to ask if there is such a thing as an appraisal that ascertains objective value apart from a request from a bank. The question was intriguing, as there are of course many other reasons besides getting a loan for getting appraisals—such as setting tax basis at time of a death, or allocation of assets during divorce or dissolution of a partnership to name a few.
I called him to get some more context and learned that he’s working on the entitlements for a multi-family housing development where the investors are looking to get an appraisal to help determine eventual values and fair market rents for the proposed residences once completed, but the appraiser he had reached out to had told him that an appraisal needs to be requested by the lender after a loan has been applied for.
While this is generally true, I let him know the QM rules the appraiser was referring to are only for mortgage origination transactions on owner-occupied residences, and likely didn’t apply to his situation. Judging from their initial response, it sounded like the appraiser he had reached out to wasn’t the right fit for the job, so as an alternative I gave him the number of our in-house appraiser David Beccaria, who happens to also hang his real estate license at Main Street. David has over 30 years of experience evaluating complex assignments, and is well up to the task.
Another client reached out this week asking if I had any recommendations for a commercial appraisal job where they had received a high quote from one of the larger sources in town. I was pleased to be able to connect her as well with David who works in close connection with other respected local MAI appraisers to provide a qualified, competitive bid. And the savings could be substantial, as it is not uncommon to see costs for commercial appraisals run well into the five figures.
Having an experienced appraiser on staff has also been an invaluable resource of helping determine pricing on a wide range of other land and commercial projects, where value can be tough to ascertain since many sales don’t get reported to the MLS, and high-priced providers like CoStar which charge thousands of dollars in subscription fees often contain insufficient or skewed data. Time and again, David has been able to dig up relevant sales and lease comps that we wouldn’t otherwise have access to in our quest to provide accurate analysis.
In this age where so often people think they can turn to online portals to get their answers, and AI is becoming increasingly active, it’s nice to have access to reliable information that has been vetted by someone with the necessary experience based on an intimate knowledge of the properties being compared, as a reasonable and reliable resource to help figure out what it’s all worth.
Great newsletter.