Appraisal Business Slow Down April - May 2020

[Tom M]

I am seeing a quite significant slow down in appraisal business as of May of 2020. Bank business seems to have declined by 50% YTD 2020 versus 2019, and even more significantly in May and June 2020. It seems Covid is the cause especially with bank closed/operating with restrictions. But, over the past several weeks (coinciding with the protests?) there seems to be a greater drop off in activity. I've been in this business for 30 years and am running my own commercial operation in the most recent years. Would love input from others on the volume of commercial appraisal business especially in May and June.

 

[JAW]

We saw a slowdown start in late March Tom, and it continued. We surveyed commercial appraisers in late March and April and here's what we found: SURVEY RESULTS

 

[Michigan CG]

We saw a slowdown start in late March Tom, and it continued. We surveyed commercial appraisers in late March and April and here's what we found: SURVEY RESULTS

From what I am reading the commercial guys are down significantly now. I only have two commercial reports right now but my work is a mixture of comercial, farm and residential.

 

[Tom M]

Certainly appreciate your feedback and the survey. The slow down is very pronounced especially among banker appraisals. I am really not finding a good explanation for this, as all commercial properties with mortgages must be continually refinanced every 5 to 10 years at the end of their mortgage terms. So, irrespective of the economy, covid, or protests, those loans definitely continue to come due, and should need appraisals.

It is hard to find layout info for non-public companies, but this article illustrates the most layoffs occurring in commercial real estate industry - https://therealdeal.com/la/2020/05/27/marcus-millichap-lays-off-20-of-workforce/ I believe many more may be coming.

 

[ucbruin]

It's been a very steady 14 months of volume....
This past 2 weeks I have less in the pipeline....
I'll have to pay attention if volume is dipping....
Or if I'm cherry picking too much....

 

[TMG]

I've been busy, but no orders for three days now. September slowdown anyone else??

 

[Terrel L. Shields]

Nope - Slow and steady as I go. Not seeing a change in demand overall, sales are brisk here, so any change is probably related to the bounce of the ball unless you have a general slowdown in your area.

 

[Hylopeeko]

Even though back to school varies from remote to hybrid to in person, always noticed a small slowdown for week or two around Labor Day.

 

[Deleted member 152047]

Certainly appreciate your feedback and the survey. The slow down is very pronounced especially among banker appraisals. I am really not finding a good explanation for this, as all commercial properties with mortgages must be continually refinanced every 5 to 10 years at the end of their mortgage terms. So, irrespective of the economy, covid, or protests, those loans definitely continue to come due, and should need appraisals.

It is hard to find layout info for non-public companies, but this article illustrates the most layoffs occurring in commercial real estate industry - https://therealdeal.com/la/2020/05/27/marcus-millichap-lays-off-20-of-workforce/ I believe many more may be coming.

So this is what I have seen and heard:

Commercial bank work is down significantly as the big boys aren't lending on deals with any hair on them. They have a moratorium on new financing and refinancing on certain asset classes as well. This has led to a substantial increase in new lending for local banks and credit unions in the commercial world. A good friend of mine reports that they are actually up YoY and are busier than they want, but nearly all their clientele are local. This was mirrored by one of my clients who works for a regional bank and said that her appraisal panel reports that they are 3-4 weeks out and are busy.....again likely mostly local clientele.

I work for one of the large national firms and our business is down. I also heard that all of the other top 5 nationals are down substantially in all facets of the business. Bank work largely does not exist and the capital markets work just is not coming in. We aggressively bid on a portfolio recently and the winning bid was approximately half of what we bid. The fees would cover travel to the assets and a minuscule amount of profit to the firm.

Now, the question of why is bank work down, especially considering that we expected the special servicers to get involved and/or refinancing? From what I hear, the banks are trying to take a breather and weather the storm without beginning the foreclosure process. Also, they are having their folks perform internal analyses of the assets to try and work through the best solutions. At the end of the day, they do not want to take back a ton of hotels, brick and mortar retail, senior housing, and entertainment facilities.

Hope this helps.....hang in there, I suspect we will be busy coming out from under this ridiculousness.

 

[Tim The Enchanter]

Keeping busy enough to feel no qualms about turning down the weird ones.
Lots of requests in areas I don't normally cover lately.
Most of what I am doing lately is for non bank lenders.