Certified Residential vs Certified General

[Dale Floyd]

The ASA offers a “Going Concern” specialty designation. It would be extremely difficult to argue that a CR with the ASA,GC designations to be lacking in qualifications for anything pertaining to housing that’s income producing.

https://www.appraisers.org/credentials/real-property/going-concern-specialty

 

[djd09]

just keep massaging that cap rate...

 

[Fernando]

just keep massaging that cap rate...

Did someone say massage.
Anyway since I'm here, I was one of those geezers who could have been grandfathered in and easily gotten the CG.
Instead I decided to get the CR. I didn't like doing commercials and going into massage parlors.

 

[Zoe]

If you can find some sales, a GRM would be sweet. Remember you apply market based rents on a market value appraisal. You don't necessarily use contract rents over the past couple of years income/expense statements. You might could do both income cap and GRM.

If you are doing fee simple property rights, you use market rent estimate. If your doing leased fee or leasehold property interests, it changes the protocol.

You would need 2 years income/expense statements on subject, assuming it has been Airbnb for 2 years.

In some ways, it would be similar to doing a condo in Florida that is like a time share condo or just a rental condo on the beach.

CR can do it unless it is over like $1 million dollars. It may be higher than that as long as it is residential.

 

[George Hatch]

Did someone say massage.
Anyway since I'm here, I was one of those geezers who could have been grandfathered in and easily gotten the CG.
Instead I decided to get the CR. I didn't like doing commercials and going into massage parlors.

Nobody in our state was grandfathered. I know a veteran commercial appraiser who was actually doing the work, and he failed the state exam 3 times.

 

[Dale Floyd]

The national CG test was nearly identical to the CR exam in 1991. The only real difference was the appraisal log. No educational differences between the two.

I think that’s what the reference was. There’s many CG’s out there who aren’t qualified to do anything more than residential work in TN. And some of their stuff, under review, is elementary at best. Competency should be the rule, just as it was intended.

 

[sputnam]

But your referencing different property rights. Business and real property rights are different.

A CR or CG could do it with help from CPA on business value.

Think about it. This stuff goes to IRS and tax code is involved on "going concern". IRS has tax rules relative to "going concern" and "business value".

Which part of...."it depends" did you not understand?

 

[George Hatch]

The national CG test was nearly identical to the CR exam in 1991. The only real difference was the appraisal log. No educational differences between the two.

I think that’s what the reference was. There’s many CG’s out there who aren’t qualified to do anything more than residential work in TN. And some of their stuff, under review, is elementary at best. Competency should be the rule, just as it was intended.

There was a significant difference in both QE and experience, and (in our state) the CG test included some income cap related questions which went way beyond the GRM. Now it's true that the states didn't follow up on the experience claimed, but nobody could even sit for the CG test without passing the additional courses. The cumulative failure rates for which were in excess of 50%. So no, not just any CR had what it took to get the CG, even at the beginning. If they weren't using the HP or TI finance calculators in their day job then they weren't doing the work because M/E buildups for cap rates and multi-year DCFs and narrative report writing were still the default at the time.

Incidentally, the 3-time loser appraiser I was referring to was actually the chief appraiser at the bank I was working for at the time. And he had been doing commercial appraisals for many years. He and his #2 were supervising and reviewing my work and helping me to learn how to complete such assignments. He ended up retiring because he couldn't make the transition into licensure, and he's not the only experienced commercial appraiser I know of who ended up the same. I also knew A BUNCH of appraisers on both the residential and commercial side who were issued Provisional licenses because they couldn't document their experience and/or their QE. Some completed that transition, some didn't.

The state didn't stop issuing Provisional licenses until after licensing had been in place for a couple years, and they didn't stop renewing Provisional licenses until the 2nd renewal cycle.

 

[Gobears81]

I do many appraisals that are on the cusp of what a CR is "allowed" to do, though I personally think that several land on my desk because they don't want to wade into that hornet's nest.

The thread last week, where there was a residence and numerous outbuildings come to mind. If the contributory value of the outbuildings exceeds the contributory value of the residence, maybe it is a CG assignment, but where is the line drawn?

Similar to a house on commercial-zoned land. A CR isn't licensed to appraise the property if the home were demolished, but as long as they are competent to grasp the land value and highest and best use, they should be OK to appraise it. But how to they gain competency to value said land if they are only licensed to do 1-4 family and residential land? Also, if the commercial land value exceeds the percentage that underwriters raise an eyebrow at, suddenly they are lost in another hornet's nest.

Regulators want clearly defined boundaries, but real estate has so many variables.

 

[George Hatch]

If there was an expansion of licensing categories then adding multi-family up to a certain number of units would be a relatively easy transition into an intermediary license status. That would still require a rudimentary understanding of cap rates and how the income/expenses work. A majority of the CRs could pass such a course/test but it wouldn't be all of them. I saw that much when I wrote and taught the SL-to-CR transition course. I had a high passrate but it wasn't 100% and that wasn't because of my instruction. In my experience appraisers generally know what they do, but some appraisers do zero math outside of what their formsware automates.

I'll get some hate for this, but I also don't think most CRs understand land valuation or the more complicated HBU issues outside of existing SFR lots. Again, multi-family or commercial/industrial land are not particularly complicated property types to appraise but also not something any appraiser is born knowing how to perform and not something to just feel their way through. Some instruction and exposure required.