Commercial comp checks?

[Ken B]

A blonde cut me off in traffic yesterday. All blondes must be idiots.

Not really, but I have some hope you see my point.

 

[Smokey Bear]

Maybe Caligirl would like to speak up on this? She quit appraising in disgust because of all of this. CG and AI member.

 

[Ken B]

I guess you didn't get my point.

 

[Michigan CG]

Comp checks and bidding wars are common in some circles of commercial work. CGs and MAIs have been taking on skippy trainees just to get the lowest bids and still make money.

Those are ASSumptions.

Timothy, you don't know what my background and knowledge is, so you're just making ASSumptions.

And FYI, a comp check isn't about finding out what the value of the property is ahead of time, it's for bidding purposes. For bidding purposes? The person who bids the highest gets the job. The person who bids the highest fee gets the job? Or the person bidding the highest value? Maybe you don't encounter this, but others do, including the CGs I started working with back in '89. They're having trouble staying afloat because of the commercial skippy mills, and they're good people and good appraisers.

From my knowledge, your experience is rare and you cannot make broad ASSumptions of commercial appraisers based on your limited experience.

 

[Smokey Bear]

From my knowledge, your experience is rare and you cannot make broad ASSumptions of commercial appraisers based on your limited experience.

Neither can you. Maybe you aren't exposed to it, but it's out there. I've experienced, others I know have experienced it, and sticking your head in the sand won't change it. And yes, I mistyped, the person bidding the highest value gets the job when there is a comp check report.

I have made no broad assumptions about commercial appraisers, I have made statements about what some are doing. Quit taking it so personally.

 

[George Hatch]

I've been appraising mostly commercial properties since 1990 and, believe it or not, I don't recall ever getting a request that resembled any of the following:

- "If you can appraise this property for at least $zzz I'll give you the assignment."

- "Call me if the value isn't at least $zzz"

- "If the value isn't at least $zzz then stop and bill me for your time."

Etc., etc..

I've had lots of conversations that were phrased like:

- "What are buildings like YYY selling for (renting for, cap rates for, expense ratios for, etc) in this area?"

- "What are vacancy rates like for YYY buildings in this area?"

- "What's the market like for YYY buildings in this area?"

- "What impact does a billboard lease have on the value?"

Etc., etc..

As PL said, in having those conversations there's no question about me expressing an opinion of value about a specific property or committing to a predetermined value. The people I deal with on these assignments are, for the most part, savvy enough to understand that there are far too many variables in commercial properties to consider a conversation about market conditions - even when it concerns an extremely narrow market segment - to be equivalent to an appraisal of a specific property. The people who aren't savvy enough to recognize that little factoid also aren't savvy enough to ask such questions anyway.

There's no doubt that the axiom "familiarity breeds contempt" plays a certain role here. Everybody and their dog thinks they understand residential appraisals well enough to recognize an acceptable appraisal when they see one. Some of those users really are that smart, but most of them aren't. In commercial appraising those ratios are reversed. Few users will take that attitude with an appraiser so long as the appraiser is assertive enough to hold their ground.

I wouldn't say that the commercial appraisers as a group are any more moral than the residential appraisers because I don't think that's at all the case. I will say that it's a lot easier for us to hold our ground because we weren't so short sighted as to saturate our own market. Our clients don't have as many alternatives. And every one of those appraisals gets read by their intended users for content. That's two huge advantages that the residential market should also have but unfortunately does not.

Of course, when a commercial appraiser does go bad the fact that they could have readily avoided it makes their offense even worse. As far as I'm concened, no commercial appraiser in my region has any right to blame their misconduct on their clients.

 

[Ken B]

Every commercial appraisal bid request I have seen come through this office requests a fee and turn time. Imagine someone making a business decision based on cost and time. Some bids we win, some we lose. I have been personally told by a client that my office was awarded the bid as a result of our reputation for a higher quality product and not that we were the lowest bidder. I have never seen a bid request contain a line for a "pre-estimated value". The only pressure I have experienced during my past 14 months doing commercial work was from a MB. Many engagement letters specifically prohibit discussions with anyone from the lender's production staff and a requirement to contact the lender's POC, who is normally the person who will review the appraisal, should anyone from the production side contact us.

FWIW, most of my assignments are subcontracted to me by an MAI. I have never been pressured to change a value. We do discuss my reports and it is not unusual for changes to occur in the report prior to its certification and delivery to a client. Sometimes these changes occur due to the strength of his argument, sometimes the strength of my argument prevails. I have never signed a report which contained information with which I did not agree.

So sorry for your unfortunate experience. My experiences do not allow me to share your opinions regarding the profession in general. I am sure there are commercial appraisers, even those with designations, who do not "play by the rules." I am not going to condemn an entire licensing category and professional designation because there are bad apples in the basket.

 

[Joker]

I think I may have been asked maybe once for a comp check on commercial property. It just doesn't happen. Like PL said, many clients call and discuss the scenario (the market) in broad terms but they are not expecting a predetermined value and a predetermined value is not an assignment condition.

Mr. Hatch posted while I was typing this post. My experience mirrors his.

 

[Smokey Bear]

I never condemned the whole group! I said this is happening, not everyone's doing it. I think it started when residential started going south and all those wonderful MBs decided the commercial was where the money is. They carried their bad habits with them. And the people just getting into commercial appraising, who didn't have solid clients of their own, were the one's targeted. I wouldn't expect the more established CGs to have the same experience if they've got good clients.

BTW, last commercial call I got, I quoted (with consultation with my CG) and they called back offering $2500 more if I'd guarantee a certain value.

It's happening folks. Whether you're insulated from it or not, it's happening. It's not me that's condemning your profession, it's those doing this and those pretending it doesn't happen. I'm just the messenger.

 

[Scott Lanz]

Pam,

My experience is the same as Mr. Hatch, Mr. Brown and Joker.