Commercial comp checks?

[The Dog]

The reason I went CG and the reason I love commercial work is because we don't have to put up with the BS. My loans I am appraising for are being held by the banks in portfolio. The ABSOLUTELY want the correct value as they do not intend to become property owners and property managers.

On top of that, the LO's I deal with are smart enough and have been in the business long enough that they can smell a "funky" loan from a distance. Maybe it is an advantage to work in a small city vs large city.

I have in over 20 years never been asked for a comp check on commercial property. In my area, talking to other commercial appraiser, I know of none that has been asked to do anything unethical. Some are MAI, some are not, but all are treated the same.

As far as hiring "Skippies", personally I have no need for that. The fees I receive are more than adequate that during the times I need help, I can afford to hire qualified appraisers. Most of those hires are retired CG that sometimes want to augment some of the retirement funds they have.

 

[George Hatch]

Don't get me wrong. I completely agree that there are clients on the commercial side who will ask and there are individual appraisers and entire fee shops that will participate. I've lost a few clients to those appraisers and it's cost me money. However, I don't get too upset about it because there are enough clients out there who really do need a decent appraisal to keep me in rice and beans.

The funky clients and the funky appraisers are - even now - reaping what they've sown. I consider myself ahead of the game as a result of not having any reports with those clients because of the guilt-by-association thing that comprises our reputations.

Water seeks its own level. This is even more true when there is a little equilibrium in the supply/demand dynamic.

I learned a long time ago that a good appraiser-client relationship comes as a result of both sides having similar goals and points of reference. No matter how good the fee is, a high maintenance client (either by mismatched ethics or quality) isn't worth chasing. The idiot appraisers can keep the idiot clients because it means less competition for me with the clients I want. Really, the same holds true for those clients who are completely anal or who believe in measuring quality primarily by weight. Contrary to what some of you might think from reading my posts here, reports by volume aren't my thing either.

I put bids out for assignments all the time that I don't get, either because of fee or turn time. I don't take that personally. Frankly, if I got every bid I put out I'd be way too busy to perform. It would tell me I'm working way too cheaply, too. As long as I don't get greedy and try to base a business off of the spikes in volume rather than the long term demand I'll never get overextended on my overhead. I've been through an RE bust before and I learned a long time ago that controlling my overhead is crucial. For me, anyways.

Lots better for me to rely mostly on a half dozen regular clients with generally similar expectations than to be chasing individual fees from 30 different clients a year. Alls I have to worry about are mergers and acquisitions.

 

[Kali the Boston Terrier]

I have had maybe a dozen or so "comp check" calls over the years, I usually have fun with them. Generally because they are residential LO, have never done a commercial loan, and will likely have a heart attack at my fee. That being said one observation about this thread is it seems like there is a complete disconnect between residential and commercial appraisers, and unfortunately it seems that the residential folks are trying to paint the commercial world with their brush. Although silly comp checks happen, and MAIs can run a sweat shop, they are by far not the norm and really the far out exception.

In regards to PL's statement, I often have conservations about the market, recent transactions, vacancy, absorption, lease activity with clients...prior, during and after an assignment. Unlike residential appraisers which is a fairly homogenous product, a commercial appraiser that specializes in ROW appraisals or easements may not have enough knowledge to appraise an investment grade office building or stamping plant. A client that does not interview that appraiser prior to retaining them, without asking basic market questions to see for compentency and market knowledge may hire the wrong person. Its one thing when you are talking about a $200k house its a whole different story when you talking about a $200 million office building. I seriously doubt a client would hire that appraiser for the $200 million office based on a discussion of comparable sales...thats laughable. I have never ever bid on a project when the value was even mentioned...and I often get jobs as the high bidder becauise of quality, not for anything else.

Please remember this is not residential appraising, being an appraiser in both disciplines I can tell you they are not the same...by a long shot, and please tell me where having a discussion about market trends is a violation of USPAP.

 

[JT1974]

I have worked for three MAI's over the past 7 1/2 years and have never been asked to do a comp check. I have had discussions regarding market trends much like PL1957 stated earlier. However, that kind of discussion is FAR from being what is commonly referred to as a "comp check".

I also take exception to Smokey Bear smearing some un-named MAI in her post. If indeed a designated MAI was doing anything unethical, Cynthia should have documented it and reported it to the Appraisal Institute ethics committee so that member could be disciplined or even stripped of their designation. However, to come here in a public forum and throw out a bunch of vague accusations against some "boogeyman" MAI appears to be nothing more than the latest attempt to smear the Appraisal Institute.

One last word of advice for those commercial appraisers who get comp check requests...........find new clients.

 

[Smokey Bear]

I also take exception to Smokey Bear smearing some un-named MAI in her post. If indeed a designated MAI was doing anything unethical, Cynthia should have documented it and reported it to the Appraisal Institute ethics committee so that member could be disciplined or even stripped of their designation. However, to come here in a public forum and throw out a bunch of vague accusations against some "boogeyman" MAI appears to be nothing more than the latest attempt to smear the Appraisal Institute.

So - keep it hush hush and let the AI sweep it under the rug? Why should an MAI get special treatment? And what was vague about what I said he did? AI folks seem so touchy and arrogant at the same time, maybe that's how a simple statement about what 1 MAI did turns into a smear campaign?

I'm amazed at the people who have intentionally turned a few statements about a few people into personal attacks on them, all CGs, all MAIs and all commercial appraisal. Seems like a huge overreaction. Maybe you all have been happy with the mud slinging in residential but want to maintain the myth of purity and excellence in the commercial field. Time to wake up folks, ignoring the problem doesn't make it go away.

 

[Ken B]

Your first post was quite vague and generally inclusive of CGs, MAIs, and commercial trainees. You relayed your personal experience and tried to back it up with someone else's proported experience. Others have relayed that this was not their experience, yet they did not deny such actions exist.

And now you make offensive statements regarding members of AI's Peer Review program and their inferred lack of ethics.

Who is being touchy and arrogant? Arrogance seems to know no bounds outside of this sub-forum which has, to this point, been generally insulated from the "mud-slinging" and simple ignorance prevalent on the other sub-forums.

I would recommend that a moderator move this thread to the Improving The Profession sub-forum as it is not a discussion of Commercial/Industrial appraisal topics.

 

[George Hatch]

This was the original question:

A couple MB over at BrokerOutpost have mentioned getting 'comp checks' on commercial properties from CB Richard Ellis. Can any of you CGs tell us what's really going on there?

PL1957 is familiar with the company in question and provided an answer, portions of which were disputed. Others involved in this end of the business stuck our $.02 in.

There seems to be some genuine disagreement as to how widespread a problem it is. The appraisers who are well-established in this side of the business are seeing one thing and some of the appraisers on the fringes are seeing something different. That's not really so different than the different viewpoints you'd get from asking the same question of staff appraisers vs. fee appraisers working for mortgage brokers - there are two very different types of clients involved, and there is where lies the difference in experiences.



The only other thing I'll add to this discussion at this point is that if there is a big problem with "commercial comp checks", it is the appraisers involved who are driving that bus because most of the rest of us have no problems avoiding it. Unlike the residential side of the business we are in no position to blame it all on the lenders and bad habits of those who have gone before us because even now it isn't that pervasive.

That's not to say that the commercial end of the business is without its problems because that would also be completely untrue. Everyone knows that we also have some real problem children amongst us who are doing very serious damage. It's just that the mechanisim of choice amongst commercial clients isn't the comp check with the contingent fee. They're a little more subtle about it. They just order another appraisal and take their repeat business elsewhere. Same result - different mechanism.

 

[Vernon Martin]

I've had a few requests for commercial comp checks. If it is a simple property type in an active market, I just send them comps. If it's more complicated, like a water park, I just tell them that they'll have to order an appraisal.

I think comp checking at the commercial level is not abused nearly as much as is done in the residential industry.

 

[Mountain Man]

The only single time I've had a commerical comp check request was from an ex-residential loan shark who turned "commercial" loan shark. The dumb ax was even trying to use a residential loan app for a 6 tenant shopping center.

 

[Fred]

I didn't realize that USPAP is different for Commercial real estate than for Residential...

I think you know it's not any different. Comp checks are permitted for both, and business appraisers, and personal property appraisers.