"Just for my files"

[Glock27]

I just need to hear what I think I know. Local bank, my best customer sent over a commercial appraisal. Video store, 2 rental properties and house all on one lot. (House and rental no problem). This is in a town of less than 1000 in a county where most of the population base is 20 miles away. (County only has 15000 population.) Going to keep the loan inhouse and wants it CHEAP!! Says just get me something on letter head to CMA. (Cover MY A**) and just for my files. I know I have to have all the documents in file, but even with everything in file can I do this???
Also last commercial sale was probably 5-7 years ago in this town.
Thanks in advance,
Tony

 

[Eminent Domain]

Oh Yeah "Cover Their A**"

What happens when their audited. Who "Covers Your A**".

Nobody!!!!! Its your baby.

I'm in the same situation here - small town and everybody wants it cheap. When the termite man has been here, or the carpet man, or the surveyor, etc. my billfold knows they've been here, but when it comes to the appraiser we are the necessary evil. I usually lose these to the appraisers who will do a cost approach only on commercial property for $500. I'm unwilling to take the chance.

 

[Mountain Man]

Limited-Restricted is about the cheapest you can get, but it still will end up being at least 10-15 pages of the bare, bones stuff. You must have an engagement letter requesting a limited-restricted, and what approaches they want. But like Bryan, I charge a bit more than $500. :roll:

 

[Terrel L. Shields]

Whatcha bet, the bank examiners have checked this mortgage file and found no appraisal..They got wrote up. Next time it will be written reprimand...They will ante by that time.

Got some J-A mortgage officer from Little Rock call me today. Wanted me to appraise a 150 ac. dairy farm which lies between the new regional airport and a golf course and next to the proposed Airport Toll Road bypass. Wants it this week and like to fainted when I quoted what I would consider a low fee. I referred him to an MAI I know charges double my fees.

I refuse to do any commercial property for less than a full fee...most comps are used once, maybe twice in 3 years. Commercial land sales in small towns are near impossible to find. I will get fair compensation or I won't do it.

ter

 

[Paul Ness MAI]

Nothing wrong with doing a limited-restricted appraisal. As someone else said, get an engagement letter spelling out the type of appraisal and approaches(s) agreed to.

Hard to say why they want a cheap CYA appraisal. There could be many reasons. It happens here at my bank all the time. Could be as someone else said, that they never had an appraisal done. Could be that the loan amount is under $250,000, but given the market as you described it, they still want an appraisal in file. Could be a line of credit renewal with no new money being advanced, but the last appraisal was done three years ago and the borrower's financial's are deteriorating. Could be a distressed situation with the borrower in trouble and the loan is heading into nonaccrual.

 

[Terrel L. Shields]

I'm still willing to bet it relates to having a bank examiner write 'em up.

I find that if you do el cheapo reports, it comes back to haunt you. Like 6 years later it could haunt you like the lawsuit I am in. It has been so long that if my report was not pretty detailed, I would be in a pickle trying to reconstruct my work so I can defend it. After all it was over 5 years and I had purged the file earlier this year because I re-appraised the property for the new owner after foreclosure. Certain things I did bring forward and leave in the current file folder.

Once you do a cheapie, raising your prices are a nightmare. And as for report writing, I find it no biggie to write a narrative, with templates I can complete a 40 page summary report in about 2 hours if all the info is in front of me. I don't find many appraisers who are as proficient with their word processor as they are with a form report. My narrtives are broken into small templates and merge documents. My tables calculate M & S and Boeckh cost data from their books. Plug in the numbers and away we go...in fact on several of my grids it automatically calculates the mean and standard deviation.

I feel like I earned my fee for the research and the reasoning I apply and a complete summary and a complete restricted report are one and the same for time in my book.

The problem is that a commercial appraisal is seen as a compliance document...CYA and not as a useful tool to assess the value and quality of a bank customers asset. It could be a comic book as far as the loan officer is concerned so long as the examiners do no more than pick it up, double check to see that the loan amount is lower than the appraised value and put it back in its folder.