New Exposure Draft

[Michigan CG]

You don't think a couple night classes would prepare someone enough to set up shop as a commercial appraiser in your area? There will be some case studies discussed in the classes.

Heavens no. There are so many aspects of commercial to learn. Commercial is basically divided into a few categories:

-Office
-Retail
-Industrial
-Land
-Agriculture

One has to know how, when applicable, to write a five-page cost approach or a five-page income approach. Highest and Best Use sections are generally 3-4 pages at a minimum.

I spent about six years with my MAI mentor and we did 90% commercial work and there are many property types I won't do because I don't feel qualified. Industrial properties are something I will rarely touch unless they are small. Appraising a 1,000,000 industrial property, I wouldn't do it.

I am from Iowa and have appraised a lot of farms. I won't touch a dairy operation or a chicken operation because I have no clue how to do it.

A person in our state got in trouble with the board because they appraised a motel and didn't know what REVPAR was.

When appraising an auto dealership one has to know that road frontage is one of the most important things to those dealers.

Marinas are appraised by the slip (not the dock).

Gross leases vs. net leases vs. modified gross leases, etc.

Shopping malls are many times valued by their in-line sales.

Concrete thickness can come into play when doing commercial.

Parking spaces, spaces per 1,000 SF of GBA, land to building ratios, allowable GBA on land, surplus vs excess land can be tough sometimes. Finding average daily traffic counts is sometimes very important.

Single tenant buildings vs. multi-tenant buildings; thee are so many things to learn.

A commercial cost approach class is four or five days long (I forget). There are two income classes that are five to six days long. In one of my income classes there were two people crying when they took the test.

I could go on and on and on.

A person who wants to be good at commercial needs at least three years of training under a very competent CG.

 

[Meandering]

And that's the basic stuff.

Get into, the value of the right to put up a billboard, where no billboard exists, but the municipality wants to prevent one from going up.

How about the value of the declarant rights that became infringed by an HOA and prevented a planned small commercial operation at the front entrance of a PUD.

Or even the easier stuff like the value of the landscaping retail center where exterior retail space per square foot is different than the interior retail space per square foot, and you must consider shading over the exterior space.

Land to building ratios - minus needed customer and employee parking - minus zoning mandated "green" landscaping spaces.

Or the value of the railroad right of way that has been de-iced for decades with slag, which is a heavy metal - toxic and is now a brown field we want to turn into a hiking trail and bicycle path.

The valuation of acres of wetlands to be purchased or condemned, if the owner can be talked into just selling it without wanting to.

Anything with timber rights that is not suitable for residential construction.

The REO golf course.

And its' sister - the tax delinquent gated PUD with a different golf course.

CG is not something you want to attempt without a mentor. I don't care how many case studies they can imagine.

.

 

[Non Sequitur]

Pages 14-17 examine the possible elimination of time requirements, hours reduction and alternative experience options, but the draft does not eliminate experience hours altogether. Am I missing something? (If I am, it wouldn't be the first time. )

See post #21.

 

[Highlander416]

See post #21.

See post #21.

I also find it interesting that the state appraisal boards would be asked to act as a mentor to those who choose the alternate path. I wonder how the states will feel about that?

 

[J Grant]

I doubt a res appraiser who transitions to commercial would feel they can appraise any and every kind of commercial property. (if they did they'd rapidly find themselves in trouble. ) I think res appraisers are well informed enough about property types to stick to one or two types they could handle comfortably and partner with a st gen on anything more complex. I do agree that having a mentor and training under a st gen is preferable. Will be interesting if this proposal passes to watch all the changes take place. I don't agree with much of the proposal but I also feel their request for comments is window dressing and they will go ahead with this as written.

 

[sandpiperapp]

I don't agree with much of the proposal but I also feel their request for comments is window dressing and they will go ahead with this as written.

I sent in a comment, but I think you are right.

 

[Highlander416]

I doubt a res appraiser who transitions to commercial would feel they can appraise any and every kind of commercial property. (if they did they'd rapidly find themselves in trouble. ) I think res appraisers are well informed enough about property types to stick to one or two types they could handle comfortably and partner with a st gen on anything more complex. I do agree that having a mentor and training under a st gen is preferable. Will be interesting if this proposal passes to watch all the changes take place. I don't agree with much of the proposal but I also feel their request for comments is window dressing and they will go ahead with this as written.

After some thought, I believe this proposal is simply a way to eliminate the trainee license. I know that path will still exist, but very few will take it.

Here is what I am thinking. The AMC business is moving toward the staff appraiser model. But, it is hard to get certified appraisers to work for them under this model. The pay is often low, and after working in that capacity for a while, you end up with all your eggs in one basket. Things slow down, you get laid off, and have no other clients. It is a tough sell. I know many do well at it, but must of us would rather take our chances on our own.

The AMC does not want to hire trainees. Clients want a Cert to inspect the properties. But, you can't hire a ton of trainee staff and have a cert go on all these inspections. What is the solution? A little "razzle dazzle" and all those folks who would normally be trainees collecting experience hours are now certified and can inspect on their own. This allows for the AMC to send them out. Their appraisal staff can review their work as it comes in and "mentor" them to some degree. I am betting the compensation will be very low for these positions. I imagine the turnover would be sky high, but then it is in the trainee process as well. I know some will wonder why they just don't start accepting solo trainee inspections. I think they also want the solo signature. No supervisor license in that state required.

 

[Michigan CG]

I think res appraisers are well informed enough about property types to stick to one or two types they could handle comfortably and partner with a st gen on anything more complex.

Well then what is the point? One or two types of properties would not put food on the table.

Partnering up? That is not how it works. If I get an assignment that I would need to partner up on then I don't take it and refer it to someone who I know can do the job.

 

[J Grant]

I can't speak for everybody, but for many res appraisers the option of even appraising a couple of types of commercial properties would be an added income stream, a foot in the door for other clients. They could continue to do res work and depending on how ambitious they are, expand their commercial skills or stick with a limited property commercial practice.

When will these changes take place? I assume it's a done deal and that the ABB has no intention of changing because of appraisers' comments.

 

[Meandering]

What is your thinking here J?

That a CR could appraise houses and gas stations, maybe small retail, but will freak out when their client says appraise the bowling alley?

Commercial work is nothing like residential work, concerning clients and "property types". Consider that learning to appraise individual rights of the fee simple for both divided and undivided interests is just too much to learn in a classroom with no real world experience. Because commercial work may be the sale of gas station today, the buyout of the gas station partnership tomorrow, the projected value if a car wash is added to the gas station, the impact of road widening on the value of the gas station, The value of the gas station that fills the boats in the harbor and does not service cars, and on, and on, and on. so, choosing a property type just doesn't jive in the real world either.