The Dream Commercial Appraisal

[Austin]

What would you consider “The” dream appraisal scenario? I think I found it this week. I appraised the corporate headquarters of one of the largest commercial real estate developers in the region. The complex consisted of over 15,000 square feet of executive office space and about 30,000 sf of warehouse/shop attached. This company builds and owns Malls, hotels, restaurants, office buildings, etc., all over the region.
I met with the president and he gave me a package of information. His building estimator gave me the replacement costs of all of the improvements; he gave me a summary of every commercial land sale for the last 8 years in the commercial district in which the complex was located, the client being the seller; he gave me all of their rates and ratios on land and buildings etc.; they gave me rental rates for office buildings along with square foot rates for utilities, cams, janitorial, insurance, you name it. He took the land sales one at the time and told me which ones were arms length and which ones were not and why. They gave me leases and told me which ones were at market and which ones were sweet heart deals and why. They gave me the range of rental rates for everything from warehouse to office buildings for the entire state. They gave me the run down on the trend for every imaginable expense item. Anything I needed, just give them a call. They ask-how many comparable sales do you need?
I thought-how should I verify this data since the primary source of commercial data in this region is this client? I could have done this job free and come out ahead.

 

[Steve Owen]

Good deal. But, I don't think I would have done it for free.

 

[Paul Ness MAI]

Keep an objective eye, don't let them steer you, and verify the sales data independently.

 

[Austin]

Paul: Actually, I already had all of the land sale data from another source. The client was even nice enough to tell me which ones were arms length and which ones were not. That raises an interesting question: How do you veryify sale data when the source of your data is the primary data source for commercial property in the region?
About six months ago I was in the tax assessor's office and the head assessor called me back into his office and gave me the latest large commercial tract sale in the largest new commercial sudivision in the city. He was using this sale as the basis of assessing vacant tracts in the same new commercial subdivision. The client (devekoper if the commercial suvdivision) told me this sale was not arms length, that he sold it far below market because it was an anchor operation that would increase the value of the other vacant commercial tracts. The moral of the story is, if you don't have some inside information you can really screw up. That is another reason I use regression methods with many comparable sales. If one is out of line, you can see it.
I did three appraisals for this company involving four leases, none of which were at market rent due to inter related business operations. Every thing they told me was right out of the book.

 

[Paul Ness MAI]

Right on! (I'm giving away my age there) and I agree that regression can be a great tool for the appraiser if understood and used properly.

 

[Terrel L. Shields]

How would you like to appraise Wal-Mart's Headquarters in Bentonville, AR? I saw that a few years ago serving on the board of equalization. The report was about 4" thick prepared by a team of appraisers who basically broke the Whitewater / Casa Grande Deals for the RTC that sent Webb Hubbell, the McDougals, Gov. J. G. Tucker, and an appraiser named Palmer to the pokey.

Ter