[Alvin “Chip” Wagner III, SRA, IFA, SCRP is third generation appraiser from Chicagoland who is a public figure and well respected within the appraisal industry. Along with his business partner, Bob Headrick, they run the firm Headrick-Wagner Appraisal Group, which has been providing appraisal, consulting and research services throughout the Chicagoland market for more than 35 years. I met both Chip and Bob through RAC (Relocation Appraisers & Consultants). When I met Chip in the late 1990’s we both spoke together at a national conference about our appraisal web sites, both among the first in the country. I have learned a lot from Chip and I am thrilled to use his firm’s market stats on my Matrix blog and post his Chip Shots column on Soapbox. Like me, he has an enthusiasm for market analysis.
In this week’s Chip Shots column, Chip lays out the discipline of relocation appraising, and its within spread (inside joke).
Okay, my recent posts have been negative, my own personal gripes. This week I’m going to talk about relocation appraising, something I love. If you are a “good” appraiser, you should love this type of work too.
I specialize in corporate relocation appraisals. This is a niche in the residential appraisal profession when a corporation or the government transfers one of its home-owning employees. Two appraisals are averaged together to form a buyout offer to purchase the home of a corporate transferee. There is a different definition of value called “Anticipated Sales Price.” The appraiser is asked to provide a prospective value into the future, a reasonable period up to 120 days. The appraiser is asked to provide an as-is value and make market-driven adjustments based upon the decorating and appeal of the home. The appraiser is asked to analyze three competitive listings in addition to closed sales. Pending sales that can be confirmed are encouraged to be used. They are asked to analyze the supply and demand, inventory levels, as well as marketing time (days on market). The appraisal principle of substitution is a key concept especially in the competing listings. “Why would a buyer purchase the property you are appraising for more than its competition?” is a question that is often asked of a relocation appraiser.
In a nutshell, it is the epitome of all residential appraisals. These concepts are not found on the 1004. The main reasons are because of the low tolerance for inaccuracy and cycle times, the fact that a peer appraiser is involved on every assignment, and a specially trained reviewer scrutinizes every last word you write.
Transferring America’s employees has been around since the 1950’s, and is a billion dollar industry for Realtors, appraisers, home inspectors, moving companies, mortgage companies, attorneys, relocation management companies and the corporation’s human resources department.
It is difficult to find your way onto an approved list to do relocation appraisals. Once you find client(s) that entrust you to do relocation appraisals, you better perform and meet their cycle times if you wish for repeat business.
The industry is tight, and clients typically seek out the best of the best. They keep track of your appraised value and what the property eventually sells for, and accuracy is a must to remain on the list.
When accepting and completing a relocation appraisal, you agree to cooperate by answering questions a client may have about your report. Some examples might be: “The other appraiser says the subject has 2 fireplaces, and you only note 1 fireplace. Could you reconfirm?” That is an easy one.
Or another example might be: “Your appraisal and the other appraisal both have a shared comparable, and you state it has a remodeled kitchen and make an adjustment, yet the other appraiser does not mention it.” If you did your research properly, that should be an easy one as well.
Sometimes it is: “could you expound on your Forecasting and Market Change adjustments.” That gets a little bit trickier – especially if the other appraiser does not agree with you.
I like this niche because it is recession proof and keeps me busy throughout the year. When the real estate markets go south, the importance of accurate relocation appraisals goes up.
Many appraisers do not like this type of work because of the frequent communication with the client and mandatory cycle times. Others do not like being measured against a “peer” appraiser’s work (probably because they have quality issues). Others cannot accurately appraise the properly (we are graded on what the home eventually sells for). And others have told me “they take too long to do” (there is a learning curve with the new form and what is expected).
It is definitely more work, as the report has extensive sections for narrative writing, and every appraisal needs three competitive listings and three comparable sales gridded. Photos of every room are needed. An adequate description of the home’s interior condition and dÃ©cor/appeal is required along with suggestions as to what the client may need to do to competitively market the home. The additional work approximately is double the time of accurately completing a URAR, and the fee you charge would also be approximately double.
The volume of this type of work is going to vary from region to region. The major metropolitan areas with corporate presence are likely to have a high volume of job transfers for home-owning employees. The smaller markets may have limited volume of this work.
Many appraisers often ask me how to get into relocation appraising. I was fortunate as I was born into it (literally, my father had been doing this type of work since the middle 1960’s).
My advice is to first join the Worldwide Employee Relocation Council (ERC is the trade association for the relocation industry); take classes if possible (the ERC has an on-line appraisal course); train with an experienced relocation appraiser if possible (most appraisers do not want to train their competition); and make it known that you are available to do this type of work. My biggest referral source is Realtors who are listing these properties often refer appraisers that they know that specialize in relocation appraising).
Getting involved with the ERC will let you know who the clients are that order these types of appraisals. Getting involved includes reading their monthly magazine called Mobility, attending their conferences (they have an annual Spring convention every May), and earning the Certified Relocation Professional (CRPTM) designation from the ERC.