Commercial Grade is a weekly post by John Cicero, MAI who provides commentary on issues affecting real estate appraisers, with specific focus on commercial valuation. Today he gets a few forms off his chest.
Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is, on Thursdays, one of the smartest guys I know. …Jonathan Miller
The residential appraisers are used to form-filling (no, I am not calling you a bunch of form-fillers!) [but most residential appraisers really are -ed]. But you spend your days with the 1050’s, 1040’s, or whatever they’re called. We commercial guys, however are more abstract thinkersthat’s probably why we get so bent out of shape when, after completing a 90 page written report, we then need to complete the client’s form.
One major lender (one of the most “fee sensitive I might add”) requires three forms: one summary of the entire appraisal, another to forewarn of “environmental” issues (“did we observe any paints or solvents at the time of inspection?”) and then lastly to “risk rate” the property (e.g., give a score for “tenant appeal within the local market”). I honestly have no idea what kind of liability I’m accepting when I fill out these formsdoes the lender use the appraiser’s inspection in lieu of a phase 1 environmental audit?
My favorite form is the most common among lenders…the one that requires the appraiser to check off and identify by page number such things as:
- “Interest appraised is identified” (yes___ no___ page no. ____).
- Appropriate support for value via income approach (yes___ no___ page no.____).
I’ve always wanted to knowDoes anyone really check off “NO” for that?
The forms are, in my opinion, one of the feeblest and most futile attempts to improve appraiser quality. To me, and of course I am biased, they are a colossal waste of timeand not just a little demeaning.
Heyyou knowit feels really good to get this stuff off my chest!