- Miller Samuel Real Estate Appraisers & Consultants - https://www.millersamuel.com -

June 1, 2018

Rising Waters: Realtor Signs, Cockroach Milk and Plastic Straws

We’re flooded (save that term for later in these notes) with new insights:

[1]

[2]

[1]

So it’s sometimes better to focus what’s immediately in front of you for your own survival as you navigate your way down the path (this is deep).


But I digress…

Flooding the Housing Market

For some reason, this week seemed to see a lot of coverage on the impact of climate change on the housing market and that the Northeastern U.S. was the most vulnerable. We seem to be lousy with water.

“In Boston, we’ve spent a lot of time thinking that these impacts are 20, 30 years down the road,” said Deanna Moran, director of environmental planning at Boston’s Conservation Law Foundation. “The last couple of nor’easters that we’ve had have made it very clear that these storms are here now. They’re happening more frequently. They’re more severe.”


The two economists undertook a door-to-door survey of properties throughout Rhode Island and found that 40 percent of flood zone respondents were “not at all” worried about flooding in the next 10 years, even though the average property in their sample has a one-in-seven chance of flooding annually after just one foot of sea level rise.

[8]

When author Jeff Goodell approached developer Jorge Pérez during a party at the Pérez Art Museum to ask him if sea level rise had changed his approach to building, the chairman and CEO of The Related Group replied: “In 20 or 30 years, someone is going to find a solution for this. Besides, by that time, I’ll be dead, so what does it matter?” A few years ago I moderated the main panel at ULI Miami and asked about the impact of climate change and got a similar shrug. It looks like awareness of the adverse impact of it on the U.S. housing stock has only recently become a front-burner concern.

For the 1/3 of Americans that don’t believe in climate change, consider going on vacation to South Beach in Miami or Norfolk, VA at high tide when it is raining. You’d be surprised how much flooding is occurring on a daily basis that wasn’t happening a decade ago. Whatever the cause, housing development has to consider it as the consumer becomes more and more aware of it.

Walkup Apartments Have Built-in Health Clubs

There was a good Wall Street Journal piece this week: Step by Step, New York City Walk-Ups Climb the Price Ladder [10]. In the appraisal of walk-up apartments throughout my career, I have always marveled at those who live on the fifth floor (and a few 6th floors) of a building without an elevator. Just imagine the scenario where you bought groceries for dinner and forgot the avocados (this is a hipster tale) so you trudged downstairs to the corner store to retrieve the avocados. When you arrive back to the apartment, a little out of breath, you realize you don’t have enough wine so you turn around and trudge back downstairs….

On the bright side, you will become super organized and heavily dependent on “to do” lists. I suspect you’ll love the solitude and the greater natural light that a lower floor apartment might not enjoy.

[11]

If the above photo looks familiar, its because these twin tenements located at 96 and 98 St. Mark’s Place between First Avenue and Avenue A in Manhattan graced the cover of Led Zeppelin’s Physical Graffiti [12] album in 1975 (the first record I ever purchased).

In our research, we find that a lowrise building with an elevator sees roughly a 1% or possibly 2% rise in value per floor above the second floor with a much large jump from the first floor to the second floor. However, the floor level premium is reversed in a walk-up building and the per floor level adjustment is much larger than in an elevator building. We generally see value changes as much as 5% to 10% per floor in a walk-up. There are a number of types of walk-ups. Here are some blog posts I wrote about floor levels a while ago that were turned into infographics by various publications – click on the graphics for the posts and more links.

[13]

The Real Deal New York
[14]

Appraiserville

The Term “Appraisals” Bleeds Into The Term “Evaluations”

One of the reasons the appraisal industry has been so upset with our former industry leader, The Appraisal Institute, is that they don’t realize that they are destroying the meaning of the word “appraisal” by championing lower cost alternatives to appraisals, that actually are appraisals. It’s the organization’s tragic flaw and why they are now essentially irrelevant. Hopefully, that will change but its really up to the residential and commercial membership to champion new leadership.

But I digress…

This is why:

Here’s an “evaluation” product that is ordered as a “new appraisal assignment” for a lowball fee. The appraiser had two hours to respond and then it rolls over to the next appraiser on their list. Robo-ordering these evaluations to hundreds on an approved list is what the Appraisal Institute has helped make possible. Think about that.

Then think about your time. If the going rate for an appraisal in your area is $450 and you are willing to do an evaluation that perhaps takes half the time (just guessing and assume you are ethical) yet retains all the liability, is a fee reduced by 83.33% worthy of your hard earned years of expertise? Are you really just a form filler or are you a valuation expert?

It’s Been More Than 9 Months: How Is The Search For New Appraisal Institute CEO Going?

On August 24th, AI’s CEO Frank Grubbe resigned overnight [15] without warning. It was announced then that second-time AI president Jim Amorin was to fill in as acting CEO until December 31, 2017. That date has come and gone without any notice to members as to the status of the search through their newsletters, website or emails that I am aware of. So much for transparency. It was widely held that once Grubbe had left the organization, the toxic culture he had either caused, enabled or allowed would subside.

No evidence yet.

AI used the executive search firm Tryon & Heideman LLC [16] to find a replacement. At no time was an application filing deadline shared with the public on either the executive search site or the AI site that I can find.

I’m not a member of the Appraisal Institute [17] but a few members I asked have reached out to have scoured the site and don’t see any information about it, not even a landing page. A little over a week ago, the Appraisal Institute removed mention of the search for the position from the home page. Since no deadline date was presented on the AI site, I can only assume that removal of the announcement from their home page was an indication that the search has ended.

Let’s recap:

(Hey, how’s that residential committee doing?)

It is time for the AI membership to hold leadership accountable (you know, the group I’m told that regularly flies first class with their wives all over the world to attend valuation conferences and don’t share what they learn with the membership).

You need to contact your local chapters and put pressure on Chicago leadership to actually attempt to be transparent. If you don’t this organization will never recover, let alone survive, from its current state of irrelevance.

Appraiser “Accounts Receivables” Alert: CoesterVMS One Step Closer to Death?

Coester Chronicles Continued…

On May 25, 2018, Myriddian LLC filed a “Confessed Judgement” request against CoesterVMS.com Inc. Yesterday (May 31, 2018) the Baltimore County Circuit Court granted the “Order of Confessed Judgement [18].” Myriddian LLC [19] is owned as a sole proprietorship and functions as a government contractor. The owner is Merlynn Carson, daugher-in-law of Ben Carson [20], current HUD secretary. This action, based on the earlier legal link, might be interpreted to mean that the creditor filed on behalf of the debtor to shortcut a lengthy litigation process.

Here’s a screenshot of the details.

[21]

And an explanation found on AppraisersForum.com:

[22]

This series of actions does make me wonder if CoesterVMS borrowed a lot of money from the Carson family and then defaulted. Given Carson’s proximity to the HUD cabinet secretary, this seems big league and ominous for the future of CoesterVMS, a notorious AMC. Appraisers who continue to work for them, despite all the available information about this AMC, that remain insistent on working for them: You’ve been warned.

Note: It’s not how much revenue you make as an appraiser that counts, it is how much you get paid. Over my career, I’ve always been amazed at how many in our profession seem to forget this basic rule of survival.

Brilliant Idea #1

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Brilliant Idea #2

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See you next week.

Jonathan Miller, CRP, CRE
President/CEO
Miller Samuel Inc. [24]
Real Estate Appraisers & Consultants
Matrix Blog [25] @jonathanmiller

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