Appraisers sell confidence
Almost every day, we write, “The purpose of this appraisal is to estimate the “As Is” Market Value of the fee simple interest of the subject property.” Or iterations thereof. But what’s the purpose of your appraisals? It’s selling confidence to your clients. Confidence to make decisions based on your number. It’s a big deal.
Put me in coach
If you look around our valuation industry, you see a gaping absence of leadership. Sure many of us run appraisal firms but we’re too busy to regain enthusiasm, focus and taking in new business knowledge. We replicate what has worked in the past.
Another word for leadership is coaching. Taking the time to manage performance for your appraisers. Clearly state your expectations for your staff. Determine if your people are performing at their highest levels with 360 degree reviews. This includes an evaluation of the owner by your employees. This might hurt your ego, but accepting honest feedback will identify areas of improvement…its invaluable.
Coaching includes internal appraisal reviews with a clear road to improvement, reducing repeat mistakes. Coaching includes listening to your appraisers when they talk to clients and then provide a constructive debrief. Coaching includes appraisal pipeline review, facilitating an increase in transaction value. Coaching includes teaching your staff how to take advantage of opportunities, understand and leverage the sales process.
Remove obstacles. Spend money, lots of money and time on improving appraisal creation processes. The appraisal firms that already have appraisal software solutions feel that they are “done.” No need to look at additional technology, upgrade hardware or keep an eye out for productivity tips. Set it and forget it. This will work for them. At least into the short term. The appraisal firm that lack tools and processes will quickly be up against a wall.
I’ve read the definition of market value 1,000 times
When’s the last time you read your market value definition in your reports? What if the definition was changed to provide productivity tips? We’ve replaced “market value” with a guy named Ted.
Ted’s the most probable appraiser which should bring in a competitive and open market under all conditions requisite to a great appraisal, the client and appraiser each acting prudently and knowledgeably, and assuming the appraisal fee is not affected by undue stimulus. Implicit in this definition is the consummation of an appraisal assignment, as of a specified date and the passing of money from client to Ted under conditions whereby:
1. Engage your clients – keep the conversation going;
2. Build and maintain your company’s reputation;
3. Maintain relevance;
4. Create options by generating more customers and revenue opportunities; and
5. Increase your appraisal fees to test your perceived expert value differential.
We live in a world of distractions. The biggest one is in your pocket. Your cell phone. Constantly pinging you for your attention. Problem is you may react to your phone more than your employees (and clients) that are starving for your attention. Remove roadblocks for your firm, should be a daily activity as owner.
The slippery slope is easy to see, an increase in threshold levels, appraisal exemption in rural areas and temporary waiver requests. Our industry’s response to the politicians is to highlight “safety and soundness and consumer protection.” No vertical wants to become the next segment to be diminished like travel agencies or newspapers. Worse, vanish from the earth like Blockbuster video.
Follow the money
So what will tether the commercial valuation skills to relevancy? It comes down to clearly communicating the importance of our experience, which plays into monetary decisions for financial institutions, investors and market participants in general. We need to answer the question. If you produce a great appraisal, how does it specifically benefit the client? What does that look like?
The No. 1 “purpose of the appraisal” for appraisers is to provide confidence. This confidence facilitates buyers and sellers moving to a successful conclusion. This creates deal flow that in turn generates economic stimulus for many – construction, real estate brokers, furniture companies, IT services, government tax base, yada yada.
US Nareit estimates that the total dollar value of US commercial real estate is about $16 trillion. The challenge is for us to coach internally and market externally. “To bring relevance to people, you have to be able to speak their language effectively.” This quote by Sunday Adelaja gives of some clues as to what we need to do next. Many infrequent users of our appraisal product don’t understand what we really do. They hesitantly ask questions. One gets the sense that we’re unicorns. Not quite real. Not sure if we really exist. Creating hesitation.
As commercial real estate professionals, we need to be seen. We need to show up as experts. Anytime a discussion of commercial real estate valuation comes up, we should be the go-to people. Participate in real estate panel discussions, YouTube videos, quoted (or authored) blogs, books, university curriculum and professional trade channels. What’s the purpose of your appraisal? Confidence.