The questions provide master-level due diligence for buyers and investors of real estate and help banks understand collateral risk.
Let’s take one typical sentence from a commercial appraisal. Then let’s ask questions. To save space, the questions are presented in one long paragraph with incorrect punctuation Jack Kerouac-style.
I apologize for the “wall of words” but it’s intrinsic to the analytical mind.
One Sentence from an appraisal
“The subject reflects a 75,000 square foot shopping center, 60% occupied, undergoing a $2.0 million renovation.”
Who’s paying for the renovation the landlord or the tenant, is the renovation cost amortized in the rent, is the renovation estimate reasonable, how long will it take to complete the work, is the work permitted, does it displace any tenants affecting revenue, what’s the cost of rent loss, why is the subject only 60% occupied, was the property recently purchased, is the property under contract, is it being improved to sell, is the tenant base local or national, will the renovation create additional vacancy, what’s the cost of lease-up, does the client want the Prospective “Upon Completion” Market Value, is the planned renovation economically feasible (recouped dollar for dollar in the market), any profit, will it allow an increase in rents, will occupancy increase post renovation, what’s the stabilized occupancy, is the 60% occupancy due to the current condition or is the property not professionally managed, is the rent roll accurate or are there undisclosed side deals, how does renovation impact CAM reimbursements and lease rollover dates. I wonder what the reviewer is thinking as we write this sentence?
Lot’s of thoughts from one sentence.
As the appraisal firm owner, what questions do you ask yourself regarding your software tools and processes?
Appraisal firm owner Qs
What old report should I pull up and type over, what report did I use a recent sale of a similar shopping center, have we done a recent shopping center report, I wonder if I should have report writing templates to avoid time-consuming manual edits and old subject bleed-thru errors, do templates really work or is my report going to be canned, wonder if firms that have implemented software are creating quicker better reports, I’ve tried solutions in the past and wasted money, what if my appraisers don’t use it, do I really need a comp database, would a workflow app help me manage bids and due dates better, are my internal reviewers frustrated with the lack of report writing solution, am I overthinking it when it comes to appraisal software, how do I get my appraisers to buy in and actually use the software, what if I fail, I think I’m too busy to have these thoughts, should I just go back to the old copy/paste way?
Appraisal manager Qs
Ok, I’m tired of Kerouac’s spontaneous prose. Let’s enumerate.
As an appraisal manager or chief appraiser, have you ever had somebody ask you, “Hey what’s the number of…?
- Days from Request Submission to Request Acceptance
- Days from Request Acceptance to Vendor Engagement
- Days from Vendor Engagement to Vendor Acceptance
- Days from Vendor Engagement to Report Submission
- Days from Report Received to Assignment of Review
- Days in Disputed Report
- Days from assignment of Review to Review Completion
- Turnaround Time (Request Submission to Request Completion)
- KPI’s and Variance
- SLA Turnaround Time
- Reviews in Process
- Reviews In‐House
- Reviews Vendors
- In‐House Reviewer Turnaround Times
- Vendor Reviewer Turnaround Times
- % Requiring Revision
- Completed Reviews
- vendor Active Licensing
- Vendor Inactive Licensing
- Residential Appraiser Vendors
- Commercial Appraiser Vendors
- Environmental Vendors
- Vendor Grades
Processes and software buys back your time
A poor appraiser doesn’t ask any questions. A good appraiser asks good questions. A great appraiser asks great questions. Consider implementing DataComp Suite at your appraisal firm or YouConnect in your bank appraisal department to give you the time to ask great questions.
Unleash your superpower!