If you are a non-appraiser and tasked with reading and trying to determine the validity of a CRE appraisal report, it can be an intimidating experience. Moreover, while there is no sure way to tell if the values are valid, there are a few telltale signs that should immediately raise a red flag, and you should consider seeking trusted professional advice.
- Poor Maps/Exhibits – Generally speaking if the maps and exhibits in a CRE appraisal report are faded, crooked or they look like they have been taped in with double sided tape, you may be reading a shoddy CRE appraisal. If the appraiser does not care enough to handle the easy part then why should the metrics be any more reliable?
- Outdated Economic Information – If the economic data presented is from 2013, the comparable data is from 2010, and it is now 2018, you just might be reading a shoddy CRE appraisal.
- Lack of Relevant Continuing Education – If the bulk of the continuing education and relevant coursework by the appraiser signing the report is from the 90’s, and it is 2018, the appraiser is resting on his/her laurels, and there is a good chance you may be reading a shoddy CRE appraisal.
- Lack of Website or Social Media Presence – It is 2018, and even the most basic companies care enough to have a reasonable web and social presence. Therefore, if the appraiser signing the report has no web or social media presence, I would not be surprised if you were reading a shoddy CRE appraisal.
- Data is Thin and Comparable Selection Makes No Sense – Like the old adage, junk in, junk out, a report is only as good as the data the valuation is based on. Therefore, if all of the comparable data is clustered around a two-block area 30 miles from the property being appraised, and there is no reasonable explanation, the appraiser is probably just being lazy or is incompetent, and you just may be reading a shoddy CRE appraisal.
- Poor Photo Quality – They say a picture is worth a 1,000 words. If the CRE appraisal you are reading has photos with the appraiser’s finger or the frame of his/her car door in the image he/she does not care enough to get this basic piece right, and you just might be reading a shoddy CRE appraisal.
Walter Duke + Partners has been providing trusted advice to the commercial real estate industry for over 43 years in the Florida market. Our reports are widely relied on by a variety of clients from startups to Fortune 500 companies. Give us a call today at 954-587-2701 to see how Walter Duke + Partners can help you or your clients.