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 John opted to talk about how the proliferation of data has changed the appraiser’s role to an analyst (without the couch).
Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is, on Thursday afternoons, one of the smartest guys I know. …Jonathan Miller
In their book Freakonomics, Steven Levitt and Stephen Dubner point out that Information is the currency of the internetit has vastly shrunk the gap between the experts and the public.
This is true. Information is everywhere, and the appraiser’s challenge has evolved into sifting through the volumes of data available on the Internet, rather than finding it in the first place. The Internet has enabled the solo practitioner working out of his/her kitchen the same tools as the national firms with extensive market research departments.
With information so readily available, clients no longer put much of a premium on it. The usual retort to my (incessant) complaints about the declining fees for our services is that, with the Internet, we can research markets much quicker and, therefore, deliver an appraisal more efficiently.
However, I have never viewed my role so much as a purveyor of market data, but rather as a real estate analyst. In the valuation class I teach at NYU, I introduce the above pie chart to illustrate what appraisal typically consists of.
Yes, you need good market data to begin with, but that’s only a portion of what we do. The real value of a good appraiser is the proper analysis of that data and effectively communicating the property’s risk factors to the client.