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. John quickly gets annoyed about clients trying to hire hime on the cheap.
Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is,
on Thursdays on Mondays, one of the smartest guys I know. …Jonathan Miller
One of my clients, a major and very active national real estate lender, sends fax solicitations for “bids.” Most recently their bid request forms have been accompanied by the lender’s internal instructions to the appraisal department.
On top of the page, above some very general information about the property (which very often needs to be clarified before a reliable quote can be given) and borrower contact were these instructions:
Engage based on: ___________ Quickest turnaround ___________ Lowest price
I looked high and low but couldn’t find the check box for:
- best quality
- most proficient
- most experienced with this property type, or
- best database
In nearly each instance, both boxes were checked. The instructions to the appraisal department were crystal clear:
Get me an appraisal fast and cheap.
In some cases the property was straightforward; in other instances it was quite complex.
No doubt that loyal Commercial Grade readers will recall a recent post where I discussed the joy of seeing an account officer finally get it, the realization that preparing a good appraisal is not easy, but critical to the underwriting process.
It is clearly going to be a sisyphean task to get the entire lending community to come around.