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 talks about the wide disparity between residential and commercial valuation disciplines.

Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is, on Thursdays on Fridays, one of the smartest guys I know. …Jonathan Miller

Although there are a number of appraisers who make their living appraising both residential and commercial property, for the most part the field is broken down into either residential appraisers and commercial appraisers.

Having been affiliated with a residential appraisal firm for a number of years now, I have seen first-hand how stark the differences are between these two fields. There is overlap, of course, but in my opinion, the residential and commercial appraisal fields ate so different that I think the profession would be better served if there were different organizations representing their respective interests.

The Appraisal Institute does bestow the SRA designation on residential appraisers and the MAI on commercial; state licensing boards do distinguish between general certification and licenses. But still, the distinction between the groups tends to be blurred; for example, courses tend to be geared towards one group or another and lobbying efforts tend to primarily serve one group more than the other.

I am not saying that one field is better than the other, or even harder, just different.; different with respect to:

  • The skills required to excel (commercial folks do much more writing, for example)
  • The day to day work environment (residential folks tend to be out and about much more)
  • Relevant continuing education
  • The impact of technology (commercial folks aren’t threatened by AVM’s; most don’t know what it stands for!)
  • The type of clientele
  • The source of “client pressure”
  • The future of the profession

just to name a few off the top of my head.

I can cash flow model all day long, but don’t ask me what’s an appropriate adjustment for a fireplace.

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