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 art of appraisal review.
Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is, on Thursdays, one of the smartest guys I know. …Jonathan Miller
I used to wear the bank review appraiser’s hat. I spent my days pouring over appraisal reports prepared by the bank’s external consultants (remember they are not vendors) and if something was wrong, or unclear, or illogical..or if I just didn’t agreeI would pick up the phone to discuss it.
Reviewing the work prepared by a peer is not easy, particularly if you believe something should be changed. As a banker you need to be careful not to exert influence on the appraisal, at the same time that you’re trying to get the appraiser to see things your way. This is a skill, quite unlike the skills required by a fee appraiser. You need to be tactful, and diplomatic. (talking down to the appraiser who prepared the report as if he was a moron is probably not the best approach).
Having been there, I often cringe at the poor bedside manners of some bank reviewers. So to those who need a little polishing I offer these tips:
- Start with something positivesurely there was something that you liked about the reportthe pictures?
- Be open-mindedrecognize that there may be more than one way to solve the “appraisal problem”this is part art, remember?
- Acknowledge the effort that has already gone into the appraisal, and that whatever you are asking for will take even more time.
- Differentiate between a major valuation issue and a small compliance issue. (Say something like”I know this is minor, but the regulators have told us”)
- Don’t expect the appraiser to remember all of the details of the appraisal that you’ve had on your desk for four weeks as soon as you get him/her on the phone. Agree on when the appraiser will get back to you with answers.
- Most importantly..be pleasant! Remember, you attract more flies with honey than with vinegar (..or something like that!)
[OMG, did he really use that honey/vinegar quote? -ed]