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A few years ago Bloomberg created indices for the Manhattan Luxury Housing market based on our data to be seen by their terminal subscribers. Cool to have an index based on our research (and a project triggered by our report efforts).
The top 10% of the market (Luxury) is hovering at just over $2,000 per square foot for the past year [top chart]. Median sales price has remained just above $4M for the past 3 years [bottom chart].
Tags: Bloomberg News, Miller Cicero
It’s officially been a decade since we launched our commercial valuation affiliate Miller Cicero, LLC and it’s been a great run so far. In appraiser years, it actually feels longer than a decade.
Our partner and co-founder in this commercial venture, John Cicero, MAI, CRE, FRICS with nearly 3 decades of valuation experience, runs the firm. Besides being a good friend and especially because he thinks I have a good sense of humor, is still one of the smartest guys I know in commercial valuation. He’s got a great executive team and staff providing commercial valuation expertise throughout the NYC metro area.
The commercial real estate world is a mess right now and Miller Cicero provides reliable neutral valuation insight to it’s clients. Give John a call.
Tags: Miller Cicero
Last week the appraisal community was up in arms about a $55 “appraisal” product that was an appraisal but no self-respecting appraiser could complete the report completely, be USPAP compliant and still make a meager living. The consensus is that it will attract shysters and promote short cuts. There is a rabid discussion forum on this topic right now on LinkedIn if you are a member of the group.
A new product by First American has now appeared which is explained in technicolor by Tyler King, our resident Phish fan and hipster over at Commercial Grade called an AVPO:
So to recap: The (licensed) appraiser looks at a set of comps, from these comps logical adjustments are made, and the appraiser formulates a value opinion. Yes…I see…that sounds nothing like an appraisal.
aside: First American owns eAppraisIT, who’s slogan on their web site, incredibly, is “Redefining Value.” For those who may have forgotten, NYS AG Andrew Cuomo filed suit against eAppraisIT back in 2007 for conspiring with Washington Mutual to inflate real estate appraisals.
First American claims “this is not an appraisal” to which the Appraisal Foundation replies:
While it is not within our purview to determine whether any particular product or service complies with USPAP, we can tell you that, as far as USPAP is concerned, the product appears to qualify as an appraisal or an appraisal review assignment. The press release states, in part:
“While this is not an appraisal, a licensed appraiser confirms the specific set of values determined by a local Realtor® by looking at comparable sales and verifying accuracy. If discrepancies are found, the appraiser provides a new set of values, complete with an explanation of how they were determined.”
If an appraiser is required to comply with USPAP (such as a licensed appraiser in a state that mandates such compliance), the above product would have to comply with STANDARDS 1 and 2, or STANDARD 3.
Best regards,
John S. Brenan
Director of Research and Technical Issues
The Appraisal Foundation
www.appraisalfoundation.org
(202) 624-3044
Tags: Appraisal Institute, Miller Cicero, NAR, National Association of Realtors
One of the mysteries of the recent credit boom was the way very smart people made decisions that they now regret. Hugh Kelly and I in our latest podcast agreed that “you do the math” simply wasn’t enough. Knowledge of rent regulation intentions was imperative.
Rental office site for Stuyvesant Town/Peter Cooper Village
One of the largest examples of the credit disconnect and the moment I realized the credit bubble had peaked was the moment I heard that the price paid for Stuyvesant Town/Peter Cooper Village was $5.4B a few years ago.
A recent ruling on rents may have been the last straw.
My commercial partner John Cicero in our Miller Cicero commercial valuation concern lays this out plain as day in his Commercial Grade blog extolling the virtues of an excellent white paper by Barbara Byrne Denham, Chief Economist of Eastern Consolidated Properties.
Here’s a great blog on the building complex.
Tags: Miller Cicero
For the past several years, John Cicero, my partner in our commercial appraisal venture Miller Cicero (hands down the best commercial appraisal firm in the NYC metro area), has been laboring in fits and starts to convey his views on commercial real estate valuation in the public domain.
Largely because Miller Cicero is humming on all cylinders…
At first John’s efforts were a regular column on my former Soapbox Blog called Commercial Grade which has been merged into a stand alone blog called, surprisingly, Commercial Grade. when he revamped the Miller Cicero corporate web site.
His latest is a post on commercial rent control. Check out the blog and check it often.
Tags: John Cicero, Miller Cicero, Commercial Grade
During the housing boom, a slew of foreign buyers came to New York City to take advantage of the falling dollar. Largely from Europe and with a high concentration from Ireland, this movement was characterized by tales of Irish carpenters buying multi-million dollar luxury condos. Booming economies and a weak dollar made investors hungry to go farther to seek out higher returns.
One of the more well-known Irish marketing firms to find Irish investors to buy luxury condos and other properties was KMS Commercial, and we usually dealt with Cathal McGinley, the Managing Director. Our residential and commercial firms dealt with his firm on several occasions as the housing boom roared on and even after it corrected at the end of 2008.
Here’s where it went sour between my commercial appraisal firm Miller Cicero and KMS Commercial.
On April 28, 2009, Cathal/KMS hired our commercial firm Miller Cicero via a signed engagement letter for a substantial appraisal assignment covering the residential component of 835 Sixth Avenue, a new large mixed-use project going up on Sixth Ave at 29th Street developed by JD Carlisle (Jules Demcheck).
The report was delivered within the agreed upon time and the appraisal fee was due in full.
Hence the reason for this post, which is basically us venting our frustration since KMS Commercial is acting like it doesn’t intend to honor its financial obligations. My partner John Cicero has been trying to collect the fee for past 5 months and has been treated less than honestly – and he’s torqued about that. His first few attempts at contact were met with his assistant saying they were on vacation, etc. until finally there was no response at all.
Appologiese for not reply before but Cathal and I are both on holidays and will not be back in the office until 14th August. I will remind Cathal re payment as soon as we are back and will send you confirmation of same.
After several months with no response, John began to think he had the wrong contact info (they moved) but it was hard to believe such a high-flying well-known firm would simply disappear. Someone we know had a contact in Dublin who went by the building and indicated that KMS Commercial does not appear on the building directory that is listed on their correspondence. Weird.
After repeated efforts by John to contact Cathal, he finally got a response on October 23 which necessitated this post due to their sarcasm:
On Oct 23, 2009, at 9:40 AM, Cathal McGinley wrote:
John
I am in receipt of your 27 various email last night and today. I can confirm that I met today at 11am my time with my partners to advise them of the urgent need to pay your bill which I agree is long overdue for payment. I personally hold a 5% interest in KMS Sixth Avenue LP with the balance of the shareholding held by two others, Liam Smyth 85% and the O’Malley family 10%. As, to date I have not been put in funds, other than my own contribution, by my partners I have been unable to pay the invoice however they have both assured me that they will put me in funds by early next week (it is a bank holiday here on Monday) so assuming this happens I will send the money out probably on Wednesday or Thursday. In the mean time if you like I can send you my $600 today or wait to send it all at once. You’re choice.
Regards
Cathal
Cathal McGinley
Managing Director
KMS COMMERCIALThe Malting Tower
Grand Canal Quay
Dublin 2
Irelandt: +353 1 6425220
f: +353 1 6619708
e: [email protected]
Of course this was October 23rd. Its now November 3rd and our follow up efforts after the above email have not been answered.
It’s a shame that there aren’t any viable options to pursue them in Ireland. It’s hard to believe they can’t afford our appraisal fee (that they agreed to in advance).
We have to pay our staff for the time it took to complete the report which was not nominal. Our conclusion has to be that KMS Commercial is either under severe financial duress or it is a business strategy – 5 months of repeated attempts to contact them is a reasonable period to draw these conclusions.
We recognize that this is one of the risks of doing business and we assume KMS Commercial will never pay us for the services they sought us out for and received. However, our treatment was so unprofessional, we felt it necessary to talk about it in a public forum. For all appraisers out there – if you are contacted by KMS Commercial for an assignment, think twice. If you are, make sure you are paid in advance and in cash. We have twelve thousand reasons to believe this is a tested assumption.
Ok, venting complete – back to work.
Tags: Europe, Miller Cicero
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I stumbled on a really great blog on the American Banker site called BankThink and it’s worth checking back on a regular basis.
Webmaster/Journalist Emily Flitter asked me to contribute a guest column on the current state of appraising. I named it:
Then Don’t Call It An Appraisal.
I hope you enjoy it.
Here’s a local copy of the article:
The trillions in adverse financial exposure and lost economic opportunity were supposed to teach us, especially those of us connected with the banking system, something about risk. But a look at the latest trend in home appraisal practices shows that although the relationship between mortgage lenders and appraisers may look different on the surface, its nature remains troubled.
As a rule, appraisers are generally ignored until we make a mistake. We’re the back-of-the-house worker bees. During the housing boom (actually a credit boom with a housing boom as a symptom), an appraisal was relegated to a commodity status like a flood certification. Without much political clout or public awareness, we weren’t used to being in the spotlight. We’re finding it not at all flattering.
Mortgage brokers’ business swelled during the boom years and many participated in compromising as much as two thirds of the residential mortgage lending business at peak – they only got paid if they could close the deal. That took an appraisal. Guess what type of appraiser was hired en masse? The ones who provided the “right” value.
How did things work in the banking industry? During the boom, in-house appraisal review departments were closed in most US Banks because they were “cost” centers. Mergers and consolidation caused lenders to lose local relationships with appraisers.
After the September financial system tipping point, it seemed like we appraisers might get an opportunity to redeem ourselves. After all, we were part of the problem along with regulators, investment banks, commercial banks, ratings agencies, real estate brokers, mortgage brokers, mortgage bankers and consumers. One big happy party.
Regulators have set out new guidelines on appraisals for lenders. The Home Valuation Code of Conduct, pronounced “Havoc” is an agreement between New York State Attorney General Andrew Cuomo and Fannie Mae that was intended to change everything.
Comp Checks, inquiries in which an appraiser was often asked to assure a floor value for a property without actually performing an appraisal, are over. Mortgage brokers can’t order appraisals anymore – otherwise the bank can’t sell the paper to Fannie Mae.
But not much else has changed. Lenders now call appraisal management companies who pay the appraiser half their wage (fees for AMCs are lower than appraisal fees paid 20 years ago) and require 24 – 48 hour turn times without exception.
The National Association of Realtors wants appraisers to use “good” comps and ignore foreclosure activity because we are “killing the recovery.”
Many of the ethical “appraisers” have been forced to seek new types of work or switch careers, as they have been replaced by an army of “form-fillers.”
After all of the financial system turmoil, not much has changed in the mortgage process as it relates to appraisers. A conversation with a loan consultant we had last week perhaps best exemplifies how detached from reality many in the lending community really are.
One of my staff appraisers recapped to me a direct conversation with a loan consultant at a large national bank. The consultant had contacted the appraiser to complain about the appraised value not being high enough on several occasions, even bringing the borrower in without advanced notice to the appraiser on one of the calls. This is a frequent conversation and it’s getting old.
When trying to get an understanding of the collateral, does the banking industry want to know what the value is from a neutral source or not? If not, don’t call it an appraisal because its not.
Jonathan Miller is a real estate appraisal consultant in New York. He is the co-founder of the residential appraiser Miller Samuel, and a managing principal of the commercial appraiser Miller Cicero.
Tags: American Banker, Fannie Mae, Appraisal Management Companies, BankThink, HVCC, AMC, Miller Cicero, NAR, National Association of Realtors
One of our appraisers at our commercial appraisal firm Miller Cicero was taking an on-line McKissock appraisal course (which is excellent) and came across a page under the section One-person firms and noticed a familiar person in the photo.
Here’s the screenshot (click image to expand):
Even though there is an “I” in “appraiser”, unlike “team”, our appraisal firms of Miller Samuel and Miller Cicero is growing – and our staff does a lot more work than I ever could.
One could say I’m a “model” appraiser? Ok, probably not.
Tags: Miller Cicero
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Today is a big day at our commercial appraisal firm, Miller Cicero. My partner John Cicero has shared a few thoughts on the anniversary – after all, he is the smartest guy I know.
Here’s John Cicero’s take on it.
Seven years ago today Miller Cicero was formed, a collaboration between me and Jonathan Miller (before he became famous and went on Mexican TV), his wife Cheryl (who watches over the purse strings) and his sister Dina (the true brains of Miller Samuel!) It’s been a great ride and I couldn’t ask for better partners.
Similarly, I couldn’t ask for a better group of staff appraisers, especially Michael Falsetta, Executive Vice President, who freakishly remembers every sale that ever took place in Brooklyn since the turn of the century (and knows where to get the best pizza and grilled octopus in every borough), and Steve Manheimer, Senior Vice President, who leaves no stone unturned when researching a project and makes more demands on himself than I ever do. I know that I’m biased but I believe that I have the best group in the business.
Its been an interesting time to be appraising property in the New York metro area, though. Over the past seven years we’ve seen property double and triple in value, buyers camping outside the sales offices of new condos to be the first to buy, 21-year olds fresh out of school becoming developers (cute!) and then…just as quickly, complete market paralysis.
OK, enough nostalgia. I need to get back to trying to figure out what anything is worth these days….
Tags: Pizza, Miller Cicero
I spoke at length with Michael Falsetta, EVP of our commercial real estate valuation firm Miller Cicero, a 17 year expert on the Brooklyn new development space.
As a native Brooklynite, he’s got a lot to say about the most populous NYC borough.
He recently started a blog, 21Elephants.com covering the residential new development market in Brooklyn.
As an added bonus, I got some details about his Guiness Book of World Records world record for riding every mile of NYC subway system (in about 25 hours).
Check out the podcasts and links.
You can subscribe on iTunes or simply listen to the podcast on my other blog The Housing Helix.
Tags: Miller Cicero
Podcast: Play in new window | Download
Tags: Miller Cicero
Guest Appraiser Columnist:
John Cicero, MAI, CRE, FRICS
John provides commentary on issues affecting real estate appraisers, with specific focus on commercial valuation. He is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is, depending on what day of the week it is, one of the smartest guys I know.
…Jonathan Miller
Bob Knakal, Chairman of investment sales brokerage firm, Massey Knakal Realty Services, recently released an excellent commentary on a 25-year history of the New York City multifamily market. Using actual sales data from 1984 to the present (including cap rate data from 2005 to 2008 compiled by my firm, Miller Cicero, LLC).
In addition to examining historical cap rates and gross rent multipliers over time, the report analyzes cap rates relative to mortgage rates and the yields on 10-year T-bills. An excerpt:
From 1994 through 1999, we saw slow steady declines in cap rates, with slightly positive leverage and risk premiums within a range of 100 to 250 basis points…Throughout the 25 years of this analysis, this period was the most stable-and I attribute this stability directly to the very disciplined lending practices of debt providers.
It’s actually fascinating (at least for a commercial appraisal nerd like me!) to see how many NYC multifamily property was routinely purchased with negative leverage (i.e. at cap rates below mortgage rates. In fact the past five years has been the biggest period of negative leverage buying since the mid 1980’s. However, with the more stringent underwriting now in place, the NYC multifamily market seems poised for another (surprisingly rare) period of positive leverage.
Tags: Massey Knakal, John Cicero, Miller Cicero, Commercial Grade
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Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts. He holds the Counselors of Real Estate (CRE) and Certified Relocation Professional (CRP) designations. He is an Appraiser “A” Member of the Real Estate Board of New York and a member of Relocation Appraisers and Consultants, Inc.
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