Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/64804
WHO'S WHO? Qualifi cations to appraise real estate are set by the Appraisal Qualifi cations Board, an independent board of The Appraisal Foundation, which is authorized by Congress as the source of appraisal standards and qualifi cations. Under the provisions of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, or FIRREA, the AQB establishes "the minimum education, experience, and examination requirements for real property appraisers to obtain a state certifi cation," according to the Appraisal Institute. Licensed and certifi ed appraisers have met the qualifi cations required by their state regulations. MAI appraisers have earned the MAI designation from the Appraisal Institute, and are considered by AI to have "the necessary commercial property valuation experience and expertise in a property's relevant geographic area to produce a reliable valuation." The MAI designation requires 4,500 hours of experience, an undergraduate college degree, and an education program and qualifying exam. GAA is the general accredited appraiser designation from the National Association of Realtors for state certifi ed appraisers who meet additional experience and education requirements. or three listings that are adjusted for a dis- count," says Jeff rey T. Miller, CCIM, MAI, president of Miller Real Estate Advisors LLC in Alpharetta, Ga. "Listings are sometimes the best comps because it's hard to say a simi- lar property will sell for more than the other's listing price." T e current climate also requires a more thorough market analysis. "More attention is being placed upon micro-market-area infor- mation refl ecting vacancy, absorption, and locational attributes," says Brian D. Frank, CCIM, GAA, an appraiser for Accurate Services Commercial Property Valuation in Chandler, Ariz. "It has become a mix of cur- rent reported data and speculative common sense, with the consideration of future upside potential." In Frank's market, for example, the loca- tion of an office condominium property near a major medical facility might off set the current oversupply weighing down offi ce condo sales prices and market lease rates. "As economic conditions improve and absorp- tion increases, this product type would be 34 May | June | 2012 expected to recover much earlier in the process," Frank explains. He runs a direct capitalization rate analysis on current mar- ket lease rates to illustrate the diff erence in pricing from sales to potential income. "I'm fi nding that properties in outlying areas and older class C properties are again selling for prices relatively in line with direct cap rates of current market lease rates," Frank says. "T is has not been the case for the last two years and indicates that buyers are not willing to take on risk or pay for future upside potential for this property type. In other words, what you see is what you get." For REO sales, Frank adds, lender motivation must be considered as well. If appraisers understand lender motivation, they can more accurately assess the current market value vs. the disposition or liquida- tion value. Ultimately, however, the client sets the defi nition of value. "A typical problem is a bank client that requests market value but incorrectly expects a disposition or liqui- dation value," Miller says. If the appraiser provides a market value, which assumes a 12-month marketing and exposure time, the broker and bank expecting a sale within a few months will be frustrated. In addition, listings services are some- times unreliable, so appraisers need a little help from their broker friends. "Typically, appraisers will interview market participants to confi rm data," says Miller, who uses all available resources to track down the "big- gest and best players" in a given market. Recently, he searched the CCIM Find a Professional database to locate experts who could confi rm market data for a Colorado land deal. "T e CCIMs have a big picture view of the world, are happy to assist, and oſt en share new insights on market activity," he explains. Other market participants might need a little more coaxing. "Some brokers say, 'T at's not my job — you fi nd the data,'" Scheidt explains. "But if brokers want to do the best job for their clients, they need to provide the most credible and up-to-date data available. Greater cooperation among brokers, appraisers, and property managers, along with better data, will result in a more acceptable valuation for all parties." Rich Rosfelder is associate editor of Commer- cial Investment Real Estate. THE DUAL-DESIGNATION ADVANTAGE How can MAIs improve their market knowledge? Eric Garfi eld, CCIM, MAI, director of valuation services for WTAS LLC in Los Angeles, recommends the CCIM designation program. "Incorporation of CCIM sentiments into appraisals is essential to support conclusions and ensure that they're not based on 'rear-view mirror' data," he explains. MAIs can earn the CCIM designation through the fast- track program, which allows them to bypass the elective credit and Portfolio of Qualifying Experience requirements. Visit www.ccim.com/membership for more information. Commercial Investment Real Estate Pedro/Veer