|
Real Estate Appraisal
WE FOCUS ON THE APPRAISAL of a range of property types, including:
• Single-family residential The Jeremy Bagott Company performs appraisals of single-family residences in certain geographic areas.
• Industrial buildings (manufacturing buildings, warehouse properties, distribution centers, R&D facilities, industrial condominiums and self-storage buildings)
• Office buildings (professional office buildings, medical office buildings and office parks)
• Multifamily properties (apartment buildings, duplex, triplex and fourplex properties)
• Retail buildings (commercial buildings, freestanding retail buildings, strip centers, neighborhood centers, regional centers)
• Hospitality properties (hotels, motels and B&Bs)
• Land (development land, raw land, agricultural land and ranch land)
• Special-purpose properties (schools, religious facilities)
As commercial real estate appraisers, we perform valuations for many purposes – work for public agencies, consulting, accounting, expert witness work, litigation support, internal decision-making, continuing disclosure, institutional financing, condemnation, estate planning, accounting, developer impact-fee assessment, Mello-Roos (CFD) bond issuance and more.
An appraisal of an industrial, commercial or residential property will be subject to a scope of work, which will include the degree to which the property is identified, the extent of research performed and the type and extent of analysis performed.
We are not affiliated with any real-estate brokerage, investment bank, bond underwriter, land developer or property management company; all findings include a signed certification of appraiser independence.
ARTICLES
APPRAISERS ARE FINANCIAL ANALYSTS
MY EYEBROWS ALWAYS ARCH WHEN SOMEONE CALLS ME out of the blue and asks me to provide a rough opinion of value of his property over the telephone and without the benefit of visiting the property, an examination of market data, an analysis of how the property fits into its segment or an evaluation of its highest and best use.I think of a man having chest pains. He calls a cardiologist and tries to lock in a preliminary diagnosis over the phone. Who would do that and what would the value of that diagnosis be without the cardiologist even listening to the man's heart or doing an EKG?
Read Full Article
EPIC HOLDOUTS IN NYC REAL ESTATE DEALS
I STUMBLED ACROSS A USED BOOK WRITTEN by Architect Andrew Alpern and the late New York City real estate developer Seymour Durst. The book, "Holdouts" (McGraw-Hill, New York, 1984), is a series of case studies about holdout property owners impeding strategic assemblages of parcels in the Big Apple.
Read Full Article
Appraisers are Financial Analysts
By Jeremy Bagott | Aug. 12, 2011
MY EYEBROWS ALWAYS ARCH WHEN SOMEONE CALLS ME out of the blue and asks me to provide a rough opinion of value of his property over the telephone and without the benefit of visiting the property, an examination of market data, an analysis of how the property fits into its segment or an evaluation of its highest and best use.
I think of a man having chest pains. He calls a cardiologist and tries to lock in a preliminary diagnosis over the phone. Who would do that and what would the value of that diagnosis be without the cardiologist even listening to the man's heart or doing an EKG?
These are sometimes the same people who believe that appraisers’ findings are based on intuition, hunches and back-alley conversations with market insiders, that we somehow have the power to touch the property's walls and, through divine intervention, issue forth a number.
The 2008 financial crisis, which led to the deepest recession since the 1930s, has only worsened this misconception. After all, if investment bankers on Wall Street, bond insurers, the credit-rating agencies and securities analysts could get housing value trends so hideously wrong, certainly real estate appraisers, who tend to operate locally or regionally must be equally reckless or have a similar wide latitude in interpreting value.
The fact is, real estate appraisers have been heavily regulated and supervised since the nation's previous financial collapse – the Savings and Loan Crisis of the late 1980s. We are one of the most structured and regulated professions in all of the 50 states and the District of Columbia. Appraisers cannot operate on a contingency or commission basis, like a real estate broker, a bond underwriter or an attorney. We must complete hundreds of hours of qualifying and continuing education, pass at least two state exams and log thousands of trainee hours in order to work independently. We hold very coveted licenses and have much to lose.
In fact, we are so regulated that the profession is not able to expand and contract in lockstep with the demand for our services. For this reason, financial institutions have successfully lobbied for legislation and policy interpretation that allows them to replace licensed appraisers in many instances with computer valuation models or real estate brokers who perform property “evaluations” instead of “valuations.”
The newest version of the Interagency Appraisal and Evaluation Guidelines, a statement of policy prepared by the Office of the Comptroller of the Currency, the FDIC, the Federal Reserve System and the Office of Thrift Supervision, is Kafka-esque.
But the point is, licensed real estate appraisers, to say the least, are closely scrutinized and must follow a set of rigid standards. Some market participants may believe that the appraisers involved in their transactions must be biased and self-interested only because everyone else in the transaction is. That assumption is incorrect.
This is not to say that there aren't isolated cases of, say, a crooked appraiser conspiring with his brother-in-law, who’s a mortgage broker or bank underwriter, to fleece institutions or investors. However, the problem is not a systemic one.
I would also submit that dishonest appraisers get exposed, stripped of their licenses and fined or jailed far faster than dishonest brokers, underwriters, securities dealers, attorneys or securities analysts. Our findings and the analyses we employ to arrive at them are normally published in reports that are submitted to clients. Our reports can wind up in investment prospectuses, being circulated to credit committees, on the Internet, in court proceedings or requested through the Freedom of Information Act when a federal agency is involved. Many eyeballs tend to look at our reports.
In development deals, the independent fee appraiser is often the only party with no skin in the game. Even in public finance, city or school district officials can sometimes be stubbornly committed to unfeasible projects for reasons connected more to prestige, politics or career advancement than sound analytics.
Unless you’ve worked as a real estate appraiser, you will not be able to fully appreciate the lonely and thankless nature of being a disinterested third party in a world of self-interest. If you’ve worked as a line judge in tennis or a baseball umpire you might have a vague idea.
Ultimately, a real estate appraiser, like any responsible financial analyst, arrives at his findings only after careful and sober analysis based on observation and interpretation of market data. We interpret the markets, we don't make them. We leave hunches and divine intervention to others.
A Look at Epic Holdouts in New York City Real Estate Development Projects
By Jeremy Bagott | July 10, 2011
I STUMBLED ACROSS a used book awhile back written by Architect Andrew Alpern and the late New York City real estate developer Seymour Durst. The book, "Holdouts" (McGraw-Hill, New York, 1984), is a series of case studies about holdout property owners impeding strategic assemblages of parcels in the Big Apple. Sometimes you pull for the holdouts; other times, you see them as unlikable impediments to progress.
Take the case of 733 Third Avenue, a 24-story office building envisioned by Durst, who began quietly assembling the 16 parcels of land needed for the building. Working through agents, he was able to acquire 14 of the parcels with little effort. But in the case of two of the parcels and tenants in two of his newly acquired buildings, he ran into major problems.
Handicapped Brother
In one of Durst's newly purchased apartment buildings on the site, a middle-aged woman who lived with her brother would not vacate her leasehold. A relocation expert was sent to the apartment and over a six-month period communicated with the woman by telegram, letter and in personal visits. The tenant was nice enough over the phone, but never let him into the apartment and was deadset against vacating no matter what inducements Durst's agent offered. A remark by one of the neighbors shed light into the woman's motivation.
Her brother was mentally handicapped and she feared she and her brother would be denied an apartment elsewhere because of his condition. Also, she didn't want to traumatize her brother by moving him to new surroundings. Once the problem was identified, which represented a big part of the effort, a suitable apartment was found nearby and the agent's time and persistence paid off when the pair willingly moved.
Reclusive Couple
In the other building, a reclusive elderly couple kept Durst's agents busy for nearly a year. They would not unlock their door to visitors and refused to disuss relocation. Finally, after many months of stalemate, the wife became ill and was taken to the hospital, where she died shortly thereafter. At that point, the surviving spouse barricaded himself in the apartment, refused to come out and threatened anyone who came to the door. The neighbors grew conerned and called police, who pried the door open and took the man away for a psychiatric examination.
To the astonishment of all, the "husband" turned out to be woman. She and her "wife" had lived in the apartment for 35 years, and a search of the apartment turned up a wedding certificate on the wall. The police, fearing that the man in the wedding certifcate had met with foul play at the hands of the woman impersonating him, then sealed the apartment, adding to the developer's frustration. In the end, after foul play was ruled out, the police surrendered the apartment to Durst, its new owner, and the woman was put into a nursing home.
Sister Catherine's Home
Of the two non-leasehold holdout parcels, one belonged to Sister Catherine's Home, a boarding house for young working women newly arrived in New York City. The organization had occupied the building for more than a half century. While the women of Sister Catherine's Home were more reasonable than the tenants described above, it took four years of hard bargaining to get the 22 women and two staff members to sell. Durst presented a list of a dozen exchange properties to Sister Catherine's trustees.
The building that Sister Catherin's finally agreed to accept was owned by Durst. A condition of the exchange was that the new building underwent a complete remodeling, though it was already in much better condition than the former building. New plumbing, heating and electrical wiring were installed, and the interior altered and refurbished. In 1960, the girls moved to their new digs and their old building was razed a few days later to allow excavation for the foundation of the new office structure.
Backyard Stable
The final hurdle before construction of 733 Third Avenue could begin was a backyard stable owned by a Jack Begelman, who had combined three 19th Century buildings on 46th Street with a one-story backyard stable. The conversion, which created a backward "L" (with the toe being the former stable), had been carried out in the 1920s. Durst wanted to put the corner of his new office building on the area occupied by the erstwhile stable. Durst offered to purchase the 30-foot by 56-foot piece, but Begelman refused to negotiate. He had no interest in making his building any smaller.
Realizing that future attempts at negotiation would be futile, Durst had his architects redesign the building to allow an envelope for the former stable on the first floor of this building. Begelman agreed to lease the land under his building, as well as the air rights over his building, to Durst. He also agreed to allow steel columns to be run through the toe of his building, as well as three giant girders to be erected above it in order to support the weight of the building.
Six years after the project had begun, Durst's building at 733 Third Avenue was finally completed in 1961.
The book is as much a study of human nature as it is an examination of real estate development. It is essential reading for any student of real estate.
Disclaimer: The information above has been obtained from sources believed reliable. However, the Jeremy Bagott Company does not guarantee the accuracy of any information on this page.
|
|
