Appraisers' Free Forum

**Goodpasture** · Posted: Wed Nov 14, 2007 9:51 am Post subject:

In a report for a commercial building it should have explained why neither the income or the cost was used. There may be valid reasons for excluding the cost, but for a property that is being rented, I cannot see any reason why the income was excluded......and its exclusion should have been discussed in depth.
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M L · Posted: Wed Nov 14, 2007 10:14 am Post subject:

Okay, I miss understood you, I thought you hired this appraiser. Ed is right, in that case, the appraiser can't talk to you. YES, do go get your own appraisal! To flat out not even consider the income approach is poor appraisal practice. If it's not applicable, the appraiser has to give a darn good reason and document why. We can't just ignore an approach because we don't want to do it. That creates a misleading appraisal, and could be a violation of USPAP.
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**benluby** · Certified Residential Joined: 12 Aug 2007 Posts: 1576

A little clarification, please, LingLing. Your husband is renting a medical office, but now the landlord wants to sell you a condo, or the office is in the condo? I am confused and fuzzy on that area.
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LingLing · Member Joined: 09 Nov 2007 Posts: 23

**benluby** · Certified Residential Joined: 12 Aug 2007 Posts: 1576

I'd talk to the second appraiser, personally. Not to raise dead dogs, but just because it costs $XXX to build something doesn't mean it is worth $xxx.
Since it is being used as primarily a commercial enterprise (your husbands' office) I'd also make sure that the appraiser is competent to appraise commercial.
I'd also be curious to find out what some of your husbands colleague's are paying for similar properties in rent.
You are working in a primarily commercial area, and I'd feel that the income approach would probably be the most valid indicator of market value, due to the difficulties of going to a hot area in what sounds like a different market.
I'd also recommend waiting for the more versed members on here that deal with those types of properties regularly to chime in. They are much more competent than I am.
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Whoever thinks herding cats is impossible, has never walked with an open can of Tuna.

**Joker** · Posted: Wed Nov 14, 2007 12:33 pm Post subject:

It is very difficult to diagnose your problem via the internet, but I will attempt to assist you.

* The residential market and the commercial market are two different markets. They MAY have a correlation but often they do not.

* If you are not the client (ordered and paid for the appraisal) then the appraiser cannot speak to you unless he has the permission of his client (your landlord).

* It would appear that the appraiser was either incompetent or was hired to do less than what some of us refer to a "full scope" appraisal.

* 18 months between the sales date of the comparable sales and the date of the appraisal is not a long time unless their are more recent comparable sales. I often use sales that are up to 60 months old.

* Hopefully, you had an attorney represent you before signing a lease. If you invested $250K of your own money for the build out, there needs to be provisions for that in lease, either by way of lower lease rate, extended lease term, or an option to purchase at a lower price.

*An appraisal would value the property based upon what a typical buyer would pay for the property. IF you improved that property by $250K, perhaps the landlord would be willing to accept that much less than the appraised value. (see above).

* In another thread on this board, you have already been given sound advice on how to hire an appraiser. For additional sources, ask the hospital trustees whom they use for appraisal services. If you intend to finance the purchase of the condo, ask your lender which appraisal firm they use. They will also need to hire an appraiser if you buy and finance it through them. Using the same company will most likely save you money by not having to pay full price for two appraisals.

* Consider why the landlord wants to sell.

* It may be more financially advantageous to you to continue leasing the property than to buy it. An appraiser can assist you with a lease/buy decision, but that is not typically part of an appraisal. It is a consulting service that many appraisers provide.

* If you decide to purchase, PLEASE have an attorney review the condo documents (condo docs) before entering a purchase agreement for this property.

* If you need help, continue posting or contact one of us directly. My contact info is on my website:
www.appraisal-consulting.com
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This space for rent

**Jim Plante** · Posted: Wed Nov 14, 2007 12:39 pm Post subject:

LingLing,
Use the second appraiser. Two things recommend him from your description: He determined right away that the cost approach wasn't applicable to a condo, which indicates a good understanding of appraisal principles. Secondly, he told you up front that his opinion might not necessarily be lower than the other appraiser's, indicating that he has integrity.

One credential you can look for is professional designations: In this case, IFAS or MAI would be good recommendations. Although those designations by no means *assure* competence, those who possess those letters after their names have passed a peer review process, and other experienced appraisers have found their work to be competent.
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Jim Plante

**Joker** · Posted: Wed Nov 14, 2007 12:52 pm Post subject:

I concur. The second appraiser "sounds" better.
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This space for rent

M L · Posted: Wed Nov 14, 2007 12:57 pm Post subject:

**Christine Marie** · Posted: Wed Nov 14, 2007 7:06 pm Post subject: i have a confession to make...

I don't watch the news on a daily basis, but for some reason, I did watch it tonite.... and i think the St Lucie market was one identified and portrayed in the crunch "foreclosure increasing numbers list".....

Ling Ling, sorry to tread on your thread, but i think that if a growing number of the investors are bailing out of their indebtedness, might further help in your situation.... Sorry to toss fuel to the fire, but, any economic activity that is affecting the current market needs to be taken into consideration... More specifically, it is very concievable, that prospective Investors are not going to be looking at properties in the area.... This is only a surmise, at this point.... Wish we had more Floridians in here that would voice their particulars, as far as market conditions, as well...

But, as we are still growing, Maybe, they will, once they read the thread.... or maybe a mod will rename it appropriately specific to your particular market area, and attract more Southerners attention...

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LingLing · Member Joined: 09 Nov 2007 Posts: 23

**Edd Gillespie** · Certified General Joined: 13 Aug 2007 Posts: 2282

Sounds to me like Mr. Ling Ling has decided to buy and Mrs. Ling Ling doesn't think its a good idea. Are we getting involved in a domestic dispute here? If so, I would reccommend before anything more is said by us that Mr. & Mrs. Ling Ling discuss this matter and decide what they, as a team, want to do about this.
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Edd “In the real estate economy, there are no guarantees that reason will prevail in a market where emotions run high and the amount of misinformation runs deep.” Jonathan Miller in The Matrix. So what’s an appraiser to do?

**Steve Owen** · Posted: Wed Nov 14, 2007 9:31 pm Post subject: