Appraisers' Free Forum

I've been asked to submit a proposal for market rent analysis. The thing that is different about this one is that the entity requesting the analysis is an attorney, the presumed client is a union training fund and the attorney tells me that the Feds require the analysis. The fund apparently rents space from a local union and the fund needs the report for establishing terms of a renewal lease.

Question is: Does anyone know if the Feds have any additional requirements for this work?

Additional Info: I have appraised the building in question before for a different intended use. The fund apparently used the part of my appraisal (without my knowledge) where rent was analyzed for use in the income approach to determine the lease terms on the lease at that time. This makes me think that there are probably no additional requirements beyond what an appraiser would typically do for market rent analysis. However, my experience with the IRS is that individuals (and sometimes even accountants and attorneys) utilize appraisals that do not meet all the requirements, and the IRS usually does not seem to do anything about it. So... I am reluctant to think that just because they used the rent analysis from a prior report that means there are no additional governmental requirements.

Has anyone here done work for unions or under circumstances similar to what I am describing? Do you know of any additional requirements?

Steve,

I have not worked for unions in this capacity, but I do perform market rent analysis all the time. Several large corporate clients utilize this service as further documentation/support for site location decisions when opening a new venue. In stating the obvious, they are obtaining an independent objective opinion from someone outside of the transaction (i.e. not the real estate agent). Also, governments do this when renting space both to and from private entities.

I deliver a narrative format with exhibits (photos, maps, etc) and use the consulting certification from USPAP rather than the appraisal one.

One distinction you need to make with regard to the service is are you providing a market rent study (general market trends) or a market rent analysis (a specific rent for a specific space) with typical lease terms, conditions, etc.

Hope this helps

Thanks, hklahr. I've done these before, too. What these guys want is a market rent analysis... basically an appraisal of the market rent for the specific property.

In one very memorable past event, I bid to do a market rent analysis for a HUD property. Turns out, they wanted it on a specific form, which had to be filled out in a typewritten format (not computerized) and had some very specific requirements for adjustments. After I had done the job, they offered a class, so I went up and took it. I had not made too big of a mistake, apparently, because none of the work came back to me. However, I did learn in the class, that the government powers that be at HUD did not understand the difference between incurable and curable physical depreciation.

Anyway, you post does help as a refresher, but what I am really looking for is any Federal "gotchas" that I might have to watch out for before I send my bid.

Steve,
I can't think of any requirements specific to rent analysis. You can ask specifically what parties they intend to show the report to, and then see if that party has anything in writing they use to gauge rent studies, or if it is just a plain-vanilla "generally accepted" standards thing.

I would try to get standards and regulations language in the engagement document, so that later if they need some other work, there won't be any question about whose dime covers the new work.

HK,
The "consulting" certification in Std 5 says that your "recommendations" are you own independent opinions. In a rent survey, study or analysis - what "recommendation" are you making?