When was the last time you brought in somebody from outside your firm to help you solve an appraisal problem? Is that a step you should take? Aren’t appraisers supposed to be independent? Aren’t outside consultants and advisors expensive relative to the typical appraisal fee?
Recently I had an assignment in Wyoming, a state not known for its temperate climate, gentle breezes, and dulcet winters. This was a custom-designed and custom-built home with well over 5,000 square feet of living area, and luxury amenities too numerous to mention. However, for reasons not important here, the owner-builder never completed the structure and it had sat, open to the elements and unprotected from the ravages of nature and squatters (who had done the house no favors by their occupancy). Needless to say, despite this property’s grand potential, when I toured it, it was a dump. Therefore, I had a two-fold challenge (for a huge fee, by the way): appraiser the property in its then present condition; and appraise it as if it were complete per plans and specs.
While I felt competent to complete the appraisal portion of this job, I knew I was going to have to bring in outside help to help me with the “as is” value. To help me with this, I hired a local contractor I know and trust. Their job was to analyse for me how much of the house was still usable, how much would have to be repaired or replaced (a lot, by the way), and what the costs of all that would be. They even told me how much it would cost to demolish and dispose of the existing improvements so I would know how to value the vacant site (I even consulted with my All-Star Team, whose members were a great help and sounding-board. Thanks, guys!)
Long story short, after we looked at the costs of construction, marketing, brokerage and so forth (including an entrepreneurial profit!) versus what its market value would have been had someone completed the construction, it was clear the highest and best use of the site was to raze the improvements, then sell the vacant site to a retail end-user.
My point here is that, without the contractor, the help of local realtors managing tribal loans, the help of local investors, and so forth, I could not have completed this assignment competently and within USPAP. I just did not have the competence in all these extra-appraisal areas. That’s why I brought in the outside experts.
What’s the take-away here? It is simply that when you need help, reach out for it! You’ll probably have to pay for that help, but is that not cheap money to pay to avoid the expenses of a defence against a charge of incompetency from your state appraisal board? We can’t be experts in everything. So let’s be expert real estate appraisers, while we contract out the rest.
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: