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What Chief Appraisers Want in a Commercial Appraisal Report

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[fusion_dropcap boxed=”no” boxed_radius=”” class=”” id=”” color=””]M[/fusion_dropcap]arty Skolnik, MAI, Chief Appraiser Director, Freddie Mac, presented to the Appraisal Institute in summer, 2018, about what chief appraisers want.  He urged all the appraisers in the audience to summarize, shorten and focus commercial real estate reports.  He recommends a maximum of 50 pages (ironically, his presentation was 75 pages long). Furthermore, he added recommendations on brevity, standardization and not repeating information.  He is among a growing segment of lenders and other clients that are telling the profession our reports need to lose weight!  Do your reports need to shed a few pounds too?

Skolnik says typical commercial reports are too long and include too much boiler plate and duplication.  At the same time, he says they often lack support for adjustments, submarket trends and thoughtful analysis.  This is the stuff that really matters. Just to be sure, I called a few of my banker friends and clients.  There was complete unanimity.  They all agree with Mr. Skolnik, some version of, “Give me the facts, not the fluff,” they said.

I couldn’t agree more.  Too often, appraisers use voluminous reports instead of concise, solid data and analysis.

Are Appraisers Delivering What Clients Want?

Our clients include a mixture of financial institutions, municipal organizations, government agencies and others.  They are very clear in their needs:

1. Accuracy:      The appraisal must be accurate and free of errors
2. Consistency: The format and methodology must be consistent
3. Relevance:     The comps must be truly comparable to the subject property
4. Compliant:    Reports follow USPAP and bank-specific standards
5. Data:               Facts support all opinions
6. Speed:            Report delivery is timely (Those deadlines are coming faster)
7. Competitive: Fees are reasonable and competitive

Effective Commercial Appraisals for Banks

Douglas Nason, MAI, MRICS, teaches a class “What Chief Appraisers Want” and says, “commercial reports must be clear and easily read and understood by a non-appraiser.” Too often, appraisers tell me their Word templates and report formats are “special” and took years to refine.  Granted, a Word document lets you do almost anything because it is a word processor. But, we are not writing the next “Great American Novel.” Save that for the weekends because it doesn’t matter to our clients.  In fact, readers can think an appraiser’s personalized, old systems and reports are out of date, or worse yet, simply out of touch with the current market. That’s exactly opposite of the goal.

So why do so many appraisers keep delivering these bloated, old-style reports?  Especially when doing so is exhausting. It runs the risk of inconsistencies and errors.  Like so many aspects of life, we often fall into our comfort zone even when it’s stuck in the past.

Create a Report that’s What Chief Appraisers Want

It is possible to easily roll out a simpler, cleaner appraisal report in a consistent format.  It is possible to do so with a tool that increases accuracy and reduces the delivery time.  Our office implemented realquantum in early 2018.  All the appraisers in the office found it easier to provide concise reports to our clients. Realquantum’s report writer and database are both in the same web-based application. So, there are fewer errors and it’s easier to capture and use the data we gather in our daily practice. The app has sections for each of the static text that goes in the report and can be updated for a specific project. Since I can set it up in advance, the narrative is cleaner.  By comparison, offices that take an old report and update it for the next project can end up with “meandering” extra text (not to mention type-Os). We get improved productivity to boot.

Just like Marty Skolnik, our clients consistently tell us they want an appraisal report the helps them do their jobs better. Realquantum helps my appraisers do just that. So, consider making your own new year’s resolution. Not to lose weight yourself (well, if you do, that’s your business) but to help your appraisal reports lose weight.  You may find realquantum is just the diet plan they need.

What do your clients want?

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