Desktop Commercial Appraisal Review
Appraisal Review Services
Desktop Appraisal Reviews - Entire State of California, with appraisal review experience in Nevada, Oregon, Utah, Idaho, Washington, Arizona, Texas, Colorado, Ohio, Michigan and Florida
Commercial and High-End Residential Field Appraisal Reviews - San Francisco Bay Area/Silicon Valley/South Bay Areas, including San Francisco County, Alameda County, San Mateo County, Marin County, Santa Clara County, Contra Costa County, San Benito County, Santa Cruz County, San Joaquin and Monterey Counties
Kelvin Sheahan, MAI, holds this appraisal designation of the Appraisal Institute and has performed appraisal reviews since 1984. He has served numerous lender clients throughout his appraisal writing and review career.
No matter the complexity of the property or the size or type, or the complexity of the appraisal assignment, it can be competently reviewed, unless certain circumstances may prevent accepting the assignment.
Property types:
Kelvin Sheahan, MAI specializes
in commercial narrative appraisal reviews, primarily written for lender/bank
oriented clients (federally related transactions) but also performs reviews
on most all property types including industrial, warehouse, manufacturing,
R&D, multi-family residential, condominiums, subdivisions (residential
tracts), retail, office, proposed construction, vacant land, and high-end
residential, service stations and many other types of special use properties
including assisted-living/nursing facilities, health clubs, marinas and
many other real estate property types. Form reports are also reviewed
for commercial, multi-family, condominiums and subdivision properties,
vacant land and higher end residential properties.
The client/intended user of a review will typically provide the appraisal which should include an appraisal engagement letter which adequately identifies expectations of the nature and scope of the assignment. The reviewer will read the terms of the engagement letter with respect to specifically requested items and whether or not they are included in the appraisal report, as requested.
Turnaround time is an important consideration to most clients and we pride ourselves in providing committed deadlines unless circumstances beyond our control prevent us from meeting those deadlines. We can usually provide a commercial review in three to five working days. We can provide an exact completion date depending upon the date of the appraisal review request.
Conformance with the USPAP and federal regulations and guidelines are also important aspects of the review process. The reviewer is competent in the area of USPAP compliance review and has the assistance of other MAI consultants in the event of unusual appraisal problems or issues which may require a second opinion. Client confidentiality is at all times maintained and respected.
Compliance with the requirements of federally related transactions including an understanding of FIRREA, the FDIC, OTC, OTS.
As additional assurance, a checklist of 94 items is addressed.
Download Sample Desktop Appraisal Review Checklist (PDF)
As part of the review these are some of the items we consider in following appraisal review criteria:
- General Compliance with USPAP Standards Rules 1 and 2…or Standard 3 for Review Appraisals
- Ordering Appraisals: "as-is " versus "as-complete" versus "as-stabilized", proposed construction versus existing construction, moving inventories, defining the appraisal problem accurately, Defining Scope of Work & assignment parameters, correctly defining collateral security and property/parcels to be held as security so appraiser doesn’t include exclude or include right or wrong property , disclosure of past sales, pending sales and listings, getting correct documentation, risks of unsigned leases, sales contracts, detail in engagement letters (your only real contract with the appraiser) , risks of venturing outside the Lender’s approved fee panel list or accepting outside appraisals
- Aggregate retail value, bulk sale value, "as-is" value with respect to subdivisions, Introduce Various Definitions: Present Value "as-is" versus hypothetical condition, future/prospective value-extraordinary assumptions, net usable versus net rentable versus gross building areas, density analysis
- Hypothetical Conditions versus Extraordinary Assumptions-define and explain
- Information to be included with an appraisal, such as title report, leases, rent roll and income/expense information, common area expense reimbursements, building floor and site plans, construction costs, etc.
- Three approaches to value: Cost, Sales Comparison and Income Approaches
- Scope of work and exclusion of approaches, old terms: "complete versus limited," are gone with departure provision. New terms = Summary, Self-Contained and Restricted
- Appraisal Requirements: subject property, comparable building sale and rental photographs, Conformance to USPAP, adequacy of comparable sales and rents
- Adequately recent, appropriate data from defined geographic areas
- Adequate exhibits including location, sale and rental maps, land sale maps
- Adequate Market Trends analysis, intended users/intended use, legal description, property rights appraised (leased fee versus the simple versus leasehold)
- Adequate Regional, Neighborhood, Site, Improvements, Zoning and Highest and Best Use Discussions
- Valuation methodology-appropriateness of each of the three approaches to value and defined values sought
- Valuation methodologies: Cost Approach-replacement cost new, supported cost sources, land value, supported direct and indirect costs, depreciation estimates, developer’s profit
- Property types: commercial, retail, office, R&D, industrial, Manufacturing, warehousing, multi-family apartments, residential condominiums, detached single-family housing, subdivisions, mixed-use properties, motels/hotels, service stations, shopping centers, special use-health clubs, golf courses, resort properties, fee simple, leased fee, leasehold valuations and issues
- Methodology of Appraisal Review-steps taken-Read for concept, techniques & consistency
- Common problems: Cost Approach -
Land value estimate-unsupported
Improper land sales selection
Recent dates, location, size, similar use & zoning, density analysis/comparison
Replacement cost-unsupported,
No indirect or soft costs,
Lack of developer’s profit
Excessive or minimal depreciation estimates-unsupported
Incorrect math, inconsistent SF figures - Sales Comparison Approach:
Improper Sales Selected – location, dates of sale, size, age/condition, quality, similar use
Excessive adjustments
Inadequate or minimal adjustments
Inconsistent adjustments
Improper adjustments
Incorrect addition of adjustments
Selection of overly wide range of comparable sales
Overly wide adjusted value ranges based on magnitudes of adjustment-reconciliation problems
Mistakes in DCF analyses associated with subdivisions and income properties
Incorrect math,
Inconsistent SF figures, price/SF figures - Income Approach: Improper rentals selected,
Improper rentals selected, dated rents, location, size, done deals vs. asking rents, gross vs. triple net
Unsupported vacancy rate and expenses,
Stabilized vacancy versus survey rates of vacancy,
Inadequate relationship of market trends versus concluded vacancy,
Reliance on national surveys as opposed to local area data,
Improper capitalization rate selection, lack of confirmation of rental information,
Failure to include all sources of income, expenses
Above market or below-market rental valuations, compared with contract rents, inadequate lease analysis,
Inadequate or incompetent leased fee valuation-direct capitalization of below-market income stream versus use of DCF or annuity capitalization methodology,
Support for discount rate in DCF,
Support for absorption/stabilization expenses to get to “as-is” value
Triple net versus full service gross versus modified gross,
Incorrect math, inconsistent SF figures, price/SF figures - Private designations versus state certification
- Appraisal competence and proper license level with respect to assignment
Corner Retail Building
Proposed Apartment Complex
Health/Tennis Fitness Club
Office Building
Industrial/Office Building