The Valuation Trap via CCIM Institute

Appraisals in today’s market are not for the faint of heart. Comparable sales are scarce, markets are changing quickly, and rules and regulations are stricter than ever. One false step could imperil even the most solid transactions.

“Today, there can be significant gaps in valuation metrics across property classes and among the various markets and submarkets,” says Von Moody III, CCIM, CRE, MAI, senior manager of Thomson Reuters in Denver, N.C. “These gaps can create hazards.”

And these hazards can create angry brokers.

Mind the Gaps
“Lack of comparables has appraisers using properties that would never have been accepted four years ago,” says Eric R. Rehn, CCIM, vice president of Cassidy Turley in Walnut Creek, Calif. Rehn sees appraisers using comps from other markets, not giving credit if a comp is a “fire sale” or real estate-owned, and underestimating values by as much as 25 percent. But such practices aren’t just common in Walnut Creek.

Read more...The Valuation Trap | CCIM Institute