Additional Ways to Understand Your Portfolio
Do You Need an Appraisal of Your Commercial Property Portfolio?
In our last blog, we discussed three things that might surprise you about commercial property portfolio appraisals. Well, we kept the biggest surprise for our second post in the series. This might sound a bit strange coming from us but there are times when you don’t need an appraisal at all. In those instances where you are seeking data, insights, input, knowledge and experience to help guide decision-making, a full portfolio appraisal might not provide the information you need. As we’ve previously shared, a good appraiser is more than the report they write, they’re property detectives! That’s why having an experienced valuation professional in your list of contacts for specialized services is so important.
Let’s compare: appraisal services
An appraisal assignment and an appraisal consulting assignment may sound similar, but the information we provide and the form in which we provide these services differs greatly. When executing an appraisal assignment, we follow many steps like collecting information and choosing a valuation method to apply. An appraisal assignment concludes with us providing an appraisal report that includes an opinion of value on the subject property (or properties for an entire portfolio of properties). In contrast, an appraisal consulting assignment can oftentimes be more nuanced, with property-specific and/or specialized issues that need to be vetted. We typically work closely with our clients to analyze data and provide recommendations, research and provide detailed information, and/or answer a specific question or a list of questions. Consulting engagements are collaborative and consultative in character, hence the name. True to Uniform Standards of Professional Appraisal Practice (USPAP), we do so in an independent, objective and impartial manner.
Critical thinking for creative consulting solutions
The USPAP recognizes the intrinsic value in consultative services. It defines appraisal consulting as the act or process of developing an analysis, recommendation, or opinion to solve a problem, where an opinion of value is a component of the analysis leading to the assignment results. Instead of an appraiser providing an opinion of value, consulting efforts culminate with recommendations or opinions to a real estate problem or property or industry-specific questions. Such services are most often utilized by clients with portfolios of assets as their problems and questions tend to be more complex although full reports on each individual property might not be needed.
Consulting assignments might include recommendations or opinions about land utilization, highest and best use analyses, market/rent and supply and demand studies, sensitivity studies, zoning modification analysis, easement/property history analysis, condemnation, litigation CRE discovery, appraisal review, or CRE investment considerations. Over the years, we have provided such services on groupings of apartment complexes, mobile home parks, hotels, shopping centers, office buildings, and almost any other imaginable type of income producing real estate. This said, we’ve completed countless portfolio assignments involving restaurants, gas stations, large grocery stores, medical properties, schools, churches, and even specialty properties like roller rinks, funeral homes, truck terminals, etc. – for almost any property type out there, our services have been rendered.
Let’s take Rich Uncle Pennybags as a representative client (you know who he is, he’s that plump little guy in the game Monopoly – he has a moustache, wears a black top hat and carries a cane). Imagine he comes to Argianas & Associates with a commercial property portfolio of like-kind assets. Rich Uncle Pennybags already received a portfolio appraisal (multiple reports or perhaps even one narrative appraisal report with consideration of all the properties as a single economic unit). Let’s say Pennybags is now interested in determining whether the properties are worth more individually or as a single portfolio, with all the assets assumed as a single economic unit. This is a routine question our portfolio clients pose to us frequently.
It may also be that Pennybags is thinking about selling off some of his portfolio’s properties, in which case such decisions require strategic non-biased professional third-party opinions. Whatever issues that need vetting, Argianas & Associates collaborates with clients to assure such decisions are market-supported.
emails get reactions, phone calls start conversations
By clearly defining your end goal, we can help you determine if a full appraisal or a consulting agreement is the right way to proceed. Often times when you’re not sure what you need, a simple phone call with a member of our team can bring clarity and identify a solution to your problem. By working with the end in mind, we can help by identifying issues that may have been overlooked. We are good at asking the right questions and clearly outlining the details in the scope of our problem-solving work. This allows us to avoid any confusion or misunderstanding and assures you that you’re receiving the exact service you need.
If you’re looking for experts you can trust to assist you in an appraisal consulting assignment, do not hesitate to give us a call at (630) 390-0113 or complete this form. Interested in learning more about commercial property portfolio’s? Read part one of our series, Commercial Property Portfolio Valuations. Be sure to join our mailing list to receive our e-newsletter.