Do you remember when there were only three channels and maybe a UHF channel you could get every once in a while? Well, that’s all changed. Now there are channels that specialize in just one topic, like cooking or sports. At my house HGTV is on nearly all the time. It’s not surprising that people tune in to watch renovation rescues or rehab shows. We have all been there at some point but it’s so interesting to see a home renovation take place in a span of sixty minutes. Why is it then that you never see the valuation professional? Real estate appraisers play such a vital role in this process. This is not the case on the new HGTV show “Beach Flip”. This show brings in 11 area appraisers to give their opinion of value. We were lucky enough to speak with Drew Watson one of the 11 appraisers and ask him about the process. We thought our readers would enjoy the inside look.
Buzz: Drew, thanks for taking the time to talk to us about this. Can you start off by telling our readers a little bit about your history in the appraisal industry?
Drew: My first job out of college was as a consultant overseas with a Big 5 accounting firm. When I came back to the States, I was surprised by the expected grind of US public accounting. I had several childhood friends that were residential fee appraisers- and they were all having a great time and loved their careers- it looked like a great opportunity for me to leverage my analytical training plus be outside, looking at real estate. So I made the jump.
I love the appraisal profession and believe in the mission of the fee appraiser. So when the HVCC was implemented, I was struck by the lack of guidelines imposed upon AMCs. My first several business encounters with AMCs were negative to say the least. Everyone here knows the drill- recruited at one fee then offered jobs with a substantial haircut. I naively expected that fee transparency (defined as disclosure of the management fee vs. the appraisal fee) to be imposed by “regulatory authorities” as a reasonable, minimal expectation. I still contend this requirement would have saved much of the negative impact on the profession. So at yet another professional crossroads, I theorized a business concept of an appraisal cooperative or “fee transparent”, high quality appraiser advocacy firm, collaborating as business partner with both competent appraisers and lenders. This idea along with a passion for education and promoting the well-being of competent appraisers resulted in our founding of Equity Valuation Partners (EVP) in 2009.
Buzz: How did you get involved with this project on HGTV?
Drew: I received a call one day from the Beach Flip producers in New York who had received my name from local real estate agents in Gulf Shores, Alabama. We did a couple of phone interviews then I submitted a video.
Buzz: What is the basic concept of the show Beach Flip?
Drew: To evaluate which design team used its scarce resources most wisely in the remodeling efforts to produce the highest percentage increase in perceived market value from the perspective of market experts.
Buzz: Based on the premise that the show, which took 11 appraisals and averaged them to obtain the initial home valuation prior to rehab, do you think this was a fair way to value the properties? A mortgage appraisal does not average appraisal reports to obtain a value.
Drew: There are positive reasons for using an average in this instance…. To reduce the influence of personal bias, for example. At the end of the day and for the special purposes of the show, I think they will get it right (I do not know which team won).
Buzz: What do you think helped to increase the value of these homes the most on the show?
Drew: The single biggest improvement to all of the houses without a doubt was opening up the kitchen/bar seating area to the living room and gulf views. Secondary, in my opinion, were conversions that increased the utility of the available space, followed by finishes used in the master suite followed by décor and decorating choices.
Buzz: How was the appraisal process for these homes different than the normal appraisal process for you?
Drew: Way, way different… The first shoot was sight un-seen. We toured the properties and were asked point blank for our estimates relying on our personal market knowledge and experience. We were not provided descriptions of the properties before the first shoot. All the “real estate professionals” met in a public parking lot and were shuttled to the site.
Buzz: Would you do another project like this with HGTV in the future or was this a once in a lifetime experience?
Drew: It was a ton of fun and would definitely do it again. A show like this could take a million different angles. Realizing I’m a valuation junky, I’d like to see multiple regression analysis with specific contributory value ranges identified for categories of improvements….. might be a bit deep for a national audience.
Buzz: Do you think there is anything else our readers should know about the process?
Drew: The first couple of shows were filmed in February- the temps were in the low 50s and it was very windy, but we had to dress for summer. Also, it was funny that the show was just like the real life of an appraiser….after the final estimates were submitted, they showed us the door and we walked back to our cars.
Buzz: Thanks for your time Drew, we are looking forward to your next appearance on the show, on Sunday August 23rd for the season finale of “Beach Flip”on HGTV.
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