Thursday , 28 January 2021

Random Thoughts of an Appraiser

Matt Simmons
Matt Simmons, Partner of Maxwell, Hendry & Simmons

Matt Simmons has been busy with his fourth edition of “Random Thoughts of an Appraiser!” There are plenty of times where appraisers have collectively had thoughts or concepts that can be communicated and/or questioned in a sentence and don’t need a dedicated article. We are pleased to have Matt Simmons, partner of Maxwell, Hendry & Simmons, offer a periodic collection of observations on what’s going on in the valuation world. Matt is a licensed appraiser and consults on both residential and commercial income-producing acquisitions. Matt’s random thoughts are strictly for your entertainment. Enjoy!

  • Let’s say that you have perfect market data (doesn’t exist, but let’s play along). All other variables being equal a residential property will sell for $250,000 in 30 days, $265,000 in 120 days, or $285,000 in 210 days. Your task is to determine market value. What’s the market value of the property and what would you need to consider and analyze to make the determination?
  • If you’ve appraised long enough, you have that one crazy inspection story.
  • We should really focus on excellent analysis relative to condition and quality. They’re the weakest part of valuation algorithms. If we want to differentiate from them as appraisers, we must be able to explain our strengths to the market. As with any competitor – find the weak spot and make it your strength.
  • What matters is your earnings per hour, not the gross fee. If you’re operating as if it’s 1998 and your processes haven’t adapted to the tools available to us now, you should probably worry about that first since that part is entirely within your control and will have the biggest impact on your net earnings. Otherwise, be honest with yourself; you just want to complain.
  • I received this ‘revision’ the other day that said, “The final opinion of value is different from the Sales Comparison Approach. Please correct.” It was a newer duplex with three developed value approaches. Aside from not even reading the reconciliation, how scary is it that the person reviewing the report thinks that it had to be a mistake.
  • Much of my day is spent fielding calls and quoting new assignments. As part of that process, it’s imperative to collect all of the assignment elements up front. Had a recent caller get frustrated with the questions on my end and say, “Look, I just need to get an appraisal.” I politely got through the rest of the call and sent the written proposal, but knew he wouldn’t be hiring us. He would hire the appraiser that quotes the lowest fee. The appraisal was a commodity to him. I hope my work isn’t an appraisal, and I hope yours isn’t either. I hope that people want to purchase my opinion of value because they view it has having value to them.
  • Some of the supplemental standards I see from AMCs look like John Nash’s notes in A Beautiful Mind. Is it really necessary to use 18 different font styles, 7 colors, and 12 different font sizes? It couldn’t be more obvious that different people are just copying and pasting things in as time passes. It feels so sloppy. Maybe it’s just me, but I’m pricing in the fact that you’re disorganized when bidding the job.
  • The writing in some contracts we see can be awful. For example, “Both buyer and seller agree property must appraise to the sales price of $209,900.” – Or what? They’re going meet me under the willow tree and duke it out? The inference would be that the seller can cancel, but it doesn’t actually say that. In fact, technically, I read that it must appraise for that specific amount. What if we say it’s worth 250K, the seller realizes they’ve grossly undersold, and want to use that language to get out? Think about exactly what you’re writing in your reports.
  • Ever met someone who’s already decided their life story is a tragedy, and they’re just waiting to detail each chapter? Appraisers can be like that sometimes.

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About Matt Simmons

Matt Simmons
Matt is a partner with Maxwell, Hendry & Simmons, LLC, a commercial and residential appraisal and consulting firm based in Fort Myers, Florida. He is a Past President of the Real Estate Investment Society and has served as a guest lecturer in the Lutgert College of Business at Florida Gulf Coast University for several years. Matt is qualified as an expert witness in several state and federal jurisdictions and also serves as an expert on value and economic impact for land use and zoning matters. He is a licensed broker and consults commercial and residential investors in income-producing acquisitions. In 2012, Matt was appointed by Governor Rick Scott to serve on the Florida Real Estate Appraisal Board. He is the youngest appointee in the history of FREAB and served as the 2014 Chairman.

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