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March 27, 2020
Jefferson L. Sherman, MAI, AI-GRS
Director of Screening Offers Guidance for AI Professionals
Despite the unusual set of market conditions that appraisers are facing during the coronavirus pandemic, we still have the fundamental responsibility to account for market conditions on the effective date of value. Here's some helpful guidance from Appraisal Institute Director of Screening Stephanie Coleman, MAI, SRA, AI-GRS, AI-RRS:
"Appraisers are concerned about being blamed for making the wrong calls on how COVID-19 might be affecting the market. That concern is understandable. But we need to remember what it is we do.
"We come up with not what we think the value of a property is, but what we think the market thinks it is. A 'value' is inherently an opinion. It's not a fact to be uncovered. To figure out what 'the market's' opinion of what a property is worth, we start with market analysis. Market analysis is a lot easier when market participants feel confident they know what's happening. When there's a great deal of uncertainty in the market, market participants become confused and figuring out what 'typical, reasonable, knowledgeable' buyers and sellers think and how they would react becomes complicated.
"The best we can do is talk to market participants – buyers, sellers, brokers. What's happening with active escrows? Are buyers backing out? Are sellers holding off on listing properties? Reducing prices? Offering concessions? What's happening with days on market? What are brokers hearing? Are tenants renewing leases? Are businesses closing and vacating? Are vacant spaces getting leased? Are developers going ahead with development plans, or have they put them on hold?
"The answers to these kinds of questions provide clues. The appraisal report should include a discussion of them as part of the market analysis.
"Finally, the appraisal report should address the uncertainty in the market caused by the COVID-19 crisis, not as a limiting condition, extraordinary assumption, or disclaimer, but rather as part of the discussion of market conditions. While the crisis is still unfolding, it might also be a good idea to highlight key points relating to COVID-19 as a significant factor in the letter of transmittal."
We do have an essential role to play in keeping our economy stable, and we do provide our clients with the advice they need under such trying times. Never underestimate the "value" your service brings to our society.
Have a safe month!
Welcome to the Ohio Chapter of the Appraisal Institute. We are a professional organization which now includes just under 500 leading practitioners of real estate appraisal and consulting serving the Buckeye State. Please take a look at our educational offerings and "find an appraiser" links. Our Chapter is home to some of the finest instructors in the industry, and our quarterly Chapter meetings offer timely and engaging mini-seminars on a wide range of real estate appraisal topics.
The Ohio Chapter is proud to be a part of the Appraisal Institute. Our chapter professionals are committed to the highest standard of professional appraisal practice and have been tested and trained to the highest levels of educational standards in the business. Confident in our rigorous standards of appraisal practice, we are dedicated to maintaining the highest level of professionalism and quality through a commitment to life-long learning. We encourage you to consider the benefits of the Appraisal Institute if you are looking for an appraiser or an appraisal career.
I'm honored to serve as chapter president this year. As always, we have a great board and volunteers serving and I look forward to an exciting 2020.
In 2020, the chapter will continue with many of the successful policies of years past. This will include the “no cancelation” policy for our educational offerings as well as continued efforts to reach out to membership with networking opportunities. The Residential Roundtables have been well attended by both members and non-members and have been a great addition to our Chapter Developed Offerings. Immediate Past President Megan Glosser’s efforts last year working with state and educational institutions in streamlining some qualifying education for undergraduates in the real estate departments has been well received and hopefully we can continue that momentum this year.
Education was well attended in 2019 and we hope that continues in 2020, with the first handful of courses so far having strong attendance, which we hope will continue.
So far, we have held two chapter business meetings/socials in conjunction with the USPAP offerings in 2020. Both were well attended. The next chapter meeting will be in Maumee on March 6, 2020 during the lunch break for the USPAP course. We plan to have a business meeting in Columbus in the fourth quarter.
A goal of mine for the year is to find additional ways, as a chapter, to give back. Last year we held a food drive at the Economic Seminar for a local food pantry and it went well for it being the first time. I would like to continue that attitude of generosity within our group and community, whether it be holding another food drive or helping a fellow member who may be going through a hardship. I look forward to exploring opportunities for us to give back and hearing your ideas on how you would like to see us do so.
If you are interested in getting more involved in the chapter or would like more information about events or education, please email me at email@example.com.
Shannon L. Weaver, MAI
Ohio Chapter, AI