The Situation

A community bank with a prestigious customer base was concerned about a complex commercial appraisal that they had ordered directly from a local appraiser. The bank has built a solid and positive reputation by serving the local business owners and has never had any issues using local appraisers. However, this particular loan asset was very complex and involved several complicated, mixed-use parcels and both FF&E and intangibles. After the appraisal report was submitted to the bank, their executives questioned whether the report was an accurate reflection of the property and used the correct methodologies. Dart Appraisal, formerly VMG, was contacted by the bank to review the appraisal report.

The Solution

When valuing mixed-used properties, the appraiser must make sure to value each of the different space types separately, using similar space comparables. For example, a 20,000 SF retail strip building with frontage along a main thoroughfare that also includes a 2,500 SF industrial bay near the rear of the property would most likely need to have at least two sets of comparable data: data for retail space with frontage and data for industrial space with no frontage. Not using apple to apple comparisons with mixed properties can lead to inaccurate value conclusions. Unfortunately, Dart commercial reviewers realized that the commercial appraisal received by the bank failed to analyze the separate space types and in addition, the FF&E and intangible value conclusions were unsupported. Dart was able to engage a qualified appraiser who had experience for the specific property type for a new assignment, on behalf of the bank. The report received by the second appraiser went thru Dart’s robust review process and was found to be a reasonable, relevant, accurate, complete, and credible report. The report was supported by recent data and the analysis was thorough to lead to the value conclusion. The report was compliant with all applicable requirements.

The Impact

Vetting appraisers for the specific commercial assignment can be difficult and time consuming. Reviewing the appraisal to ensure it is both compliant with applicable requirements and methodologically accurate can also be a very large task. Dart Appraisal prides itself on the appraisal knowledge of its team members. By providing excellent appraisal services, review, and client advocacy, our clients can put their minds at ease knowing the entire appraisal process was handled according to exacting standards and meeting all relevant compliancy factors.

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