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Add commercial real estate appraisers to the ranks of those affected by the tumultuous state of the market. There’s
plenty for them to do, but a lack of reliable data is making the job more difficult.
“It’s an extremely difficult appraisal environment today,” said Les Linder of CB Richard Ellis. “When
there are few data points to hang our hats on, you really have to dig deep. It’s hard to put a market value on something
today.”
The culprit is the dearth of deals involving a willing buyer and seller since the bottom dropped out of the economy in late
2008. Financing is hard to come by, and many of the deals that are happening involve sellers that aren’t meeting loan
terms and are forced to sell, said Linder, who manages CBRE’s valuation and advisory group for the north central region,
which includes Indianapolis. Sales involving a more traditional negotiation between buyer and seller are better for generating
the type of data that can be used in appraisals.
Linder is based in CBRE’s Chicago office, which until recently handled appraisals for the Indianapolis market. But
the company established a local presence for that part of the business when Christopher Jarvis moved to Indianapolis from
Chicago June 1. The firm has since hired another local appraiser and expects to hire as many as three more people in the next
18 months.
Until the market stabilizes, appraisers will be operating in an environment where 20 to 50 percent drops in property values
aren’t uncommon. And clients want two sets of numbers, said Linder. “They want a normal market value and they
want to know what the value is if they need to sell a property within 60 to 90 days.”
There’s also been a lot of turnover in the ranks of clients. Of CBRE’s top 10 clients four years ago, only three
still exist. More than 50 percent of the firm’s valuation work is still done for lending institutions, but more of that
work is now done for so-called special servicers, the subsidiaries of banks that handle loans that have gone bad.
Michael Lady, a long-time local appraiser who heads the Indianapolis office of Integra Realty Resources, said property valuation
tied to real estate deals isn’t as big of an income generator as it was a few years ago because of the lack of deals.
As work tied to transactions has declined, a greater percentage of Integra’s work is now related to property tax appeals.
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