Real Estate Appraisal Integrity

I completed my first commercial real estate appraisal in 1989, and have been appraising on a full-time basis for over 22 years. I survived the Savings and Loan Crisis of the early 1990s, the Dot-Com Bubble of the early 2000s, and the Sub-Prime Mortgage Crisis of the late 2000s. All of these dismal events have resulted in moderate to severe recessions. However, one of the most significant contributing factors that has led to recessionary times is the appraiser who gives the customer the exact value they need to make their deal work, whether it’s warranted or not. I’ve seen my share of appraisers who had easily gotten into the business without much to lose, without much education, and who didn’t have much else going on. They took a one-week class, got someone to give them a job, and voila! now they’re a real estate appraiser. It’s these “easy-come-easy-goers” that have typically been the source of where the bad appraisals come from. Alternatively, those appraisers who have spent several years educating themselves and who have developed a love for the trade are the ones that seem to maintain a much higher level of honor in this opportunistic line of work. It’s not that the “good” appraisers want to kill the deal for the client, but in addition to the fact that appraising is both an art and a science, the job requires an extreme level of integrity as well. I have definitely been in situations where if I just reconciled my unit value at the top end of the range, even though the market data supports a unit value at the bottom end of the range, then everything will work out for the customer. However, deep down I know that the character I’m building by doing the right thing will far outweigh the temporary monetary gain I will get from keeping customers happy.
I recently did an appraisal on a car wash facility for a local bank, which is one of my long-term customers. My appraisal concluded that the property was worth less as a car wash than the underlying land value, which did not make my client happy. He let me know that this appraisal was for one of their big customers and asked me to “rethink” my value conclusion. After the “rethinking” process, the value opinion remained unchanged, as it should have. That was five months ago, and I haven’t received a single opportunity to do another appraisal for them since. But hey, at least I’ll sleep at night knowing I did the right thing.