Real Estate Appraisal Firms/Pettersson/dt1st/mark2nd
Executive Summary:
Now that commercial and industrial real estate has become a hot commodity again, real estate appraisers are working overtime to keep up with the demand for their services. It’s not only when a building changes hands, however, that one turns to an appraisal firm. Refinancing, feasibility studies, and litigation also lead lenders and investors to seek the advice of an appraiser.
Despite the fact that low interest rates and the strong economy have produced many eager borrowers and lenders, there has not been a huge wave of hirings in the appraisal industry, according to Don Spradlin, senior vice president of CB Commercial Appraisal. The use of more sophisticated information technology has made appraisers more efficient.
Tim Lowe of Deloitte & Touche says that when it comes to residential mortgages, lenders no longer depend on appraisers, but look instead at average values of homes in a given community. This trend has created a huge drop in the number of residential appraisers nationwide, according to Lowe.
Furthermore, he believes the emergence of “conduits,” publicly traded bonds that finance commercial real estate loans, will make lenders less dependant on appraisers because of the spread of the risk involved. On the other hand, Lowe expects transactions and new construction to keep appraisers in L.A. County quite busy for a while.
The Pacesetter:
PCV/MURCOR retains its position as the largest real estate appraisal firm in L.A. County for the fifth consecutive year. The Pomona-based firm was started by owner and President Keith Murray in 1979 as Pacific Coast Valuations, and it now employs 65 people in the Southwest U.S. The firm’s core business is in Southern California, but it has additional offices in Denver, Las Vegas, and Phoenix.
Murray acknowledges the trend in residential real estate away from appraisers, but says it only affects deals involving so-called “A” borrowers. He sees a lot of business for loans to “B” and “C” borrowers meaning those with a less-than-perfect credit history. On deals involving these borrowers, lenders like to have a more thorough assessment of the value of the collateral property, Murray said.
Although PCV initially focused on residential appraisals, the company’s share of commercial work has increased of late. Murray believes that further diversification will be essential for future growth, and would like to see his company add brokerage and property management services to its repertoire within the next five years. As in other industries, Murray expects that one-stop shopping will become the norm in real estate services.
