RES9800 Guest Speaker: Bob Hedrick
Prof. Scribner’s Real Estate Valuation and Market Analysis class had the great pleasure of welcoming Bob Hedrick, MIA from Sovereign Bank to discuss his appraisal practices on Tuesday, February 9th.
The backbone of any appraisal are the market prices on comparable properties (i.e. comps). You want to find as many of these that are as similar (and proximate) to the subject property as possible. These will serve as the basis for the appraisal. Then you make adjustments as needed based upon the site visit, conversations and other data. Mr. Hedrick covered many of the sources and techniques he uses to find comps and make adjustments.
He starts with a great (and free) tool — Oasis NYC. The map function of Oasis NYC is an online GIS application. The effort is a collaborative one organized by the CUNY Graduate Center. It is a great resource (for many professionals and the general public.) You can search by address, but block and lot will be more specific. The location report shows much of the public data about the property. (e.g. owner, area, year built, etc). Oasis and the links on it make it easy to compare the official data with that in the job folder. Gone are the days of schlepping to City offices and dealing with the place sitters. Steps to check:
- NYC DOF Assessment roll: The Dept of Finance keeps records on the taxes for the property. Who pays the taxes and how much. The assessed value is not the market value.
- Property transaction Records. The ACRIS site contains the recorded transactions related to the property. Conveyances (i.e. deeds) are of key interest.
Before getting too far into the appraisal process, Mr. Hedrick told the audience that he relies on the tried and true — a phone call. He likes to set up a time to visit the property in person early in the process. All the digital tools are great, but a good appraisal must include a site visit. He recommended an early morning visit. And don’t forget to talk with the super or other maintenance workers. These folks are taken for granted and have very useful insights to a property. In sotto voce, Mr. Hedrick sometimes resorts to sneaky tricks — cookies or a cup of coffee!
- Moodys.com — for economic data;
- Property shark — for additional data some of which is free;
- Costar.com — for sales data. There is free terminal in the Real Estate office;
- Massey Knakal — sales data, rents, etc. They are very helpful to appraisers;
- Corcoran Real Estate — brokers can be a great source of ground-level information; and
- Apartmentrents.com — for general information.
Sometimes there is more to an appraisal than what you think — it may even be counter-intuitive. Think of NYC’s rent policies. When someone leaves a rent-stabilized apartment, the increase in rent can be as much as 20%. The landlord that keeps the units in good condition has much lower turnover and thus has fewer chances to raise the rent. Thus the dilapidated property with high turnover can actually be worth more than the well maintained site with low turnover. The rents will be higher on the former. This is a phenomenon known as an external obsolescence.