I don’t really know where it started. Maybe born into a family of mental giants, where the only option for the runt is to observe and listen.
Maybe it’s a small town environment, lots of experience with outdoor life learning to observe, listen, drawn conclusions.
Maybe it was the years in correspondent banking traveling to those same small towns in six states, chatting with the grocer, the barber, the gas station attendant, picking up clues, signs along the way…so that when I walked into the bank president’s office I knew more about the commerce of the town than he thought I should, and because of that we could do business, help each other.
I do know that when I came late to the appraisal profession I took all the AI courses that were available in a five year span, all they offered really.
When I began those courses I was already trained to observe, to listen, to accumulate random facts and compose a picture…a hypothesis.
The AI courses built on that base and made me better at it. All appraisers taking the good courses in appraisal theory, learned those same skill and applied what they learned in the field to develop and hone those same skills.
It’s part of what sets appraisers apart, what makes them a professional, part of the skill set that brings value to business transactions. It’s part of what we are expected to provide, why we are paid.
I’ll bet you haven’t thought about that in weeks…maybe even months!
But it happens every day, even if you don’t consciously think about it. A typical sample of that in operation occurred with me the last couple of days.
The nation is in turmoil, many markets have been in recession for a couple of years. Houston hasn’t had that problem…not until recently. Houston is an oil town. It’s much less so than in years before, but still an oil town. West Texas Light at $150 last summer created a boom in the oil patch and in the oil service business. That same West Texas Light is now in the $40-50 range, and the oil services businesses are beginning to hurt.
Houston housing markets have been in balance for the last ten years…good solid value growth in the 3-5 percent range each year. But the clouds are building and it is not just what is being reported in the newspaper…that statistic that one in three Houston houses sold in January were distress sales. That’s certainly not good, but heck! It was 24 percent distress in January 2008.
I saw clouds building as I drove to an appointment recently. Established small strip centers one after the other, all with one or two suites vacant. Three closed bank branches…now vacant.
Yet big dirt is being moved…a 50 acre commercial site to the right in vacant land that I thought would stay vacant for another couple of years. To the left a 75-100,000 square foot shopping center with a large anchor…the anchor not yet announced. That’s another one I thought would be delayed another couple of years…but there it is…tilt wall already in place!
A highway overpass gave me bird’s eye views of two large businesses on either side. To the right was an equipment rental business with a yard full of equipment. To the left was an auction house with its yard also full of equipment. Good for the auction company…bad for the companies that could no longer afford that equipment. Bad for the equipment rental business…when the lot is full the equipment is not earning revenue.
Both those yard statuses mean the unemployment rate is going to tip up in a month or two…the yards are leading indicators.
The appointment was at a health clinic. Parking lot about half full…usually three quarters full. On my specialty floor new offices are being built for another specialty area of this large health care provider. In my appointment area I know the staff very well. Several were at different desks. When I commented to each about the changed desk assignment I heard several variations of references to business being slow…in a medical clinic!
On the drive back, it was nearing lunch time. The popular restaurant lots were not as full as a year ago. The large anchor shopping centers also had less traffic. The Walmart I stopped at was crammed full of cars in the parking lot…value shoppers.
All that was going into my trained professional appraiser brain…without my thinking much about it. What conclusions can I draw from that trip…a typical trip around my market?
If my next SFR assignment is in a mid to lower quartile of prices subdivision I’m going to be keen to looking at extended marketing times, lower prices, increased inventory in that subdivision. I’m also going to be looking at the number of distressed sales and listings within the subdivision. Why? Because I observed the equipment rental business with the full lot, and the auction yard with the full lot. That suggests a decrease in demand for hard hat workers which are typically in middle to lower quartile priced neighborhoods. If I don’t see those trends in the neighborhood, I’ll look more carefully at the neighborhood and attempt to understand why that neighborhood is bucking what should be a trend.em>
If my next SFR assignment is in a upper quartile of prices subdivision where the new anchor shopping center is being built, (which is also a stone’s throw away from the dirt being moved), I’ll enter that neighborhood expecting for fewer for sale signs, some new home construction, and likely normal to declining marketing times, steady or higher prices, and flat to declining inventory. If I don’t see those trends, I’ll look more carefully at the neighborhood and attempt to understand why that neighborhood is bucking what should be a trend.
All that because of my highly honed powers of observation and analysis
Powers I learned in the appraisal classes and which I apply every time I conduct an appraisal.
You do the same, whether you realize it or not. You drive the streets of your market and you note those same developments. You drive to your subject property and note the condition of the houses up and down the street, the for sale signs. You do the same when driving the comparable sales you selected.
Good Realtors do that also, but their market focus is generally narrower in scope than an appraiser’s. Realtors tend to specialize in a section of town. Appraisers tend to be broader, to serve the entire town.
Your value conclusions and your residential form report are influenced by those things you observed. The point value you select within the range indicated is influenced. The comments you make in your addendums likely report those observations. Soon, if you are not already doing something similar, the 1004MC will be added to your reports and more of your observations will be documented and provided to your Clients.
Your Clients pay you for those trained powers of observation. That makes you different: a professional. Take pride in that difference, in being a professional. Your Clients know you are different.
That’s why they hire you.
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