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Effective Commercial Appraisals for Banks – What Chief Appraisers Want, Part 1
February 2, 2019 @ 9:00 am - February 3, 2019 @ 5:00 pm
The Society of Chief Appraisers (SCA) and Real Estate Market Risk Officers is offering a unique behind the scenes chief appraisers’ COURSE for all Valuation Professionals – NEW DATE ANNOUNCED
“Effective Commercial Appraisals for Banks – What Chief Appraisers Want, Part 1”
BREA Approved Course #1610181006 for Seven (7) Hours CA BREA CE Credit
Date: Saturday, Feb 2nd, 2019 from 9 to 5 pm
Location: Aon Center; 707 Wilshire Boulevard, LBL Auditorium; Los Angeles, CA 90017
ADVISORY: Seating space is limited
Questions: Stew Heller, 510-816-2974, firstname.lastname@example.org
An insightful, Chief Appraiser created/taught 7-hour BREA Approved Commercial Appraisal Seminar
Ernie Lopez, MAI, Chief Appraiser, East West Bank and
Douglas Nason, ASA, FRICS, SVP, Wells Fargo Bank
Students will discover the inside workings & thinking of Bank Chief Appraisers, so they can efficiently provide quality appraisals for their Bank clients
- How Commercial Appraisers Can Develop Trusting and Long-Term Relationships with Banks
- Help Bank Commercial Underwriters, Credit Offers, Loan Officers and Portfolio Managers to better understand the appraisal requirements for acceptable commercial appraisal
Douglas Nason, ASA, FRICS, is a Senior Vice President with Wells Fargo’s Real Estate Technical Services Group (REVS-RETECHS). As the Regional Appraisal Director of the Western Region, he manages a staff of 48 real estate valuation professionals domiciled in Los Angeles, San Francisco, Phoenix and Salt Lake City. At present, Doug has direct oversight for all commercial real property valuation services in nine western states (CA, HI, NV, AZ, OR, WA, UT, ID & MT) and Asia-Pacific. In addition, he manages Agricultural Valuations on a nationwide basis. He oversees valuation services on a wide variety of property types including high dollar/trophy assets, large multi-property portfolios and special-purpose real estate. In conjunction with these services, Doug is also responsible for compliance with government regulatory requirements relative to appraisal, adherence to professional standards and practices, and the Bank’s internal policies and procedures.
Kenneth Hall, SVP & Chief Appraiser – First Citizens Bank
Allen Greer, MAI – National Reviewer for banks around the US, and former Bank of America Research Director
There will also be other California Bank Chief Appraisers assisting the teaching of the course (names to follow).
Special Instructions: 707 Wilshire Blvd. course location is one block north of 7th Street/Metro Center station in the Financial District of Downtown Los Angeles. Building parking garage is closed on weekends; however, nearby public parking is available. Registered attendees should enter from the Wilshire Courtyard and press the intercom button on the metal column next to the sliding door to obtain direct access to LBL.
- Those seeking BREA CE Credit must sign in and out in both the AM & PM sessions
- COMPLETION CERTIFICATES will be provided via e-mail to all who attend the entire day’s instruction
AON CENTER BLDG, 707 WILSHIRE BLVD, LOS ANGELES, CA 90017
MORE INFORMATION ON COURSE CURRICULUM
Appraisal Management of –
- High Profile Property
- High Dollar Loans
- Portfolio Appraisals of multiple Property’s securing one loan
- Going Concern Valuations
- Special Purpose Property Types
Managing the assignments from cradle-to-grave –
- Posting the RFP with complete collateral descriptions, articulating the scope of services, pertinent value premises, and specifying allocations of non-realty components
- Selecting and engaging a quality vendor
- Communication during the assignment
- Reviewing the appraisal(s)
Risk Mitigation –
- Credit decision – Sound collateral underwriting practice & standards.
- Reviewed the reasonableness of the facts and assumptions in the appraisal
- Conclusion provides a credible opinion of value to support the credit decision.
- Intended Users – Who are they?
- Loan (relationship mangers, loan processors)
- Internal/External reviewers
- Credit analyst & Underwriters
- External auditors (i.e. KPMG, E&Y)
- Agency regulators (i.e. FRB, FDIC)
- Borrower (bank’s client)
Overview: Effective Bank Appraisals –
- Don’t be a secret agent -COMMUNICATE!
- Overcome the technology barrier between your system and the bank’s system at the outset
- Team player Concept in Terms of Communications
- Understand and know your customers wants and needs.
- Request & review the Bank’s letter of engagement.
- Consider the audience (intended users).
- Reports must be easy to read & understand.by a non-appraiser
- We are not looking for Homer’s Odyssey in terms of irrelevant statistics or other unnecessary report space fillers
- Comply to USPAP, Interagency Guidelines, & Periodic Commercial Appraisal Directives from the Agencies
- Stay Up to Date on Bank’s Commercial Appraisal Policies
- Pay attention to, read & understand, and take note of the individual Bank’s Report Standards
- Be aware of Changing Bank Requirements usually resulting from updated regulatory directives or results of supervisory agency examination that the bank must follow
- Get to know your all your bank client contacts personally
- If possible, at least invite your client to lunch
- Request to talk to assigned review appraiser.
- Communication is key.
- You are the bank’s eyes and ears.
- Perform the required due diligence before submitting report.
Specifics of Effective Bank Ordered Commercial Appraisals –
- Accurate parcel numbers and/or legal description.
- Request Preliminary Title Report.
- Site & Improvement description
- Is there sufficient information to let the bank know what they are getting into?
- Discuss adverse factors.
- Reasonable Highest & Best Use Discussion, Basis, & Conclusions
- The analysis incorporates information from property & site description analysis to conclude the subject’s HBU. • Maximally productive, use, user & timing.
Sales Comparison Approach –
- Similar to the subject and correlate to the HBU analysis
- Appropriate adjustments.
- Anecdotal evidence, broker conversations, paired analysis
Income Approach –
- Scrutiny of owner’s historical income statements.
- Lease comps similar to the subject.
- Expenses typical for subject property
- Cap rates from sales comps should be similar to subject
- Is it applicable to use National or regional market surveys?
Cost Approach & Estimates –
- When they are needed
- Sources Identified
Enforcing Appraisal Regulations – All Parties –
- How Federal Appraisal compliance examinations are conducted
- Common Appraisal Regulatory Deficiencies uncovered in examinations, Matters Requiring Attention in the Examiners Final Report, Corrective are not Actions are required by a specific date – and penalties to the bank if changes re not made
- Outsource Appraisers’ knowledge of regulations and recent regulatory updates can help the bank reviewer avoid criticisms
Periodic Q & A Periods –
- Regular opportunities will be offered for Q &A from attendees at the main teaching location, as well as from remote proctored locations, if necessary.