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Changing Fortunes: Appraising to Consulting -
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> I just read you article in Working RE. You make a good point; answering the
question raised may not require a market value appraisal. Do you think there are
enough possibilities doing this type of consulting work for lenders? Enough to
make part of a living doing it? - Ron Borree
Response from Author
Don Swenson, MAI
Ron, The problem
we have with the lending community is that so many lenders are programmed to
request the old appraisal dogma (a market value appraisal) with all the standard
data, charts and language. Lenders need to be educated on the concept of "scope
of work" and also the underlying problem at hand. For example: Why do I (a
lender) need the old appraisal dogma when I am making a loan on an income
property where no transfer of ownership is involved? What I need is a report
that helps me fund a prudent loan on this property. And the most important item
is underwriting the stabilized NOI to determine the income available for debt
service. I can then derive a maximum mortgage loan that this income supports. I
may need other information also to accomplish my underwriting requirements, but
all this can be discussed and outlined in a "scope of work" agreement between
the lender and the consultant/appraiser. You can help with this education when
you talk to lenders.