how real estate appraisals are being affected by covid 19
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How Real Estate Appraisals are being affected by COVID 19 Presented By: Cliff Hockley, CPM, CCIM President/Executive Driector Bluestone & Hockley / SVN C OVID - 19 Effects of Covid 19 Financial Institution Anxiety


  1. How Real Estate Appraisals are being affected by COVID – 19 Presented By: Cliff Hockley, CPM, CCIM –President/Executive Driector Bluestone & Hockley / SVN

  2. C OVID - 19 Effects of Covid – 19 • Financial Institution Anxiety • Shift from Standard Real Estate to Business Loans • PPP Loan and other Federal Loan Focus • Not lending to Middle and High-Risk applicants • Requiring Larger Down Payment

  3. A PPRAISER ’ S R OLE Appraisers Helping Lenders • Parsing lender’s Risk thru Appraisals • Making adjustments to current Appraisals

  4. C OVID – 19 A PPRAISAL A DJUSTMENTS • Increase CAP rate estimates • Adjustments to lower values • Net Operating Income adjustments • Slowed real estate marketplace • Deleted the cost approach • Ignoring relevant near-term sale comps • Increase the weighting of appraisals

  5. C OVID – 19 A PPRAISAL A DJUSTMENTS Select cted F Food Gr Groups

  6. A PARTMENTS – APPRAISER QUOTES Appraiser A: • Typically, are adjusting values downward by 5% due to Covid • Adjusting values depend on collected rents over the last two months • CAP rate deductions to reflect more conservative adjustments • A good location will see fewer adjustments • Quality of income is considered as well

  7. A PARTMENTS – APPRAISER QUOTES Appraiser B: • Looking at recent trades in the marketplace for properties that were in escrow and then had prices reduced - typical price reductions 2% – 4.5% • Holding at 5% Vacancy for most properties except for ones with rents at high end and low end of marketplace which seem to have a higher vacancy rate • There seems to be a flight to quality • There might be a one-time adjustment to scheduled rents of up to 10% over six months

  8. O WNER U SER & H OSPITALITY Owner user Buildings: Typical SBA Appraisers A and B indicated no deducts Financing Hospitality: Value is driven by occupancy

  9. R ETAIL B UILDINGS Appraisers reflect that reductions Quality of tenants’ – i.e. local or Reflect significant increases in in actual rent about 70% of the national make a difference. Many CAP rates up to 1.5% to reduce rents have been collected in national tenants are not paying value neighborhood retail centers rent, and local ones are. Appraisers have not yet figured Appraisers are looking for out how to deal with lease More confusing is that many feedback from brokers – who adjustments where rent is added tenants paid their full rent really only know that sales of back in over a period of time, obligations after they received properties have ground to a halt, either over the next 6 months or their PPP Funds temporarily at the end of the lease term.

  10. I NDUSTRIAL B UILDINGS This depends on Regional tenants had Appraisers made property and quality of more trouble until PPP income and CAP rate tenants – National funds showed up adjustments tenants paid their rents

  11. O FFICE B UILDINGS Reflect many of the sale adjustments as retail and industrial buildings

  12. B OTTOM LINE CLOSE OR REFINANCE EXPECT APPRAISAL BUYERS NEED TO BUILDINGS MAY NOT LENDERS MAY DEALS WITH PROPERTIES VALUE DISCOUNTS IN EXPECT TO INCREASE APPRAISE WITHDRAW PREVIOUS THAT ARE WELL TENANTED; ALL FOOD GROUPS THEIR DOWN COMMITMENTS. WHERE TENANTS HAVE DEPENDING ON RENTAL PAYMENTS PAID THE RENT OR WITH RECEIPTS GENERATED BUILDINGS THAT ARE OWNER USER.

  13. A C OMPANY THAT O FFERS M ORE www.BluestoneHockley.com

  14. Y OUR B LUESTONE & H OCKLEY E XECUTIVE T EAM Cliff Hockley, CPM, CCIM Jeremy Boardman, Pamela Hill, CMCA, CCM Jamie Gingell Russell White President Executive Vice President VP/Director of Community Director of Commercial Director of Residential Association Management

  15. Questions?

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