Appraisal Is At The Root Of CRE. There Are Deep Cracks In The Industry's Foundation
Sasha Jones, Ryan Wangman and Matt Wasielewski
A Note From The Editor
Commercial real estate is in the midst of a historic reset.
In a few short years, the industry felt the shock of a pandemic that emptied offices, the pain of inflation that supercharged expenses, and the distress of interest rate hikes that clogged capital flows. As CRE searches for its footing, the role of appraisers to help determine property values has taken on new meaning.
But the appraisal industry has problems of its own. An evaporating talent pipeline and accusations that the industry contributes to racial discrimination in housing are two major issues. Perhaps the most glaring challenge, however, is the industry's relationship with the body with the power to write its rules: The Appraisal Foundation, or TAF.
As Bisnow found over the course of a four-month investigation, TAF's secretive practices, questionable moneymaking tactics and recent moves to distance itself from its regulator have appraisers on high alert.
“They are not leaders. They are their own silo in the valuation industry,” Jonathan Miller, the CEO of appraisal firm Miller Samuel and an outspoken TAF critic, told Bisnow. “It has severely damaged the public trust of the appraisal industry, something that they're responsible for.”
— Molly Armbrister, West Coast Editor | July 17, 2024
The Basics
How do appraisals work?
Art and science combine to determine value.
The Impact
Why the need for reliable appraisals is on the rise
“Beyond the general role of an appraiser in any market, in today's market it becomes even more crucial.”
The Barriers
Why are there so few young appraisers?
“Unless things change and we create ways and incentives to trigger a higher rate of entry into the profession, then it's over.”
The Moneymaker
Buying the rulebook is required. It keeps changing
“This is a money-generating machine.”
The Oversight
Ducking regulators sows distrust
“Accountability is really a problem. Without the proper oversight, they have no accountability.”
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