Appraiser tackles ‘oddball’ properties
Property evaluation is critical in the commercial real-estate industry, as it allows lenders to assess and manage risk when considering whether to lend money for the purchase or renovation of a property. Valuation also becomes important to investors in income-producing properties when a county auditor proposes raising the value, potentially increasing the tax bill of a property.
Specialty Valuation Group owner Aaron Wright has analyzed commercial properties for 18 years, with an emphasis on placing values on so-called special-use properties.
Q: What attracted you to valuation of specialty properties?
A: We appraise all commercial real-estate types: offices; retail; apartments; and industrial. But 65 percent of what we do is “other,” the ones that don’t fit into any of those groups, like mixed-use properties, bowling alleys, marinas, hotels, landfills. We did 40 appraisals (in 2017) for auto dealerships for lenders. …
I’ve always been a car guy, so that was fun way for me to get into putting a value on dealerships. It’s interesting to see what makes these properties tick, what drives the value. Determining what makes a dealership — or a funeral-home property — valuable, what drives the demand, has always been fun to figure out. I’d get the oddball assignments…
Q: Death drives funeral homes.
A: (Funeral homes) are where I cut my teeth (as an appraiser). It all started with one report. We looked at death rates in the county and applied it to the subject property’s trade area. We projected future demand based on the demographics.
Q: A lot of changes in that businesses, with even wellestablished funeral homes going out of business.
A: Yes. A lot of changes. About 27 percent of the funeral business was cremation 20 years ago. Now it’s 50 percent-plus. Cremations are lower cost, but the profit margins are higher. The
whole industry is adjusting to the trends. Some are knocking it out of the park. … I don’t see that business going away. It’s recessionproof. People are going to die.
Q: So property values can change as quickly as the business or industry?
A: An appraisal reflects the market. And the (value) is good on the effective date. Our job is to appraise a property to what the market is doing then.
Q: How do you determine that value?
A: We’re looking at (comparable) sales, other real estate that’s similar. Owneroccupied properties — like