Why Appraisal Services Are in High Demand Now
As institutional investors reassess portfolios and adjust asset allocations, they are also spurring fresh demand for appraisal and risk management services.
The growing interest is creating new reporting demands and an increased need for valuation services, Eric Durden, newly appointed head of value and risk advisory in JLL's value and risk advisory business, told GlobeSt.com
As the CRE market begins to stabilize, price discovery becomes important as investors consider acquisitions and lenders consider whether an appraisal justifies a loan, noted Becci Curry, another recent hire who is global head of strategy and quality management within the same business. Like Durden, she was brought in from CBRE. "One of the ways you see demand from an evaluation perspective is through growth of the market and also through decline in the market," she told us.
In addition, following the gyrations of the real estate market in recent years --including a period where it virtually stalled because of high interest rates -- many market participants are anxious to establish some sense of what is currently happening and how their portfolio is doing, based on data and real-time insights. Banks, for example, might want to know if their debt service coverage ratios are still in line with where they should be, loan-to-value ratios, and other factors, Curry said.
"We are living in a world that's full of change, and that affects values and properties," Durden noted. "It is not a function of one particular event. The value to clients is being able to utilize real-time information and leverage the amount of data the company has at its disposal to help clients evaluate their options."
"Appraisals are a single point in time," Curry added. "We have a lot of data and a lot of relationships with various people in the industry who are market participants, where you get a sense not just about what is happening today but what people think is going to happen in the future if you're thinking about a five- or 10-year hold. Before investing in a property, what do you think about the risk profile going forward?" Investors who currently own property face other questions about future risks and how to mitigate them.
(Globe Street | By Philippa Maister)
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