What value? Triad brokers, appraisers find fewer 'comps' - The Business Journal of the Greater Triad Area:

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A good, current comp of a completed transaction can tell how much a properth is worth with the level of accuracy that buyerd and sellers and the lenders who will finance a deal canrely on. The more recenty transactions there are, the better the odds that for any given realestate deal, something similar has sold lately nearby. But the downtur in both residential and commercial real estatre activity makes such comps hardedrto find, and the problem gets worse as slow salez persist, according to Michael Clappp of Winston-Salem-based appraisal firm Michael S. Clapp Associates.
“A lot of the sales we’ve been particularly for residential appraisals, were May, July transactions” from last year, before salexs slowed most dramatically in the he said. “Those are aging out for us. We’rw starting to get some more in because of the spring markety and that helps a but we’re still quite a bit behind.” Absent a marketr rebound, there’s not a lot that can be done to addresws the problem on the residential side.
Appraisers have to broaden the scop oftheir comps, gointg back further in time and measuring againsy less similar properties, which reduces the accuracy of the “We lived in a different worle 12 months ago,” said Kevinj Kemp, a partner with . The lack of compsx is an issue for commercialappraisale too, but there are alternative ways to value a piecre of property that is used for business, said Tom Taylore of the Greensboro appraisal firm Taylor Pope and Properties such as multitenant office buildings can be valued by the amoung of income they for example, Taylor said.
The “cap rate” takes into accounty both income and sales price so a lack of comparablr sales still makes the appraisal but the rental stream at least provides some current data togo by, he Of course, the recession also has an impact on leasingg activity, so some propertiesw may not have a lot of current income to valuw either, Taylor noted. “Wity a lot of vacancy, may have to lower their rent toattract tenants, and that impacts the value,” he “It is a problem, but it’s just what we’vwe all got to work with.
” On the brighrt side, neither appraiser felt the lack of comparablse sales with which to value properties would scuttle enougg deals on either the residential or commercialo side to become a major drag on the market But in some cases buyers and sellers who can’r make the valuation numbers work for a traditional deal are havinbg to get creative, said Sean Dowell of brokeragde and appraisal firm in Greensboro. He said he was involvee in one recent transaction in whichy a company that both owned a buildiny in North Carolina and hada $2.
5 millionn lease commitment in California essentially gave the building it owned to its landlorcd in return for being let out of the lease in California. The company was facing a downsizing but coulrd not value its property to sell it and buy out the Dowell said. He declined to identify the but said bypassing the formal appraisap and sale process allowed each side to get somethinv out ofthe deal. “The landlordr turned around and leaseds the building to make up the differencee inthe rent, and they didn’t have to determinde a formal valuation sincwe they could just sign the generap warranty deed over,” he In a tough market, “people are doing whatever it takes.
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