We at CES hope that this message finds you well. First, we want to assure you that your Virtual Appraisal Department is up and running at full capacity. We have contractors all over the country that are safely “Sheltering in Place,” plus our Atlanta management team is equipped with encrypted laptop computers to ensure security while working remotely. Our job management system is web based, so we do not anticipate any disruption to our services. A list of our direct lines that also forward to our mobile devices can be found on our website under “Our Team” page.
The question we have received most often over the last few weeks has been about property inspections. We have been working with our contractors, independent fee appraisers, and local authorities to establish safe guidelines for conducting business during these unique times with public safety for everyone being of our upmost concern.
It is important to note that a “personal inspection” is a term that is narrowly defined for appraisal purposes. Whereas a “personal inspection” is not required for appraisals under USPAP or FIRREA, it is usually required under USPAP to disclose whether a personal inspection was completed and the extent to which the property was inspected. For Evaluations an inspection is always required; however, to the extent of what level of inspection that is to be performed is left up to the institution holding the collateral. The Client and appraiser should define to what extent a property will be inspected, on a case by case basis, in order to achieve the most credible results.
As “your virtual appraisal department,” we are carefully monitoring every assignment to make sure that we always achieve the most credible results. To that end, we are encouraging our appraisers to supplement their drive-by inspections with a borrower’s or tenant’s provided interior photographs, marketing brochures, and virtual tours, when they are unable to access the interior of property due to risks of being exposed to person to person contact.
Here are a few brief observations about the state of CRE:
- The industrial sector is generally expected to be a winner in this time of upheaval. Distribution of goods remains a key component of the global economy.
- Data centers and other IT related properties are also considered “safe” bets.
- There is renewed interest in domestic manufacturing, especially for medical equipment and other essential goods.
- Industrial properties related to the oil and gas industry are likely headed for a bust phase.
In closing, we would like to pass along some advice from insurance brokers. Businesses should be filing claims for interruption loss. The best and safest thing for a policyholder to do now is to submit a claim. It will likely be denied, but that gives the policyholder, under most commercial policies, two years to decide whether to file suit. The jury is still out on what costs, or how much will be covered; however, a claim will need to be filed with your insurance provider just in order to get the ball rolling.
Please stay in touch and by all means, be safe!