Appraisal Reports and Assessing Market Value
4.66
520 Reviews
In this 4th course of the Commercial Real Estate Underwriting Skill Series, participants will examine differences between description and analysis for guarantor and global cash flow statements, review property market value estimation, and explore appraisal reports, sales comparison approach, and capitalization rate implications.
Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
Duration
1 hr.
Prep Time
1
Quiz
Overview
In the fourth webinar session, participants review the fundamental differences between description and analysis in assessing and interpreting guarantor and global cash flow statements. They examine the information, evidence, or documents necessary to estimate property market value, cash flow, asset quality, access to the property and its stream of income in case of default. They review the sole purpose of the appraisal report and the three standard approaches to establishing market value with specific emphasis on the sales comparison approach to value, the validity of information for comparable properties, and the role of appraiser adjustments. In addition, participants examine the implications for the capitalization rate using information in the sales comparison approach to market value.
Who Should Attend
This Course is ideal for participants currently in or aspiring to enter the following job functions:
- Credit Management
- Commercial Real Estate Administration
- Commercial Loan Portfolio Management
- CRE Lending
- Private Banking
- Loan Review
- Special Assets
- Construction Lending
- Credit Analysis
Prerequisites
Familiarity with accrual financial statements and accrual financial statement terminology for a commercial real estate operation, as well as completion of prior sessions in the Credit College.
Objectives
By the end of the webinar session, participants will be able to:
- Identify the information, evidence, or documents necessary to estimate a property's market value and net operating income, or cash flow, available to service interest-bearing debt.
- Identify the information, evidence, or documents necessary to assess the existing quality of the property and potential liabilities associated with it.
- Identify the information, evidence, or documents necessary to establish a lender's access to both the property itself and the property's stream of income in the case of default.
- State the sole purpose of the appraisal report, the three standard approaches for estimating market value of an income producing property, and the underlying concepts that support the sales comparison approach to value.
- Show how an appraiser's uses adjustments to conform comparable properties to the subject property and assess the implications for the capitalization rate.
- Assess the benefits, limitations, and use of the sales comparison approach to value in arriving at an estimate of market value for an income producing property.
Materials(access provided with registration)
- Credit Refresher on Net Operating Income or Market Value?
- Terms and Concepts - Commercial Real Estate
- Excerpts from Shadelands Glen's Appraisal Report
- Exercise for the Session 4 Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 4 of 8 in the Commercial Real Estate Underwriting Skill Series
The CRE Analytical Process and Credit Write-Up
Borrower Cash Flow, Ratio Analysis and the First Way Out
Personal Cash Flow, Guarantor Analysis and the Second Way Out
Appraisal Reports and Assessing Market Value
The Income Capitalization Approach and the Cap Rate
Underwriting Standards, NOI and Breakeven Analysis
Management Assessment, Competitive Forces, and Projected Performance
Repayment Risks and Covenants
