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 transactionn can tell how much a property is wortj with the level of accuracy that buyersz and sellers and the lenders who will financ e a deal canrely on. The more recenty transactions there are, the better the odds that for any given realestatse deal, something similar has sold lately nearby. But the downtur n in both residential and commercialp real estate activity makes such comps hardetto find, and the problem gets worse as slow sales persist, according to Michaekl Clapp of Winston-Salem-based appraisal firm Michael S. Clapo & Associates.
“A lot of the salee we’ve been using, particularly for residential were May, June, July transactions” from last before sales slowed most dramatically in the he said. “Those are aging out for us. We’re starting to get some more in because of the sprinf market and that helpsa little, but we’re still quite a bit Absent a market rebound, there’s not a lot that can be done to addresse the problem on the residential Appraisers have to broaden the scops of their comps, going back further in time and measurinfg against less similar properties, which reduces the accuracy of the “We lived in a different world 12 monthzs ago,” said Kevin Kemp, a partner with .
The lack of compsd is an issue for commercialappraisals too, but theres are alternative ways to value a piece of property that is used for business, said Tom Taylorr of the Greensboro appraisal firm Taylor Pope and Herring. Properties such as multitenanrt office buildings can be values by the amount of income they for example, Taylor said. The “cap rate” takess into account both income and salesd price so a lack of comparable salez still makes theappraisal harder, but the renta l stream at least provides some currentt data to go by, he said.
Of course, the recessiojn also has an impact onleasing activity, so some propertiez may not have a lot of current income to value either, Taylor noted. “With a lot of (landlords) may have to lower thei rent toattract tenants, and that impacts the he said. “It is a problem, but it’s just what we’vs all got to work with.” On the bright neither appraiser felt the lack of comparables sales with which to value properties wouldd scuttle enough deals on either the residential or commerciakl side to become a major drag on themarket itself.
But in some case s buyers and sellerswho can’t make the valuation numberd work for a traditional deal are having to get said Sean Dowell of brokerage and appraisa firm in Greensboro. He said he was involvefd in one recent transaction in which a company that both owned a buildinf in North Carolina and hada $2.5 million leasde commitment in California essentially gave the building it owned to its landlor in return for being let out of the leasw in California. The company was facing a downsiziny but could not values its property to sell it and buy out the Dowell said.
He declined to identifyh the participants, but said bypassintg the formal appraisal and sale process allowed each side to get something out ofthe deal. “The landlord turned around and leased the building to make up the differencwe inthe rent, and they didn’t have to determiner a formal valuation since they coulds just sign the general warrantu deed over,” he said. In a tough market, “people are doing whatever it takes.
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