Book Review
Hot Books in the Appraisal Field!
Three Book Reviews By Henry S. Harrison
James K. Tellatin, MAI
Appraisal Institute, Chicago IL (2009)
Soft cover, 334 pages
$48 non-members, $40 members
(312) 335-4100; FAX (313) 335-4400
www.appraisalinstitute.org/store/
This book will be the definitive reference on this subject for many years to come. Jim Amorin, MAI, SRA and the 2009 President of the Appraisal Institute, accurately describes the book in his introduction: "(This book) explores long-term care facilities from both a physical and economic perspective..."
This is the key to appraising skilled nursing home facilities. The appraisal is usually not just an appraisal of the real estate (fee simple, leased fee or leasehold). It also includes tangible personal property (furniture, fixtures, and equipment) and intangible personal property (including the assembled work force, licenses, certifications, approvals [specifically certificate of need (CON)], patient records, goodwill, and management.
Before you even consider appraising a skilled nursing home, you must read Chapter 18: Reconciliation of Value and Allocation of Going-Concern Value, where the author explains how to deal with Entrepreneurial or Proprietary Profit Capitalization and Lease Income verses Operational Earnings.
If you think you might like to learn more about this subject, I recommend that you take the Appraisal Institute Seminar entitled: The Appraisal of Nursing Home Facilities.
by Barrett A. Slade, PhD, MAI
Appraisal Institute, Chicago IL (2009)
Soft cover, 163 pages
$40 non-members, $32 members
(312) 335-4100; FAX (313) 335-4400
www.appraisalinstitute.org/store/
Sooner or later almost every Certified Appraiser will be offered an assignment to appraise an office building. The Competency Section of the USPAP says that an appraiser must have the necessary knowledge and experience to appraise a property or obtain the necessary help to make a credible appraisal. This new text offers good way to increase your knowledge about office buildings.
The book starts with an interesting history of office buildings. I did not realize, for example, that few were built in the 1930s and early 1940s because of the Depression and then WW II, or that the elevator, which is crucial to most office buildings was invented and already in wide use by the late 1800s.
The following is a list in the book of ten common types of office buildings: Low-rise, single tenant; Mid-rise, single tenant (4 to 16 stories); Highrise (16 or more stories); Office with street-level retail space; Medical or dental office; Office condominiums; Bank branch; Veterinary hospital or clinic; and Office with mixed retail and residential space. The author points out that this list is not complete. I personally would have added a separate classification for skyscrapers.
The book follows the traditional sections of an appraisal (Site Analysis, Improvement Analysis, etc.). The Income Capitalization Approach chapter crams a lot information into 44 pages, including some relevant case studies. Much of this material is also useful for other income producing properties. There is an interesting grid showing the items of comparison which may need adjustment.
Most of what is in the Cost Approach chapter applies to many other types of buildings and is similar to what is covered in The Appraisal of Real Estate, 13th Edition. The short Glossary is helpful as it focuses on specialized words related to office buildings. For example, demising partition: - A physical barrier that designated a tenant space or establishes a leasable area and separates it from the remaining space......"
What I liked best about the book was the author's writing style, who in spite of being a PhD as well as an MAI, writes in a clear and easy to understand manner. There is a lot of valuable information about appraising office buildings packed into this short 163-page text.
Shopping Center Appraisal and Analysis, 2nd Ed.
J. Vernor, MAI, PhD;M. Amundson, MAI;
J. Johnson, MAI; J. Rabianski, PhD
Appraisal Institute, Chicago IL (2009)
Soft cover, 249 pages
$44 non-members, $36 members
(312) 335-4100; FAX (313) 335-4400
www.appraisalinstitute.org/store/
This is the second edition of a book that was first published in 1993. I recommend this book to any General Appraiser who appraises retail property, as it contain substantial information that applies to any type of retail space.
The book begins by pointing out that the traditional classification of shopping centers into one of five categories (convenience, neighborhood, community, regional and super-regional) is just a beginning. Appraisers also have to consider the shopping center's size, anchor tenant(s), types of product, site size, distance and travel time from its service area, and the consumer base. All of this is necessary just to describe the property and to define the appraisal problem to be solved.
Many shopping centers are bought and sold as investments. Because of the recent significant changes both in the real estate market and in the buying habits of consumers beginning in 2008, these investments must be analyzed as both historical and prospective investments.
Chapter 3 is entitled: "Three Studies and Three Geographic Areas in Retail Analysis." It sets the stage for the 8 chapters that follow. The term "Market Analysis" is used repeatedly throughout these chapters and this is what the book is all about. It is not until Chapter 9 that the "how to" aspects of this kind of work is covered, with a review of the results of the various market analyses presented.
After you read this book, you will know a lot about the ins and outs of shopping centers. A good place to learn more about that subject is in The Appraisal of Real Estate, 13th Edition also published by the Appraisal Institute. 
