Eric, I am in agreement with your suggestion that appraisals of all types, including BPOs (Broker Price Opinions) and CMAs (Comparable Market Analyses) should have some identification of "Licensed Architect Designed" or not. This could simply be accomplished by having a checkbox on the appraisal/BPO/CMA form that indicates something as simple as: "WAS THIS HOME DESIGNED BY AN ARCHITECT? IF SO, ADD 20% TO THE TOTAL VALUATION." If indeed, that is the added value someone like Michael discovers is the appropriate amount to add to a home for having been designed by an architect. 20% is my off the cuff guesstimate, as an architect doing this for about 37 years. Under certain circumstances, it could be more; it could be less. For instance, what would be the valuation of Falling Water today? Architectural icons would be the exception to the rule. GOAL: CREATE A SINGLE LINE ITEM FORMULA:
It appears that what Michael is trying to do is to come up with a "one size fits all" equation and I respect and appreciate that. People will say that approach is too simplistic. Well, I have seen line items on some appraiser's forms that say simplistic things like: "Add $50,000 for a stone front porch and stone steps." If appraisals can be that simplistic, then let's go ahead and become part of the calculation with at least some added valuation factor
. That would be better the present situation for having a home designed by an architect, which is: zero. Something, even an overly simplistic increased factor is better than nothing. SOME ARCHITECTS AND OTHERS WILL CREATE STATIC:
Michael, you are going to encounter some resistance to your efforts. Do not that that deter you. All the residential architects in the AIA (and those also not in the AIA) appreciate what you are doing and thank you. Even if they give you negative comments about being "simplistic", they will directly benefit from your Research and Development and they should be thanking you and helping you. It is through scientific data gathering like yours that will result, hopefully, in making a nationwide improvement in how the public perceives the value of real architects and come to understand that our fee for designing their home will come back to them at resale time due to appraisal reforms brought about by people like you and Eric and others. Please continue. Fight the good fight. And oh, of course there are other things that bring our fee back to them, such as: reduced monthly power bills, due to an architect's efforts to improve the building envelope's sealing and higher insulation levels, proper overhangs to control sun, proper choice of windows, doors, siding and other factors. Then there are the aesthetic values that are intangible, but priceless, like properly orienting a home to a wonderful view, shielding private spaces from the street and opening those same private areas to the views, sensible organization, efficient space planning and capturing a client's lifestyle in the design, which an off-the-rack builder home simply cannot accomplish.
Some people will say: "but all architects are not the same. Some don't create homes that have as saleable features as others, yadda, yadda." Yeah, well, the same can be said of builders and others in the entire home creation, valuation and building cycle. And the appraisers muddle through it all, don't they? Making a mess of it generally, but they do forge ahead. All we are trying to do is make just one adjustment in the method: that in general, having a competent, capable licensed architect design your home should result in a better sales price. Is this a guarantee? No. Of course not. Neither is being in a good neighborhood. We have all seen exceptions to the rule. What is being sought here is an improvement in the appraisal methods through the addition of JUST ONE LINE ITEM that adjusts a home's value upward due to the fact that a home was designed by a real architect. GOAL OF MICHAEL'S STUDY: GETTING ONE LINE ITEM ADDED TO APPRAISALS AND BPOs AND CMAs:
And I think that should be your goal, Michael: you are trying to get just one line item added to an appraisal form. And that will be enough to help us all. Please do your study. I suggest you begin by creating an Excel spreadsheet, copying verbatim a nationally accepted appraisal form. Then, somewhere, down around the bottom of this, look where you can insert the new "Architect Designed Value Added" line item that pumps up the whole value by a factor that your study supports. This new spreadsheet of yours + your data will hopefully result in a game-change for home appraisals. BPO/CMA/ REAL ESTATE BROKERS/INTERMEDIARY BPO SOLICITATION COMPANIES:
Note that you are not done, with just appraisals! THERE ARE PROBABLY 4X MORE BPOs AND CMAs CONDUCTED BY REAL ESTATE BROKERS THAN THERE ARE OFFICIAL APPRAISALS. Banks and other lenders that are foreclosing on homes are the ones who solicit for and pay real estate brokers to create BPOs and CMAs. Why? Because a real estate broker will do it for much less than appraiser. Also, it is the real estate broker who has direct access to the MLS (Multiple Listing Service), which is where the data comes from to support Listing Prices and Sales Prices. And due to the volume of foreclosures over the last several years (millions), banks had to find some alternate method of valuing their sudden glut of repossessed homes and other properties. Therefore, they sought the assistance of real estate brokers. Therefore, once you, Michael, hopefully with the AIA's help (and the assistance of other organizations as well, we hope) tackle the appraisal industry and get the Architect Value Added line item, there will need to be some sort of trickle-down effort to get this line item added to bank/financial institution BPO and CMA forms. And here's the kicker: each form can be different for each institution. Also, there are various intermediaries that act as work-brokers for the banks, like Clear Capital, who in turn go out and solicit real estate brokers to conduct the actual BPO study. Then these intermediaries check the BPO, make sure it is as correct as possible, then they turn those BPOs over to the banks whom they represent. Of course, they get a fee for brokering these BPO studies. So, all these intermediary BPO solicitation companies will need to adjust their forms to add the Architect Value-Added line item as well. And that could very well take the entire might of the AIA to convince them to do that. This is a big job and it will not be done overnight. AIA TASK FORCE NEEDED
The AIA, with possibly you, Eric and Michael, heading a task force will need to tackle this. It is too much for just a single individual. Eric has been correctly ranting about this for at least a year and Mark Demerley assures me that he has been heard and that supposedly something is starting to happen within the AIA to begin correcting the appraisal process. I hope so.
And Eric, I would be happy to hear your talk, but my AIA dues took all my discretionary funds for events like this. But thanks for the invitation.
Everyone: have a nice weekend.
Rand Soellner AIA
Rand Soellner Architect
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