President’s Column – A Message From ICAP’s President
President’s Column- ICAP
Our Businesses are Professional Firms – not “shops”
2nd Q 2017
by P. Barton DeLacy
2017 ICAP President
Last time we spoke of what it means to be a valuation “professional.” Today, let us look at our businesses. David S. Bunton, for the past 27 years, the President of the Appraisal Foundation, was one of our guest presenters at ICAP’s 2017 Lisle Seminar May 8. At lunch he lamented how many appraisers refer to their small businesses as “shops.” Shops imply the sale of commodity goods- one thinks of specialty stores or maybe a barber shop. Valuation services, he insisted, are the domain of professional service “firms.”
The word “firm” come to us from the Latin- to ratify by signature. Webster’s defines a “firm” as a commercial partnership. The term has become virtually synonymous with the businesses provided by our fellow professionals in law and finance. Begin with the end in mind, as Stephen Covey exhorted in his seminal “Seven Habits of Successful People.” No matter how small, our ICAP ranks are filled with small entrepreneurial businesses- professional firms of fair, impartial and objective valuers- not order-taking commodity “shops.” Go where you want to be- refer to your business as a firm!
In a related matter, I recently moderated a panel discussion at the RICS Summit for the Americas, here in Chicago for commercial appraisers. The topic: The Future of Valuation Firms 2020- Convergence, Integration or Fragmentation? The national and global valuation leaders for CBRE, Cushman & Wakefield, Altus, Colliers, Newmark Frank and JLL all participated. The discussion was lively, but the take-aways were these:
1. Big data and statistical analytics will eventually render the commodity appraisal obsolete (commercial too!). Automatic Valuation Models (AVMs) will replace bank appraisals the way Turbo Tax took over tax returns. Valuers will need to adapt like tax accountants did.
2. The big appraisal divisions (many funded by private equity and managed within much larger brokerage operations) will continue to poach one another’s staffs but cannot articulate a vision for growth.
3. The bright light for small firms is what the brokerage outfits cannot provide: local specialization (residential falls into this category) and valuation counsel.
Valuation counsel is advisory work built from our core competencies of fair, objective and unbiased analysis of real estate and land economics. Examples include any type of litigation support, property tax consulting, estate work or simply advising owners and occupiers on highest and best use. Long dominated by MAIs, valuation consulting is wide open to the professional residential valuer. More on building a consultative business next month.
P. Barton DeLacy, MAI, AI-GRS, CRE, FRICS
2017 ICAP President