Real people: Steven Shaykett

  • Updated: March 22, 2012 - 11:06 PM
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Steven Shaykett

Steven Shaykett

President, North Star chapter of the Appraisal Institute

The unstable economy means that real estate appraisers probably have to understand their markets better than ever before.

To get accurate assessments of real estate's true value means not only analyzing comparable sales, but determining the motivation of sellers and studying current market conditions, says Steven Shaykett, new president of the North Star chapter of the Appraisal Institute -- a regional organization of nearly 500 residential and commercial real estate appraisers, most of whom are in the Twin Cities area. Shaykett is also president of Sioux Falls, S.D.-based Shaykett Appraisal Co. Inc.

QHow do appraisers determine value -- both of commercial and residential properties -- in a volatile market?

AThis isn't the first experience that appraisers have had in doing appraisals in down markets. We've seen downward movement in value before. You have to utilize the comparable sales that are in the market. Even though there are fewer sales, it requires appraisers to spend more time analyzing those sales and determining what the motivation of the seller was. If it's a foreclosure, you have to understand that, and hopefully, you have some sales that are not forced sales as well. ... So you can end up with a two-tiered set of comparables - those that are motivated sales and those that are typical sales to determine value.

QHow are commercial real estate investors estimating value vs. purchase price?

AFrom what I'm seeing on the investors' side, they're looking at the income capacity of commercial properties. Take a neighborhood mall. At one time it might have been 100 percent full and now it's 80 percent full, so the income stream has dropped by 20 percent. What typical investors are saying is, "I'm not going to buy it on the potential of it being full, because in this market I'm not sure how long it's going to take me to rent that extra space." So they're buying it on the existing income stream.

QSo that's different than during strong market conditions?

AYes. Even if it was 80 percent full, they were optimistic that they would rent so many square feet over the next 12 to 18 months and would buy based on that future income stream. Today they say, "That's what it's doing and that's what I'm going to pay you on."

LIZ WOLF

Liz Wolf is an Eagan-based freelance writer. She can be reached at wolfliz99@aol.com.

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