Quality Quarterly Q4 2017 - Issue #35

CLIENT MANAGEMENT

VARA CORNER

by Jim Morrissey

Performance Report from JP Morgan Chase We recently conducted a “touch-point” call with managers from JP Morgan Chase to discuss our performance in completing assignments for them over the past year. The following summarizes the conversation. Timing – Turnaround times continue to compress, and it is critical that appraisal vendors adhere to due dates to help ensure that the bank can properly service its clients. In general, we are meeting the bank’s deadlines, but it is critical to inform them when delays are expected due to lack of receiving data in a timely manner, or for other reasons. QC – Our QC reviews need to be more robust, and the clients cited recent assignments where quality need to be improved. As a general rule, the following concerns need to be addressed: • We often do not properly explain some assumptions to the reader. The addition of one or two sentences would be adequate to help the reader understand the appraiser’s rationale. • Appraisers and QC reviewers sometimes need to step back and consider if the value conclusion makes sense. It is easy to focus solely on the assumptions and not consider the big picture. • We often include too many sales in what appears to be a data dump from our extensive database. Including too many sales is not useful, and it complicates their review process. • We need to “streamline the story” overall. They are aware that we have “amazing” data, and that is one reason they hire us; however, the reports often include information overload. All sections of the report must be concise and linked to the subject property. Market Analysis – It seems that our market analyses and cash flow assumptions are written by different people. Sometimes they do not agree and, worse, can appear to conflict. One example given was concluding in the market analysis that the market remains soft, but then growing market rent each year throughout the forecast. While there may be valid reasons for this, no connection is made in the report. Argus Enterprise – The bank reviewers have now completed training and expect to begin using the software in December. Cushman Contacts – The client asked for a list of area leaders, office managers, and practice group leaders, including their contact information. The list was compiled by Marketing and sent to the clients. Collateral 360 – The bank is moving to a new bidding and awarding system known as Collateral 360. The software should be fully rolled out in Q1 2018. Data Mining – JP Morgan Chase is looking to collect data from each appraisal for inclusion in its database for benchmarking and risk management purposes. They asked that we work with EDR (developer of Collateral 360) to construct an automated interface to seamlessly upload the information to their database. Conflicts – We absolutely must avoid conflicts when accepting assignments from the bank. JP Morgan Chase considers brokerage relationships as potential conflicts, so we must disclose any such connections relating to a subject property to allow them to decide if a conflict exists in their view.

First, I’d like to welcome Andrew Sherman to the VARA team. Andrew is focusing on research and analytics for commercial and retail properties in Manhattan and the outer boroughs. He graduated from the University of Pittsburgh with a Bachelor of Science in Communication and is currently working toward a Master of Science in Real Estate at New York University with an expected completion date of 2018. Everyone should have received an email from Moody’s to sign up for online access. We changed from an intranet link to a log-in because the intranet link we were using needed an approved IP address – and not only did that present a problem for many of you who want to access Moody’s from home, but on occasion, IP addresses can change for an entire office, and many of you were often unable to access the reports you needed. If you did not get an email from Moody’s, please check your junk or clutter folders. If you still don’t see it, try going to www.economy.com and use the change password option. Your email address is already in the system so you should get an email within a few minutes that will instruct you how to set-up a password. If you are still having problems, please reach out to me, not Moody’s, and I will KnowledgeVault, I’d like to encourage all of you to reach out to your local VARA to assist you with any questions you may have or any comp runs you may need. The VARAs were an integral part of the testing process, so they are very familiar with the product, and they can assist with any training you may need as well. Lastly, I am renegotiating our Reis contract with procurement. There appear to have been a lot of requests that went to directly to them that I did not know about. This has caused some issues in the negotiation process, so I’d like to ask each of you to please contact me if you need something from Reis, and I will work with them directly to get you what you need. Thank you! get you up and running. As we move forward with

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