Inspections, Appraisals, Environmentals!... Oh, My! Copyright 2011 Keller Williams Realty, Inc. 1

Transcription

1 Inspections, Appraisals, Environmentals!... Oh, My! SM Copyright 2011 Keller Williams Realty, Inc. 1

2 Presenter, Team Leader Gina M. Palumbo Broker-Associate NY-NJ Managing Director, KW Commercial Keller Williams Valley Realty 123 Tice Blvd Woodcliff Lake, NJ ext

3 Glenn P. Godart DMD Realtor Associate Healthcare Specialist Keller Williams Valley Realty 123 Tice Blvd Woodcliff Lake, NJ ext

4 Phillip H. Sorace Realtor Associate Financial Services Specialist Keller Williams Valley Realty 123 Tice Blvd Woodcliff Lake, NJ ext

5 Introduction In this course, you will learn the following: Commercial Inspections How they differ from Residential Inspections Commercial Appraisals 10 Things to Know 3 Appraisal Methods Environmental Assessment Basic Elements of Phase I & Phase II 6

6 Commercial Inspections Common Types of Commercial Inspections: Pre-purchase for buyers Pre- and post-lease for landlords or tenants Draw inspections on new construction Site review, pre-purchase or pre-construction Investigative/problem-solving Consulting 7

7 Commercial Inspections Types of Commercial Buildings Inspected: Apartment Buildings Medical/Professional Office Buildings Churches Warehouses Unusual: Ranches, Restaurants Bed-and-Breakfast Strip Malls Inns, Small Aircraft Convenience Stores Hangers 8

8 Commercial Inspections Types of Commercial Clients: Owner occupants Property management Investors companies Insurance companies Field service companies Mortgage companies Architects, engineers Banks and construction project Tenants, for pre- and managers post-lease Retailers Landlords 9

9 Commercial Inspections Vs. Residential Inspections Residential Deals with emotion I love the house Performance needs today Emphasis on what needs to be replaced now Flat rates $395 - Averages $. $750 $25 per sq ft 10 Commercial Deals with money How much can I make on this Investment? Five year projections Emphasis on industry standards and life expectancies

10 Commercial Appraisals Commercial is very different from residential in the fact that appraisals are much more subjective in nature Much of the value derived from a commercial building is based on the rental rates received relative to the expenses paid out The underlying asset is important, but not even close to residential property value assets Commercial value is less about the property & more about how it performs 11

11 Commercial Appraisals 5 Things to Know 1. The Physical Inspection is Only a Small Part 2. Appraisers Must Adhere to a Strict Code of Ethics 3. The Client is the Party that Orders the Appraisal 12

12 Commercial Appraisals 5 Things to Know 4. There are 3 Types of Reports: Restricted Use Report Summary Report Self-Contained Report 5. Report Type does not dictate Scope of Work 13

13 Commercial Appraisals Three Primary Methods to Find Value Cost Approach Assumes the value is the same as the cost to construct or replace not commonly used Sales Comparison/Market Approach Most familiar and similar to residential Used most for conventional financing Income Capitalization Approach Investors determine value based on net income generated by the property 14

14 Environmentals Phase I and Phase II Environmental Site Assessments (ESAs) have been developed to evaluate environmental issues at any site previously used for commercial purposes. Standards for Phase I and Phase II ESAs have been established by the American Society for Tes?ng and Materials (ASTM) Comprehensive Environmental Response, Compensa?on and Liability Act (CERCLA) contains na?onal policy and procedures for containing or removing hazardous substances that have been released, and also provides funding and guidance for clean up Be aware of state, local, or federal regula?ons outside of CERCLA 15 Revision 1., 05/09/2011

15 Environmentals What is a Phase I? The Phase I ESA involves a review of records, a site inspec?on, and interviews with owners, occupants, neighbors and local government officials. Contamina?on can result from ac?vi?es that took place on the site. Contamina?on could also come from ac?vi?es at nearby proper?es. Public records are available regarding the loca?ons of proper?es that have been classified as contaminated by federal or state regula?ons. 16

16 Environmentals What is a Phase II? If a Phase I ESA iden?fies poten?al contamina?on of the site by hazardous materials, a Phase II ESA may be conducted. The Phase II ESA includes sampling and laboratory analysis to confirm the presence of hazardous materials. 17

17 Environmentals Phase II Testing May Include: Surface, Soil and Water Samples Subsurface Soil Borings Groundwater Monitoring Drum Sampling, if any were found Sampling of Dry Wells, Floor Drains, and Catch Basins Transformer/Capacitor Sampling Testing of Buried Tanks/Underground Storage 18

18 Environmentals Who performs Phase I and Phase II ESA s? An LSRP: Licensed Site Remediation Professional What do they file with the state of NJ? An RAO: Response Action Outcome Unlike the old NFA No Further Action Letter the RAO is subject to audits by the NJDEP How long does the NJDEP have to conduct an audit? 3 years from when the RAO is filed 19

19 Environmentals AAHHHH! YOUR SITE IS CONTAMINATED! Phase I and II ESAs NEED to be iden?fied in the contract. Possible op?ons might be: Require the current landowner to clean up the property prior to the sale Reduce the cost of the property commensurate with the cost of remedia?on required Pursue acquisi?on and clean up alterna?ves that help control your environmental liability for the property 20

20 Questions/Answers Thank You for the Opportunity to Share with You I Look Forward to the Opportunity to Work Together! ~ gina, glenn and phil SM Revision #X, 00/00/2000 Copyright 2010 Keller Williams Realty, Inc. 21