Consolidation continues to reshape the commercial appraisal industry as BBG, a national advisory, has purchased Jerome Haims Realty, an independent New York firm.
Terms of the acquisition were not disclosed but on its face, it bolsters BBG’s Manhattan office staff with more appraisers and litigation expertise. It also furthers the trend of big players in the valuation space vacuuming up smaller competitors.
“We’re really just beginning, to be honest,” BBG CEO Chris Roach said of the ongoing consolidation movement, “us, personally at BBG, but also the industry as a whole.”
BBG has been on a buying spree as of late. It scooped up a standalone appraisal office in Denver in 2016, four more—in Los Angeles, San Francisco, Sacramento, California and San Antonio, Texas—in 2017 and an Austin, Texas firm earlier this year. The company now has 30 offices nationwide and is on the lookout for more.
Meanwhile, publicly-traded brokerages, such as Newmark Knight Frank and Jones Lang LaSalle, are building up their appraisal expertise, too, buying up established firms in major markets across the country, vying for an advantage in a once-crowded field. Roach said CBRE is the appraisal industry leader, commanding a market share between 7 and 10 percent.
“It’s a fragmented cottage industry,” he said. “The significant market is small, with probably an average of three to four people in shops covering local areas across the country.”
For Jerome Haims Realty, a 50-year-old practice, running that type of lean operation made business hard to maintain and almost impossible to grow.
Eric Haims, the firm’s president, said his small staff size, consisting of six appraisers and two administrative assistants, made it difficult for him to take jobs that pulled him away from the office for long stretches, such as stints as a professional witness.
“I’ve testified over 20 times, it’s something I really enjoy doing and being a part of BBG will make it easier to do,” Haims said. “In the past, if I was gone for a couple weeks testifying, I would come back and find things being a mess because we just didn’t have the support staff.
“I said to Chris [Roach], I don’t know why I didn’t do this sooner.”
Founded by Haims’s father in 1968, Jerome Haims Realty is one of the top litigation support providers in New York’s appraisal industry. It has handled high-profile condemnation cases tied to Hudson Yards, the Second Avenue Subway, Atlantic Yards in Brooklyn and the Queens West Redevelopment Project.
That specialty is what drew BBG’s attention, Roach said.
“They’ve got a long history of high quality work in that market, especially when it comes to litigation,” he said. “We were looking to expand our offering in that space and that’s what we feel like we found with [Jerome Haims Realty].”
All six appraisers at the firm will join BBG as will one of the two administrative assistants. Haims will lead the litigation support services group at the company’s New York office, located at 112 Madison Avenue, a short trek from Jerome Haims Realty’s headquarters at 461 Park Avenue.
Along with the additional personnel, Haims and company will benefit from the tech resources at BBG, a factor that has played no small roll in reshaping of this industry’s landscape. Broad access to data and analytics has leveled the playing field, at least for those who can afford the latest software update.
Precise value comparisons can be dialed up at a moment’s notice, giving rise to a belief by some that human appraisers could be an endangered species on the verge of algorithm-driven extinction. Roach, however, argues that such a conclusion discounts the value of human intuition and expertise.
“At the end of the day an appraiser is hired to create a value opinion as a third party,” he said. “Science and technology can’t create the perfect answer because the answer is not intended not to be perfect, it’s an opinion.
“If someone says technology could replace an appraiser, they’re missing the true purpose of what our industry was created for,” he added. “Turbotax didn’t replace the accountant.”