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Rough and tumble in appraisal sector sees independent players fighting back

For large real estate advisory firms, appraisal and valuation practices are useful in-house tools and recession-proof ways to bolster revenues. Prices may rise and fall, but someone has to keep score.

Publicly traded companies such as Newmark Knight Frank and Jones Lang LaSalle have spent the past year and a half building up their appraisal services by acquiring independent practices and franchises.


“There is movement in this industry for the first time in a long time,” said John Busi, president of Newmark’s valuation and appraisal practice. “Appraisers have generally not moved much in the past; most have been with the same companies for decades. What’s happened in the past 12 to 18 months is we’ve seen some significant movement of appraisers. It is an in-demand skill set today.”

Yet, for every action, there’s an equal and opposite reaction. In this case, the growth of appraisal teams at full-service advisory firms has meant an erosion of niche organizations that focus exclusively on property valuation.

“We’ve seen unprecedented movement in the valuation market with JLL and Newmark both building teams at the same time,” Michael Welch, head of JLL’s valuation and advisory services team, said. “When you add two firms that size at the top of the food chain it gets aggressive because there’s only so much business to go around, there’s a lot of competition for talent.”

While some appraisers are happy to cash in their independence for the security of a large firm, others, such as Integra Realty Resources, which has lost nine franchises in the past 16 months, are ready to dig in and resist.

“IRR’s operational prowess and entrepreneurial culture has positioned us as a top acquisition target,” Integra chairman Anthony Graziano said. “But we’re fighting back.”


In late 2016, Welch left his post a chairman and CEO of Integra to build JLL’s valuation unit.  When he made the switch, he brought IRR’s Chicago and Dallas affiliates with him, and later wooed the firm’s Southern California franchise as well as some of its top appraisers in Florida and Washington, D.C.

Along with offering more services than appraisal specialists, Welch said large advisory firms also have the advantage of vast collections of transaction data and other property records at their disposal, commodities that will only grow more valuable as the industry moves toward automation.

“This consolidation is going to give large advisory firms the data and resources to represent big, national clients while the boutique firms will still have the intimate knowledge of local markets,” he said. “It’s the middle, the regional players that are going to feel the squeeze because they don’t have the data to compete with the big firms or the connections with the local banks to get in the trenches with the boutique shops.”

Similar to Welch, Busi, a 35-year veteran, left his leadership position within Cushman & Wakefield’s property valuation division to join Newmark in September 2016. Since then, he’s led the push to grow his new company’s due diligence, valuation and appraisal practices. That effort has consisted primarily of acquiring franchise offices from smaller firms, including six Integra franchises along the east coast, from Atlanta to New York City.

“They were highly, highly functioning offices, very profitable offices,” Busi said of the September 2017 acquisitions. “One of our goals was to acquire offices that had great reputations, and that’s what we felt about these offices and the principles behind them.”

Despite the hardship of losing partners, Graziano said his firm has found some positive news in the wake of this recent disruption. Some employees from the departing franchises opted to stay with Integra and many clients endorsed the firm’s local market knowledge, saying they preferred it to national competitors.

However, with the market’s evolution, Graziano said his company can’t afford to stand pat. “Our clients are aggregating, too, so they are larger and fewer,” he said. “Being able to serve a client in multiple markets is also mostly beyond the reach of an independent firm. There is room for boutique firms, but very much like other industries, you either need to get big or get really small. Standing in the middle is the most dangerous.”


Integra operates in over 50 markets nationwide. It has replaced offices in New Jersey, Philadelphia and Washington, D.C. after Newmark’s acquisition spree and Graziano is on the lookout for partners in New York, Boston and Pittsburgh.

Other challenges facing independent appraisers include the need to keep pace with technology and the constant demand for faster turnaround.

“Five years ago, an appraisal completed in three weeks was considered a ‘rush assignment,’” Graziano said. “Today, most appraisers compete by offering two-week timeframes on appraisals. It’s insane.”

Graziano said this can lead to burnout and — when appraisers abandon their own evaluations for web-based data — mistakes.

Moving forward, his firm will attempt to stave off advances by large, full-service firms by expanding non-appraisal services such as market feasibility and study work, forecasting, inspection, environmental due diligence and business valuation.

“We’re looking at different partner platforms, and we see a lot of cross-over where our company assets align with other business opportunities,” he said.

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