North Dakota is seeking a 5-year temporary waiver for certain property types depending on the property value. Here is my quick take.
I am a commercial real estate appraiser based in Minneapolis and have been working in western North Dakota since 2012. Starting in about 2009 and extending to present, the commercial real estate market has experienced unprecedented supply and demand changes and corresponding impact on property values.
As Simonson Appraisals has continued to add clients in this region (and open for more), we have added appraisal staff in the local office area of Minneapolis/St. Paul to ensure turnaround times and fees remain typical and reasonable.
North Dakota’s economic volatility observed in the last 10 years results from a commodity-based economy heavily dependent on oil and agriculture. Having now appraised property in 13 states during my appraisal career, I can say with 100% certainty the western North Dakota market is very unique and requires intimate knowledge to understand property values. Over the past five years, it has not been uncommon to see revenue on income producing properties drop 50%-70% in less than 12 months and then rebound at nearly the same pace 24 months later. Coupled with limited market data at times results in greater challenges to appropriately support property values as they change from one extreme to another. All of this results in greater lending risk and time required to adequately support the value conclusions.
I recommend that the Appraisal Subcommittee deny the request for a temporary waiver of appraiser certification and licensing requirements.
Mitchell Simonson, MAI has been in commercial real estate for 15 years and founded Simonson Appraisals on January 1, 2019. Mr. Simonson enjoys writing about and discussing commercial real estate, personal development and business. Do you have questions on these topics? Contact him today!