APPRAISING CHANGE
appraisal profession [ reflects ] the population of the United States ,” PAREA will significantly modify mentoring , supervision , and apprenticeship programs . Currently , USPAP 2020-2021 has been extended through 2022 and will likely be further extended to a fourth year in 2023 . As PAREA is finalized in 2024 , The Appraisal Foundation will determine the future of USPAP , which may become “ USPAP Light ” or , effectively , “ USPAP Goodnight .” Any fundamental change in appraiser credentialing could be a déjà vu moment that potentially results in another appraisal crisis .
Few commercial real estate property types escaped significant changes in the COVID-19 era . These changes impact not just the use and operation of the physical commercial real property , they impact the understanding of market value by blurring the physical “ sticks-and-bricks ” fee-simple market value with going concern or business value . The going concern represents the value of the total assets of the business including tangible ( the real estate — land , sticks , and bricks ), intangible , and financial assets . This blurring of value comes into focus through the graphic in the most recent publication of “ The Appraisal of Real Estate , 15th Edition ,” by The Appraisal Institute , along with case studies involving timeshares , manufactured homes , and self-storage property types .
Timeshare Industry and Property . The timeshare industry has been moving from the traditional weeks-based system to a points-based system . While the new system allows flexibility for individual owners , it also creates operational and going concern complexity . The weeks-based system gives an owner the right to a unit in a specific resort during a specific week each year . However , in the points-based system , the owner ’ s rights to a specific resort show as points that can be exchanged for use at a different time during the year or at other resorts in a company ’ s network . This gives the points-based owner more use options — options that also
Components of the Total Assets of a Business in an Asset-Based Transaction
Tangible Property
Real Property
Tangible Personal Property
Total Assets of the Business
Intangible Personal Property
translate into value . There is increased value in having this flexibility , especially amid COVID-19 . Appraisers and brokers should consider precisely how the change from this traditional week-based system to one based on points accrues to the business value of the timeshare property — not the real estate market value . Weeks versus points is a change that blurs the market value of real estate with the going concern of a timeshare property . The physical property may look the same , but the revenue and operational costs of such a change are quite material .
Franchises and Other Contracts
Patent , Trademark , Copyright
Assembled Workforce
Trade Name
Residential Intangible Assets
Financial Assets and Working Capital
Cash
Marketable Securities
Accounts Receivable
Supplies and Inventory
Manufactured Housing . Manufactured housing communities have evolved tremendously since their inception and subsequent 1976 regulation . The early years in this industry sought to address the nation ’ s housing shortage after World War II . Today ,
Modern Class A self-storage properties are vastly improved from the stereotypical barebones assets .
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