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Death-Related Appraisals – 7 Things We've Learned

Mon, 20 May 2024 11:47:07 GMT

Insight For Legal Professionals

The professionals at Neglia Appraisals know a thing or two about Date of Death Appraisals, as we’ve been providing them for over 30 years.

Here are a few things we’ve learned that you may find useful:

When administering a decedent’s estate, prudent fiduciaries aim to achieve the best sale price for inherited real estate while limiting capital gains tax.
The cost basis is the key metric for limiting capital gains tax when selling real estate.
When heirs inherit assets (such as real estate), they can receive a step-up in cost basis if the asset’s value is higher than when the original owner acquired it.
The heirs’ valuation resets to either the value on the Date of Death or the Alternate Valuation Date, depending on the executor’s choice.
The step-up in cost basis is achieved by getting an appraisal of the inherited real estate.
The executor can choose to have the real estate valued based on its worth as of the Date of Death of the original owner. Or, the executor can choose to value the real estate six months after the Date of Death; this six-month anniversary is known as the Alternate Valuation Date.
If market prices are rising, similar-property comparable prices will result in a higher appraisal and therefore higher cost basis. Typically, the higher the cost basis, the lower the capital gains tax payable at sale time.

Neglia Appraisals is a recognized expert in the provision of trusted Date of Death and Alternate Date property valuations of residential and commercial properties to the New York City community.

For a free consultation with a Neglia Appraisals professional, call the Neglia Appraisals team at 718-331-2122 or click here to contact us .

Neglia President Richard Sheeler Quoted in Comercial Observer

Wed, 15 May 2024 15:23:34 GMT

Commercial Real Estate Appraisers Have Had to Adjust Their Measures

COVID-19 and especially higher interest rates have changed the appraisal game — for office buildings in particular

BY BRIAN PASCUS MAY 6, 2024 6:00 AM COMMERCIAL OBSERVER

Voltaire once said, “Appreciation is a wonderful thing — it makes what is excellent in others belong to us as well.” Without stepping on an enlightened man’s toes, it does beg the question:

How can you appreciate anything if you don’t know its value?

In the world of commercial real estate finance, appreciation — either metaphorically or economically through increased building values — has been a rare virtue over the last four years. This is particularly true in the beleaguered office sector, where hybrid work has ravaged traditional cash-flow assumptions, as well as within other asset classes as high interest rates have hindered values since early 2022.

“In this interest rate environment, our valuations have dropped incredibly, and buildings that were trading at $800 to $1,000 per square foot have traded at $300 to $500 per foot,” said Rod Kritsberg, managing partner at KPG Funds, a New York office developer. “There’s few trades and it’s very limited, but values have dropped precipitously — not just in the office sector, but across the market.”

While it might seem easy to blame COVID for everything wrong with CRE these days, the decisions made at the Eccles Building in Washington, D.C., by the Federal Reserve have had a far greater impact on CRE values than anything else, according to several market participants.

“COVID is obviously the change in supply and demand dynamics, but I think what has really created some upheaval in the last 24 months is the Fed moving rates up,” said Ayush Kapahi, principal and co-founder of HKS Capital Partners , a CRE investment firm. “At the end of the day, commercial real estate is a function of debt, what you can borrow, and the cost of capital that flows with it.”

As targeted equity returns are directly correlated with the cost of financing, every interest rate tick upward alters cap rates, impacts demand, freezes lending, and changes the valuation equation for different CRE asset classes and submarkets.

“The interest rate hike has diminished values in a way that I’ve never seen in my 20-year career,” said Kritsberg. “Not even during the Global Financial Crisis have I ever seen a loss of overall values on paper like I’ve seen during this interest rate hike.”

Nowhere has the value declines been more pronounced than in the nation’s office sector, however.

Moody’s Investors Service found that appraised values had declined an average of 35 percent since securitization on 78 office properties, totaling 38 million square feet, currently with defaulted CMBS conduit loans. For the 30 properties within New York and Chicago, value declines were 28.5 percent and 46.5 percent, respectively. Seven office properties in Denver and Houston declined in value by 60.3 percent, while four San Francisco offices declined by a stunning 72.5 percent.

For an asset class that has seen national vacancies rise to 19 percent in the fourth quarter of 2023, conduit default rates double from 2.73 percent in January 2023 to 5.49 percent in January 2024, and transactions essentially grind to a halt, it’s not surprising that question marks have proliferated around market values.

“It’s the transaction volume decrease that makes it tough for people to say they have reference points for cap rates or whatever metric they’re using as valuation benchmarks,” said Darrell Wheeler, Moody’s head of CMBS research, who added the velocity of office transactions now sits at 2013 levels. “There’s a lot of concern about valuations and how they’re done.”

Ah, yes, valuations — how they’re created and what goes into them. In many ways, this element of commercial real estate finance is the secret ingredient baked into all transactions. The opinion of value crafted and then concluded by an appraiser — almost always an independent third party — is often what determines the fortunes of investors, the share of allocated spoils, and the long-term viability of any income-producing property.

“The ding on an appraisal is always that it’s rearward-looking, we take the comp [comparable] that happened yesterday and adjust, and apply it to a transaction today. But when there are no transactions yesterday, that makes it that much harder,” said Robert Skinner, managing principal of Cushman & Wakefield’s New England office,

“An appraisal is always a blend between art and science, but it’s not fully scientific,” Skinner continued. “It’s called an ‘opinion of value.’ My opinion of value is different from yours, but we should be within 5 percent if we know what we’re doing.”

During the first years of the pandemic, a wave of broker opinions of value swept through the industry as soon as the Federal Reserve dropped interest rates, creating one of the frothiest markets in modern times.

Steve Schaller, chief revenue officer at Bowery Valuation, a New York-based appraisal firm, said his business was as busy as it could be when rates were nearly zero in 2020 and 2021. “We couldn’t hire appraisers fast enough and had more demand than we could manage, and that was true for most appraisal firms,” he said.

But that changed almost as soon as the Fed began raising interest rates in July 2022.

“It’s definitely significantly slower than it once was,” said Schaller. “And I don’t think we’ve even seen the full distress hit the system yet, in terms of where things are headed.”

Yet today, without a robust capital markets landscape to interpret, an appraiser’s personal judgment has come to occupy an increasingly important seat at the table as lenders and investors alike consider several key metrics used to determine CRE valuations.

Among the most critical statistics studied in any deal are net operating income (or NOI, also known as revenue), cap rates, vacancy rates, and rental rates, according to Brandon Gollotti, managing director of Bowery Valuation.

“When rental rates fall, that impacts income, and when vacancy increases through excess supply, that has largely negative effects on valuation,” said Gollotti.

Other key data points appraisers consider are renewal probability, absorption velocity, static vacancy, and net effective rents, as well as expenses, according to David Lyon, executive director at JLL Value and Risk Advisory.

“While ultimately the capitalization rate and discount rates move the needle on valuation, there really is no single metric which I would deem most important,” said Lyon. “A credible expert valuation will consider myriad variables which impact value.”

Fair enough. But what exactly goes into a credible valuation today?

Expert analysis

Despite being an industry of concrete building blocks and impersonal spreadsheets, commercial real estate still depends on human beings to physically enter the equation and craft values based on their own observations.

Richard J. Sheeler , president of Neglia Appraisals , said that an appraiser has “a fiduciary duty” to dig into the data, visit the buildings and create a comprehensive analysis, rather than simply accept the valuations presented by a building’s ownership group.

“I can tell you that with appraisers you get what you pay for,” said Sheeler, who added that the numbers presented by ownership are incorrect 90 percent of the time. “I know a lot of appraisers who dig in and do the research, who do it the right way, and others who just take whatever ownership tells them is in the rent roll, not dig in, and say, ‘This is what it is.’ ”

Any appraisal begins with an engagement — either an owner or lender calls the appraiser onto the site to figure out an updated appraisal for either financing a transaction or account for year-end reporting. After reviewing public records and checking the property’s certificate of occupancy, before even entering the building, the appraiser begins the on-site visit with a study of the neighborhood.

“You go out to the property for a physical inspection to figure out what the market is like. Who are the neighbors? How does it fit into the broader market?” explained Cushman’s Skinner. “The classic example is: Is it a church next to a strip club?”

During the physical inspection, the appraisers inspect as many units as possible, including commercial and residential spaces in the case of a mixed-use building, and usually a sampling of residential units within each apartment line. This process usually includes an interview with the building manager or superintendent and takes only a couple of hours.

“The reason why we’re adamant about seeing the commercial space is we want to measure the commercial space, as the rent is done on a per-square-foot basis,” explained Sheeler. “We determine what the space of the commercial real estate unit is to see if rent is in line with the marketplace and to make sure nothing crazy is passed through into the appraisal.”

Other experienced appraisers believe that only a limited inspection is required to adequately compare the property to the market and determine the revenue it can generate.

“I don’t need to see every single square foot of the building. I need to see a representative sample of what the tenants will see, because what the tenants see determines how much rent they will pay,” said Skinner. “So you make certain assumptions that it’s at a certain market standard and how it is perceived by the market.”

If there is this critical physical component, then there is also the element of perception.

Generally, appraisers believe their job is to hold a mirror up to the market and reflect the market as accurately as possible to the interested parties. At best, an appraiser keeps their own biases about a building or neighborhood at arm’s length and relies instead on expert opinions to inform their own conclusions.

“It’s not for me to judge the cap rate. All I’m doing is reflecting the market,” Skinner said. “Then you go back to the office and talk to brokers, buyers, sellers, investors about the market, because I can’t reflect the market if I don’t understand the market.”

Three avenues

Even though a physical inspection is required for any legitimate appraisal, there are actually three separate numerical approaches appraisers use to determine values for commercial real estate property: an income approach, a sales comparison approach, and a cost approach.

The cost approach is the least common method because its valuation model usually applies to new construction, where land values, vacant land sales, and depreciation estimates of nearby buildings are used to figure out how much it would cost to construct a replacement property in the same area. If this sounds like reverse engineering to reach an informed value, well, it is.

“It’s hard to determine the depreciation structure for a building that’s 100 years old, so a lot of times you won’t see that come into play,” said Sheeler. “Lenders usually ask for this [method] to estimate the replacement cost of a new structure to determine what they can insure it for.”

Then there’s the sales comparison approach. This method is exactly as it sounds: an analysis of data from recent sales of similar properties that produces an agreement on values, as appraisers assume that no informed buyer will pay that much more than the most recent purchase price of comparable properties.

The problem with this method, as one can imagine, is the difficulties appraisers encounter in determining markets when investment sales freeze and transactions fail to materialize.

“When there aren’t a lot of transactions, you as an appraiser, rather than using comparable sales data, are doing a lot more on the interview side: You’re talking to buyers and sellers, getting their feel for what returns should be,” explained Skinner. “But the short answer is it’s a lot harder.”

Moreover, some appraisers eschew the sales comparison approach because of the unique characteristics among CRE properties, such as neighborhood quality, access, renovations, debt yield, debt service coverage, estimated rents, projected vacancies and NOI, which makes comparing values based on recent sales a fool’s errand.

“The problem is no two office buildings are the same and there are all these differences without getting into all the nuances,” said one experienced appraiser, who spoke on conditions of anonymity. “When one is looking at the sales comparison approach, it’s very hard and challenging to get real numbers, so I give little weight to it.”

With that said, like a dependable brand, one appraisal method remains trusted among all others: the cash-flow approach, also called the income approach.

Because commercial real estate properties are income-producing assets, the cash flow coming out of a property can be used to determine its value relative to market comparables. No matter a down market or a hot market, every CRE property is still able to produce a rent roll for analysis and assessment.

“The entire weight is given to the income approach,” said the anonymous appraiser. “When you have an income-producing asset, no one cares about the cost approach or the sales comparison approach.”

Using the income approach, an appraiser sets up a rent roll and studies the leases, before writing an income and expense analysis that helps determine an estimated rent for the space based on comparable market data. The appraiser then considers vacancies and loss rates, and also applies typical expenses like taxes, heat and hot water, electricity, interior maintenance and other building costs to determine the NOI of the building. After choosing a capitalization rate based on market comparables, that cap rate is applied to the NOI to convert this mix of data into an updated building value.

Moreover, some appraisers (and investors) use a discounted cash-flow analysis, which makes assumptions about building metrics during a fixed time period. These metrics might include rental movements, vacancy levels, and where residual cap rates will be upon a future exit date.

“From my office, and my way of thinking, we put most weight on actual market transaction cap rates than on a theoretical band of investment cap rates,” said Sheeler. “That’s how we get down to value via the income approach.”

However data-intensive the income approach is to determining values, the consequences of this method extend far beyond the offices of an independent appraiser. Because buildings derive their value from cash flow, widespread value declines across the office sector (and other asset classes) have forced lenders and equity partners to become increasingly involved in the valuation process, or at least more than they typically are when interest rates are low, according to multiple appraisers.

Consider: When vacancies rise and rents fall, how much cash flow is left over after expenses to service a loan? Likely not as much as underwriting once assumed. And, if estimated cash flows can’t service a loan, which lender would ever float millions of dollars in debt to support the capital stack of even the most accurately valued building?

This uncertainty around debt service in CRE is the primary element that’s freezing transaction volumes and confusing values for appraisals — after all, is not market value determined by both a willing seller and a willing buyer?

“The biggest problem with office valuations now is even if I come up with an opinion of value, it still assumes that a buyer can purchase the asset,” said Skinner. “The lack of financing is having a greater negative impact on valuations [than anything else].”

If cash flow assumptions weren’t difficult enough, the fears of inflation photobombing the capital markets picture have in turn heightened dreaded expectations that the Fed will raise interest rates even higher to fight it off, while nervous investors in turn will drive the 10-year Treasury past 5 percent for the second time in 12 months.

All told, market participants are preparing to hunker down in an uncomfortable world where interest rates are higher for a long foreseeable future.

“It’s not a good thing for our market, it’s not a good thing for liquidity, it’s not a good thing for transaction volumes, and it will have the impact of chilling investment sales because it will put things back in doubt today,” said Warren de Haan, CEO of Acore Capital .

6 Reasons Pre-listing Appraisals Win the Best Sales Prices

Sat, 27 Apr 2024 19:33:48 GMT

READ THIS Before Listing Your Property For Sale

Selling your (or your client’s) home is a very significant financial transaction. Of course, your aim is to maximize your return on the time and money you've invested in the property.

While mortgage banks typically require an appraisal before buyers can finalize a purchase, sellers have the option to order up an appraisal before listing property for sale . Here's what a pre-listing appraisal involves and why it's prudent to consider one before putting your home on the market:

Establish Realistic Expectations : Selling a home is not just a financial transaction; it often carries emotional significance due to the memories created within its walls. An appraisal provides an impartial evaluation of your home's value, helping to temper emotional attachments and make level-headed decisions.
Set a Realistic Sale Price : Whether you're working with a real estate agent or selling your home independently, determining the right listing price can be challenging. A pre-listing appraisal offers an unbiased assessment, guiding you towards a competitive listing price.
Provide Security in Short Sales : If you're in a rush to sell your home, particularly due to job relocation or family emergencies, a pre-listing appraisal offers assurance. It ensures you're not underselling your property, especially if dealing with companies offering cash purchases.
Prioritize Repairs and Updates : Before spending on costly renovations, a pre-listing appraisal helps weigh the potential return on such investment. It provides the information you need to make an informed decision as to whether renovations are necessary to maximize the sale price.
Select the Best Real Estate Agent : By obtaining a pre-listing appraisal, you gain insight into which real estate agent offers the most realistic strategy for your property. This helps in making an informed decision when choosing an agent.
Avoid Unpleasant Surprises from Mortgage Brokers : A pre-listing appraisal can prevent setbacks during the sale process, such as a low appraisal value affecting mortgage approval. It provides clarity upfront, reducing the risk of unexpected hurdles.

A pre-listing appraisal is a valuable tool while navigating the complexities of selling your home, offering clarity, security, and informed decision-making throughout the process.

Neglia Appraisals has been expertly providing pre-listing appraisals since 1991. The family-run real estate valuation company is experienced in appraising residential and commercial properties throughout the New York Metropolitan area. Neglia services the New York City Boroughs of Manhattan, Brooklyn, Queens & Staten Island, and draws on a unique and extensive proprietary reference database for these areas. To learn more about Neglia Appraisals and its services, visit https://www.neglia.com or call (718) 331-2122 .

Is Staten Island a good place to buy a home?

Wed, 03 May 2023 15:40:32 GMT

Staten Island is one of New York City's five boroughs and the least populous of them all. However, despite its relatively small size, Staten Island is an excellent location to buy a home.

Staten Island offers a unique suburban lifestyle while still being part of the bustling metropolis that is New York City. In this blog post, we'll explore why Staten Island is a great place to buy a home.

Affordable Housing The cost of living in New York City is notoriously high, but Staten Island is one of the few boroughs where you can still find housing at a reasonable price. Compared to other areas in New York City, the cost of living in Staten Island is lower, making it an attractive option for those looking to buy a home.
Proximity to Manhattan While Staten Island may be considered a suburban oasis, it's still close to the heart of the city. The Staten Island Ferry runs regularly and is free, offering a scenic and convenient way to commute to Manhattan. For those who work in the city, this makes Staten Island an excellent place to live as it offers the best of both worlds. Other than the ferry, the MTA express bus system provides mass transit into Manhattan. However, the express buses are mostly commuter service with few weekend and evening trips.
Parks and Recreation Staten Island is home to over 170 parks and recreational areas, making it a haven for nature lovers. From hiking trails to beaches, there's something for everyone. Some of the most popular parks include Clove Lakes Park, Silver Lake Park, and Wolfe's Pond Park. These parks offer a serene escape from the hustle and bustle of the city, and they're perfect for families with children.
Great Schools If you're a parent, one of the most important factors when buying a home is the quality of the local schools. Staten Island has some of the best schools in the city, with a mix of public and private options. The Staten Island Technical High School is consistently ranked as one of the best in the country, and there are also several other highly regarded public schools in the area.
Vibrant Culture Staten Island is known for its vibrant and diverse culture, with a mix of ethnicities and backgrounds. The borough has a rich history and is home to several museums, galleries, and cultural institutions. The Staten Island Museum is a must-visit, offering exhibitions and programs that explore the natural history, art, and culture of the island.
A Strong Community Staten Island is a tight-knit community with a strong sense of pride and identity. It's a place where neighbors know each other, and there's a sense of camaraderie and community spirit. This is reflected in the many community events and festivals that take place throughout the year, such as the Staten Island Music Festival and the Richmond County Fair.
Waterfront Living Staten Island is surrounded by water, offering residents the opportunity to live near the waterfront. There are several waterfront communities in Staten Island, such as St. George and South Beach. These areas offer stunning views of the water, easy access to the Staten Island Ferry, and a laid-back, beachy vibe.
Up-and-Coming Neighborhoods While Staten Island may not have the same reputation as other boroughs like Brooklyn or Queens, it's an up-and-coming area with several emerging neighborhoods. St. George, for example, is undergoing a revitalization, with new restaurants, shops, and cultural institutions popping up all the time. This makes it an exciting time to invest in property in Staten Island, as you can potentially see a significant return on your investment in the coming years.

Staten Island Restaurants

Staten Island, one of the five boroughs of New York City, is a haven for foodies. From Italian cuisine to seafood, the island has an array of restaurants that offer a diverse range of dishes. Here are some of the best restaurants in Staten Island that you must try:

The Stone House at Clove Lakes: The Stone House at Clove Lakes is a picturesque restaurant that offers breathtaking views of the Clove Lakes Park. The restaurant has an extensive menu that includes seafood, steak, pasta, and vegetarian options. The Stone House is also a popular venue for weddings and private events.
Enoteca Maria: Enoteca Maria is a unique restaurant that showcases the cuisines of grandmothers from all over the world. The restaurant features a rotating cast of grandmothers who cook their signature dishes. Enoteca Maria is a must-visit for anyone who wants to experience the diversity of Staten Island's food culture.
Vinum: Vinum is a wine bar and restaurant that specializes in Italian cuisine. The restaurant has an extensive wine list that features some of the best wines from around the world. Vinum's menu includes classic Italian dishes like spaghetti carbonara and osso buco, as well as some innovative creations.
Ho'Brah Tacos: Ho'Brah Tacos is a popular restaurant that serves Mexican cuisine with a Staten Island twist. The restaurant's menu includes tacos, burritos, and quesadillas, as well as some unique dishes like the Staten Island-style pizza taco. Ho'Brah Tacos is a great place to grab a quick and delicious meal.
Marina Cafe: Marina Cafe is a waterfront restaurant that offers stunning views of Great Kills Harbor. The restaurant specializes in seafood and has an extensive menu that includes fresh catches like lobster, clams, and oysters. Marina Cafe also offers a variety of pasta dishes, steaks, and salads.
Bayou: Bayou is a Cajun and Creole restaurant that serves some of the best Southern food in Staten Island. The restaurant's menu includes classic dishes like jambalaya, gumbo, and po' boys. Bayou also offers live music on weekends, making it a great spot for a fun night out.
Violette's Cellar: Violette's Cellar is a trendy restaurant that features a rustic decor and an extensive menu of American and Mediterranean dishes. The restaurant's menu includes steaks, seafood, pasta, and salads. Violette's Cellar also has a great selection of cocktails and an impressive wine list.
Seppe Pizza Bar: Seppe Pizza Bar is a fresh, modern, and family-friendly take on a neighborhood pizzeria with comfortable, classic touches and a welcoming, laid-back atmosphere free of formal frills. With a wonderful location close to the water, you can build your own pizza with locally sourced ingredients. The menu also consists of traditional Italian staples such as Chicken Parm and Shrimp Oreganata. In addition, they offer a full bar with delicious cocktails and wines.

Staten Island is a food lover's paradise, and these are just a few of the many great restaurants that the island has to offer. Whether you're in the mood for Italian, Mexican, or Southern cuisine, there's something for everyone in Staten Island.

Conclusion

Staten Island is a hidden gem within New York City. It offers a unique blend of suburban living and urban convenience, making it an attractive location for those looking to buy a home. From affordable housing to great schools and stunning waterfront views, Staten Island has something for everyone. So, if you're considering buying a home in New York City, Staten Island is definitely worth considering. With its strong sense of community, cultural institutions, and easy access to Manhattan, Staten Island offers a high quality of life at a more affordable price than other boroughs. Furthermore, with its up-and-coming neighborhoods and ongoing revitalization, the potential for future growth and investment is high.

Of course, as with any home purchase, it's important to do your research. You may want to consider a pre-sale property appraisal to ensure you’re asking the right price, and to have the appraisal in your arsenal during purchase negotiations.

Neglia Appraisals is a full service, family-run real estate valuation company, experienced in appraising residential and commercial properties throughout the New York Metropolitan area since 1991. The firm services the New York City Boroughs of Manhattan, Brooklyn, Queens & Staten Island, and draws on a unique and extensive proprietary reference database for these areas. To learn more about Neglia Appraisals and its services, visit https://www.neglia.com or call (718) 331-2122.

Neglia Appraisals Announces Merger

Tue, 01 Feb 2022 23:35:25 GMT

This story was featured on the Columbia Society of Real Estate Appraisers, here .

Brooklyn, NY – January 18, 2022 — NYC property owners can now access a more robust range of real estate services as three leading firms have merged to start off 2022.

The firms include Brownstone Property Group, a full-service real estate company specializing in high-touch residential property management, general contracting, and real estate brokerage, RJS Appraisals, and Neglia Appraisals. RJS Appraisals has been a leading provider of outstanding residential appraisal services in Staten Island for over a decade, with a focus on estate, divorce and pre-listing valuation assignments. Neglia Appraisals is a family-owned and operated real-estate appraisal and consulting company with a 31-year reputation for delivering high-quality commercial and residential real-estate valuation products to its clients. As leaders in diverse yet related specialties, the merger brings a wide range of synergistic opportunities enhanced by the experience, talent, and innovation of each firm. In addition, the principals of each firm are noted for their outstanding customer-care approach and hands-on personal attention to clients’ needs.

“Brownstone Property Group is well-positioned to gain from the RJS Appraisals and Neglia Appraisals legacies and to help raise the prospects of all three firms to the next level of achievement and excellence” states Josh Blackman, Brownstone Property Group’s Principal. “The expertise of the Neglia and RJS professionals will enhance the ability of Brownstone to ensure that our management and real estate brokerage clients continue to receive excellent service from a range of experienced professionals.”

As Founder of Neglia Appraisals, Domenick Neglia, SRA, CSA-G, is a highly respected member of the NYC real estate community, and is past President of the Columbia Society of Real Estate Appraisers. In a 2014 NYS Supreme Court opinion, Justice Debra Silber noted Mr. Neglia’s “impressive credentials, including his work doing appraisals for the Courts and the Public Administrator…”

In 2021, Neglia Appraisals surpassed pre-covid company numbers in terms of total gross revenue, appraisals written, and client base growth. According to Mr. Neglia, who continues to guide the firm as Senior Review Appraiser; “This merger is set to continue all three firms’ rapid expansion, and proves that the whole is greater than the sum of its parts. The focus on integrity and customer service permeates everything we do. We are looking forward to continue servicing clients for residential and commercial valuations throughout the five boroughs of NYC.”

Richard J. Sheeler Jr, is the Founder of RJS Appraisals, and a long-time consultant at Neglia Appraisals, completing residential and commercial valuation assignments for the firm. He has received the CSA-G designation from the Columbia Society of Real Estate Appraisers where he currently sits on the Board of Governors. Mr. Sheeler will join the executive Board at Neglia Appraisals as President. “The timing was right” stated Mr. Sheeler noting that “there is a trend beginning in the valuation sector with single practitioners expanding their existing businesses or partnering with others to create larger firms.”

Since 2005, RJS Appraisals has provided reliable real estate value opinions that major lending institutions, attorneys, and home buyers require for home loans, estate management and real estate sales and purchases. The firm specializes in residential appraisals in Staten Island, New York.

Established in 2004 in Park Slope Brooklyn, Brownstone Property Group has become the go-to small building manager in Brooklyn in addition to a highly successful general contracting and real estate brokerage. During 2021, Brownstone nearly doubled revenues and increased the size of its managed portfolio, employed team, and number of offices in a reflection of the Brooklyn real estate market’s steady improvement despite the pandemic. Contact Brownstone Property Group at BrownstonePropertyGroup.com or call 718.499.6030.

New York Law Journal

Mon, 08 Mar 2021 14:31:07 GMT

NEW YORK LAW JOURNAL
by Domenick Neglia, SRA, CSA-G

Domenick Neglia was referenced in a December 24, 2014 issue of the New York Law Journal for his skills as an expert witness. Justice Debra Silber noted his more impressive credentials and the diligence he showed in describing how he came to his findings compared to Plaintiff's appraiser.

See Justice Silber's Comments HERE .

Pride and Professionalism

Mon, 08 Mar 2021 14:27:41 GMT

PRIDE AND PROFESSIONALISM
by Domenick Neglia, SRA, CSA-G

Appraiser licensing as mandated by USPAP has educated users of appraisal services such as lenders, homeowners, attorneys, mortgage brokers, etc., of the educational requirements and general standards of professional practice that appraisers must adhere to. Licensing has also inspired many appraisers to upgrade their approach to the profession; unfortunately, there are still appraisers who are not motivated to consistently conduct themselves as professionals. Not long ago my own house was appraised for a major lender. When the appraiser rang the bell, I put up a pot of coffee and set the timer for six minutes, with the intention that the appraiser might enjoy a cup of fresh hot coffee before he left. Upon ringing my bell, he stated that he had some measuring to do outside, and would inspect the interior shortly.

After a brief period, he completed his outside work, came inside and proceeded with the "inspection". As he walked through my house, I thought to myself that roller skates would surely help - that's how fast he did the inspection. (During this time the coffee was perking, but not ready.) He took my word for virtually all information, including age of the kitchen equipment and air conditioning unit, attic insulation, electric service, and other items which should have been confirmed with a visual inspection. I asked him how many houses he appraised in a typical day - he said "between eight and ten" - amazed at this, I further enquired as to how he could write up so many appraisals so quickly? Without hesitation he admitted that someone else in his office actually wrote the reports! He had no business card, and would volunteer his first name only, thus making it difficult to prove that the writer of the appraisal did not actually inspect the property. As he was finishing the inspection I asked if he would like a cup of fresh coffee; he politely declined, stating that he had another appointment very soon. My front door closed behind him when the coffee timer sounded - total time to perform an exterior and interior inspection of a seven room house containing almost 1500 square feet of living area plus full basement? Six minutes! I thought to myself, "this must be a world's record - if any of my staff appraisers did this I would fire them on the spot!"

Enforcement of USPAP can curtial this type of slipshod work; but more important, owners of appraisal companies must themselves understand the importance of conformance to high standards of professional practice, must enforce adherence, and not foster manipulation of the regulations to make money. In addition, better educational standards throughout the industry, especially in basic appraisal courses, will promote higher standards of professionalism. An intangible component of all appraisal education should be the teaching of pride in the final product.

With the heightened awareness of USPAP throughout the real estate industry and with increased competition for quality appraisal work, I believe that performances similar to the one described above will occur less frequently, and that pride and professionalism will predominate.

A Brief History of Carroll Gardens

Wed, 03 Mar 2021 14:20:22 GMT

A BRIEF HISTORY OF CARROLL GARDENS
by Domenick Neglia, SRA, CSA-G

In the last century there were many neighborhoods in Brooklyn (do I have to add “New York” ?) with a strong Italian influence...Bensonhurst, Sheepshead Bay, Williamsburg, Dyker Heights, to name a few. One that still maintains a significant Italian flavor is Carroll Gardens, in what used to be called South Brooklyn, but is actually nearer to the mid-western section of the borough. It's in the same general area that Tuscany is in proportion to Italy, and like Tuscany, it has rich cultural roots. However, the heritage of most Italians in Carroll Gardens is not from the Tuscany region, but rather from Southern Italy, as a result of the great immigration of southern Italians through Ellis Island in the late 1800's and early 1900's.

The People

When these immigrants arrived over 100 years ago, Carroll Gardens/South Brooklyn encompassed a larger geographical area than it does today. There was no BQE separating the neighborhood, so the western section included the Brooklyn waterfront; it also extended further north, to the Atlantic Avenue border with Brooklyn Heights. Back then, the Brooklyn docks dominated the entire area, with longshoremen enjoying consistent employment, albeit doing physically hard, demanding work. Most men working the docks were Italian and lived within walking distance; thus Italians dominated the area. Local shops reflected this dominance, with dry goods stores, deli’s, some restaurants, fruit stands, and many street vendors, just as in Little Italy in Manhattan.

My maternal grandfather, Antonino Mirenda, was one of those immigrants, arriving in 1906 at the “advanced” age of 16. He too settled in South Brooklyn and worked as a longshoreman on the docks. When Nino first came to this country via Ellis Island, after being sponsored by his older brother Martino, he lived in a rooming house on State Street in Brooklyn Heights. Later, after marrying my grandmother, they lived in a “cold water flat” on Nelson Street, on a block subsequently razed during the construction of the BQE and Brooklyn Battery Tunnel.

The population of Carroll Gardens today is no longer predominantly Italian, but is more reflective of the youth movement and upper middle class professionals associated with the real estate boom in Brownstone Brooklyn over the last 25 years. But the century-old Italian influence in the neighborhood remains unmistakable, and is quite appreciated by the younger, multi-ethnic generation.

The Architecture

There are more than 150 buildings comprising the Carroll Gardens Historic District, which was designated by New York City in 1973. Most of these houses are on President and Carroll Streets, and were built between 1869 and 1884. However, the brownstones in the neighborhood actually extend beyond the Historic District boundaries, and most date back to the late 1800's.

To walk inside one of these brownstones is like taking a trip in the twilight zone back over 100 years ago: The architectural details that survive in these stately buildings include the original wide wood moldings, pocket doors that slide into the walls, mahogany or oak banisters and wainscot, high ceilings on the parlor floors, parquet floors, built-in pier mirrors, marble fireplace mantles, and decorative plaster ceiling medallions. Most of these components were originally hand made, and exude exquisite 19th century character. Today, these extensive original details contribute significant value to these houses.

The ceilings on the parlor floors are often ten feet or higher, and many houses still have the coffin’s corner: a cut-out in the stairway wall where the coffin could be turned and still maintain a horizontal position. After all, in those days, when someone died, the wake was in the house, and the coffin was in the parlor - but the stairs were so steep, the pallbearers would have had to turn the coffin vertical, which would certainly upset the occupant inside! The coffin’s corner would allow the coffin to be brought down the staircase horizontally, ensuring that the inhabitant remain in a comfortable, prone position.

Beginning in the late 19th century, Italian immigrants moved into the beautiful brownstones of Carroll Gardens, with ornamental building facades and long front yards. From the early 1900's through the 1950's, Italians displaced the original Irish population in most of the neighborhood. Many of the large front yards still have religious shrines and statues throughout the year. During the Christmas holidays, the entire neighborhood is decorated with lights and ornaments adorning front yards and houses.

Five churches built during the 19th century still exist in Carroll Gardens, and three are still functioning as houses of worship; the other two have been converted to condominiums, which has been the recent trend. The three remaining churches are all very distinctive: St. Agnes Roman Catholic, on the corner of Sackett and Hoyt Streets; Saint Mary’s Star of the Sea at 467 Court Street; and Old Saint Paul’s church, at the corner of Court and Congress Streets. St. Paul’s was built in 1836, in what used to be part of greater South Brooklyn, but is now known as Cobble Hill.

The Shops and Food

Court Street remains the main commercial thoroughfare, and is still populated with many Italian restaurants and pizzerias, as well as pastry shops, bakeries, and a few clothing stores. Among the perennial standouts are:

Marietta’s Ladies, Men’s & Children’s Wear – Recently closed due to the death of the owners, this small clothing store was at 392 Court Street. My grandfather had a friend, Dominic Chirico, who he knew from the same town in Calabria. Our family called his wife commare Marietta, and it was Marrietta who opened the store in 1940. It’s obvious that the store did not changed at all in the 71 plus years of its existence. The shelves and showcases were the same old wood and glass style as they were before WWII, still stocked with women’s house dresses, underwear, nightgowns and pajamas, but now they sell jeans too - what a wonder!

Who wouldn’t love the Italian bread at Caputo’s Bakery , at 329 Court Street? Their cakes are unsurpassed, and everything is made on the premises, under the watchful eye of John Caputo, the fourth generation owner. John’s son, James, is next in line, and works there too. According to John, the bakery was originally opened in 1904 on Hicks Street by his great grandfather, Vincenzo, and ownership has stayed in the family ever since. Specialties include rustic bread, olive bread, pepper and lard bread, and my personal favorite, the old fashioned round, sliced Italian bread (with a thick crust) - just great toasted with butter for breakfast! John tells me that this is one of the oldest continually family operated Italian bakeries in all of Brooklyn, and I surely believe him.

Speaking of bakeries, I can’t leave out Mazzola Bakery, at 192 Union Street - they still make the best Prosciutto bread, and now you can have an expresso and pastry on a table on the front sidewalk, just as you would in Tuscany. It seems like they bake all night, and the wonderful smell wafts over the neighborhood like a delicious cloud from bakery heaven.

Esposito’s Pork Store , at 357 Court St., was voted by Yelp.com as the best Italian deli in Brooklyn, and I can understand why, after having shopped there for the last 25 years. Owned by John and George Esposito, it too has been operated by the same family for almost 100 years. They make their own sausages, mozzeralla, and rice balls, and recently started offering fresh pasta too. The sharp provolone is aged a minimum of two years, and is the best you will taste anywhere. Just to walk inside and inhale the delicious smells makes anyone yearn to taste one of their homemade delicacies.

Ferdinando’s Foccaceria at 151 Union Street, is technically now in Carroll Gardens West if local real estate brokers are to be believed; this was part of the original Carroll Gardens waterfront section in the late 1800's and early 1900's. Separated in the 1950's from Carroll Gardens proper by the Brooklyn Queens Expressway, it nevertheless has lost none of its original charm and old world appeal. The current proprietor, Francesco, is the son-in-law of the original owner, Ferdinando, who first opened the restaurant in 1904, primarily as a fast food lunch stop for the longshoremen. Much of the interior remains unchanged from over 100 years ago, including the wood and glass food show cases in the front, and a myriad of old photographs of Sicily. Of course the kitchen is right up front, and the original old sign remains on the wall behind the stove announcing Ferdinando’s Foccaceria, Est. 1904". Among the Sicilian favorites offered on the menu are vastedda, arancina, trippa, pasta con sarde, polpo, and my personal favorite, the panelle special.

Conclusion:

The common thread among the Italian stores in Carroll Gardens is the same as it was 100 years ago: the owner is always there to watch the store ...giving the personalized care in production, the love of the product itself, the pride in creating the best possible product, and of course, a friendly, warm, homey atmosphere. And the beneficiaries don’t have to be Italian - they just have to know homemade quality when they taste it!

How & When Should We Measure Changing Values

Tue, 02 Mar 2021 14:13:11 GMT

HOW & WHEN SHOULD WE MEASURE CHANGING VALUES

August 2016

As professionals, all appraisers must examine how values change over time. Obviously, this in required in the market conditions analysis section: whether the report format is a form or narrative, we have to address supply and demand and marketing time, which usually affect property value trends. This article is intended to answer two questions, and is limited to residential valuations: Over what period of time should we examine changes in real estate trends? And how should we analyze those trends?

The answer to the first question is subjective – the appraiser needs to use experience and judgment when examining changes in market conditions over a particular time period. But what should that time period be? That’s the subjective part. Considering that the end result of the analysis is whether or not to apply time adjustments, it would seem that the measurement should at least be from the time of the oldest comparable used in the sale comparison approach, or just beyond that date. Some appraisers apply the logic that if all comparables are recent, then adjustments for changing market conditions need not be applied. I would counter with the fact that if values are changing quickly, there is good reason to adjust. Moreover, time adjustments should be applied from the contract dates, which represent the “meeting of the minds”; thus even comparables that closed recently may have been in contract for quite a while, resulting in significant market condition adjustments.

The answer to the second question is more analytical. Whatever the data source used for the comparables, e.g., Comps Inc., Geodata, Streeteasy, MLS, etc., the appraiser can either make use of the analysis available from that source, or perform an independent analysis. Sometimes the analysis from the data source is too broad, or too generalized: for example, Comps Inc. offers residential Market Trend data by county and zip code over the last 15 years or so. But if the subject neighborhood straddles more than one zip code, or the property type is unusual in that area, the results can be misleading. It that case, a narrower, or more specific search should be performed, using a tight radius around the subject (in that neighborhood) for a particular time period. Either average or median sale prices can be analyzed (or both), to determine the direction and rate of change for market conditions.

The curve balls in all of this are, of course, the unique property or the very desirable neighborhood. Values for many high end residential properties in Manhattan have recently stabilized. The first clue to this was in the print media: the Sunday Times Real Estate section remains an excellent source for this information. When my office completes valuations of midto- high end properties in Manhattan, we always do a specific search of the property type and the neighborhood to find out what the trend has been over at least the prior year. Time on the market is always a good trend indicator. We have recently seen high end properties on the market for longer time periods than in recent years, with bidding wars now infrequent. The conclusion is that values for these properties have stabilized.

Neighborhood trend analysis is also important, since there is evidence that some neighborhoods have stabilized, while there is strong demand in others that still drive up prices. This is true throughout the Metropolitan area. Examples of this are in Brooklyn: values in most brownstone neighborhoods have stabilized in 2016, however, areas that are on the borders of the brownstone neighborhoods, or in areas that are gentrifying, (for example Crown Heights, Bed-Stuy and Bushwick) continue to show upward trends. The appraiser cannot take for granted that trends in one area are consistent with other surrounding areas.

This type of thorough analysis is also applicable for retrospective valuations, but the data can be somewhat easier to analyze. The data sources noted above are reliable, and for values in the five boroughs of New York City, NYRealEstateTrends.com is very accurate, and goes back to 1995.

As valuation professionals it is our responsibility to measure changing market conditions as accurately as possible. Diligence in that regard lends credibility to the final valuation. Thanks to the many electronic data sources at our disposal, accomplishing this is not nearly as cumbersome as in previous times, and we should all be working toward the goal of accuracy and reliability.

Residential Real Estate Values in New York City Have Now Exceeded Pre-9/11 Levels

Mon, 01 Mar 2021 15:25:26 GMT

RESIDENTIAL REAL ESTATE VALUES IN NEW YORK CITY HAVE
NOW EXCEEDED PRE-9/11 LEVELS

Author: Domenick Neglia, SRA, CSA-G

The attacks of September 11 had a profound, but short term, effect on residential real estate in New York City. Volume of sales, as well as property values, showed pronounced changes between August, 2001 and June 2002, the period for which conclusive data was available for this study.

Predictably, Manhattan real estate was more severely affected by the attacks of 9/11 than any other borough. By the middle of 2002, prices for Manhattan condominiums were still significantly below pre - 9/11 levels.

For this study, data was analyzed comparing sales volume and prices in the last quarter of 2001 (e.g., just after 9/11), to each of the previous four quarters. Our analysis also included a comparison of prices at the end of 2001, with the first half of 2002. Property types studied included one and two family properties and condos throughout all boroughs of New York City. Sale prices were also examined comparing 1995 levels to price levels at the end of 2001. The most significant changes are analyzed below:

BY JUNE, 2002, PRICES EXCEED PRE-9/11 LEVELS FOR MOST PROPERTY TYPES

In spite of the negative affects on real estate after the attacks, single family properties in New York City still showed an increase in value by the end of 2001, compared to 2000 levels. Citywide, by the end of 2001, the average sale price for a single family dwelling in New York City was $278,418, an increase of 7.1% over 2000, and, significantly, 45% higher than 1995 levels. (Excluding Manhattan, the 2001 average sale price was $264,724.) The highest increases were in Manhattan, Brooklyn and Queens, where single family housing prices increased by 82.9%, 48.6% and 48.7% respectively, compared to 1995.

Citywide, by the end of the first half of 2002, prices for most residential properties exceeded the levels just before and just after 9/11. By the middle of 2002, prices for single family properties had increased by 7.2% and 4.8% respectively, compared to the third and fourth quarters of 2001.

Overall, by June of 2002, average single family sale prices in all boroughs increased by 9.2% compared to 2001, from 4.5% in Brooklyn, to a high of 14.8% in Manhattan. Similar increases occurred in all boroughs for two family properties.

Average prices for condos in 2002 increased in Brooklyn, Queens and Staten Island, while Manhattan and the Bronx showed decreases in values of 11.8% and 54.5%, respectively. Manhattan condos were the only remaining property type that continued to show declining prices by mid 2002: average sale prices decreased compared to the third and fourth quarters of 2001 by 12.2% and 9.5%, respectively.

The steepest declines in average sale price were for Manhattan condos in zip codes 10007 (TriBeCa), 10022 (East Side), and 10280 (Battery Park City). By July 1, 2002, prices had decreased by 35.6%, 43.2% and 35.6% respectively, compared to 2001 levels.

EFFECTS ON SALES VOLUME

Sales volume for single family properties actually increased from the first and second quarters of 2001 to the last quarter of 2001, in all boroughs except Manhattan. Manhattan showed an increase of 15.6% from the first quarter to the fourth quarter, but no change for the third quarter to the fourth quarter, or from the fourth quarter of 2000 to the fourth quarter of 2001.

The volume of condo sales increased citywide between the first two quarters of 2001 and the last quarter of 2001, except in the Bronx and Manhattan. After 9/11, condo sales volume decreased significantly in Manhattan, compared to three of the previous four quarters. The highest decline was between the last quarter of 2000 and the last quarter of 2001, indicating a 34.8% decrease in the number of sales.

For one and two family properties, overall sales volume throughout New York City increased from the first quarter of 2001 to the last quarter of 2001. This increase is not unusual, since volume in the first quarter is typically lower than in other parts of the year. Sales volume for condos throughout the city declined by 11.9% in the same period.

By the last quarter of 2001 (i.e., post 9/11), overall residential sales volume throughout New York City had declined significantly for most property types, compared to volume in three of the previous four quarters. Most significantly affected was the condo market, where volume decreased 22.8% from the last quarter of 2000 compared to the last quarter of 2001.

FINAL COMMENTS

Based on the above statistics, the resilience of the residential real estate markets in New York City has been reaffirmed, despite the devastating effects of 9/11. Moreover, the total increase in value over the last six years is extraordinary. Strong demand, limited supply, and the lowest mortgage interest rates in 30 years, all contribute to the continued growth in the residential sector. This trend can be expected to continue over the near term.

About NYRealEstateTrends.com

In this website, we offer a complete and accurate analysis of residential real estate value trends in New York City since 1995. All recorded transfers of one, two and three family residential properties and condominiums in the five boroughs are considered in our research. All information on sale prices and sale dates is from public record.