In February, 2013, a bank approved a $2,000,000 mortgage loan on a commercial rental property on the condition that the subject property appraised for a minimum of $3,076,923. The bank began the appraisal process by having Valuation Management Group of Marietta, Georgia put the appraisal out for bids which specified that the appraisal was to have a sales approach, a cost approach, and an income approach. The CEO of Valuation Management Group (VMG) is Vicky Thompson.
VMG sent a questionnaire to the appraiser with the winning bid which asked if the appraiser had ever been sued. The appraiser falsely answered “No”. In fact, the appraiser had been sued for appraisal negligence. Since VMG failed to check this out, later on March 7, 2013, the appraiser executed an engagement letter with VMG wherein the appraiser falsely stated that there was no conflict of interest either “direct, indirect, financial or otherwise … in the property being appraised …”. In fact, the appraiser was in the process of closing the purchase of a vacant commercial rental property a mere 300 feet down the street from the subject property. The appraiser’s property was clearly a potential competitor for prospective tenants with the property being appraised.
On March 11, 2013, the owner of the subject property paid $5,200 to VMG for their services and the appraiser’s services. On March 18, 2013, a deed was executed conveying the vacant property to the appraiser.
On March 19, 2013, the appraiser met the owner of the subject property being appraised at the subject property. The appraiser never revealed that he had just bought the vacant property down the street and he would be competing for tenants with the property being appraised. The appraiser asked for and received from the owner confidential information about the subject property’s tenants, rents, lease termination dates, and overall business strategy. The appraiser also learned that the owner was going to use about $425,000 of the loan proceeds to make improvements that would increase the subject property’s appeal to prospective tenants and that the loan amount was approved to be $2,000,000 subject to an appraisal of a minimum of $3,076,923. At the meeting the owner gave the appraiser a list of 18 sales of commercial properties in the neighborhood which indicated the subject property should appraise in the range of about $7,000,000 to $10,000,000.
In April, 2013, the appraiser sent his appraisal to VMG. The appraisal was for $2,100,000 and revealed to VMG and the owner that the appraiser had purchased the vacant property down the street. The appraisal did not have the agreed required sales approach and cost approach, but only had an income approach in which the appraiser cooked a low value by using an arbitrary low rental rate. The missing sales approach should have resulted in a minimum value of $7,000,000. The missing cost approach would have shown the land alone to have been at least $4,000,000 and the buildings at least another additional $4,000,000 for a total of $8,000,000 or more.
On April 18 and 19, 2013, the owner complained to VMG about the missing sales and cost approaches, about the appraiser’s manifest conflict of interest, and about the appraiser not using the 18 nearby sales. VMG was shown on a map their locations and the sales price per square foot for each sale. The average of the sales would have given the subject property a minimum value of $7,000,000
The bank and the owner asked VMG, on whom they were both relying to manage the appraisal process properly, to “appropriately follow up on the matter.” The appraiser, of course, refused to increase his appraisal by any amount. Notwithstanding overwhelming evidence of conflict of interest, lack of the sales and cost approaches, sales data indicating a value for more than the minimum of $3,076,923, Valuation Management Group did not do a review of the appraisal concluding the value was at least $3,076,923.
Because of this inaction by VMG, the owner could not close the full $2,000,000 mortgage loan and could not put in the improvements to its property. Several months later, the owner paid for a new appraisal with a reputable disinterested MAI appraiser who appraised the subject property for $8,900,000. After that, the owner engaged another reputable disinterested MAI appraiser to review the $8,900,000 appraisal. The review appraiser concluded that the $8,900,000 appraisal was “reasonable and appropriate.”
It is the owner’s opinion that Valuation Management Group negligently fell down on its job and cannot recommend Valuation Management Group or Vicky Thompson to anyone.
Valuation Management Group Reviews
In February, 2013, a bank approved a $2,000,000 mortgage loan on a commercial rental property on the condition that the subject property appraised for a minimum of $3,076,923. The bank began the appraisal process by having Valuation Management Group of Marietta, Georgia put the appraisal out for bids which specified that the appraisal was to have a sales approach, a cost approach, and an income approach. The CEO of Valuation Management Group (VMG) is Vicky Thompson.
VMG sent a questionnaire to the appraiser with the winning bid which asked if the appraiser had ever been sued. The appraiser falsely answered “No”. In fact, the appraiser had been sued for appraisal negligence. Since VMG failed to check this out, later on March 7, 2013, the appraiser executed an engagement letter with VMG wherein the appraiser falsely stated that there was no conflict of interest either “direct, indirect, financial or otherwise … in the property being appraised …”. In fact, the appraiser was in the process of closing the purchase of a vacant commercial rental property a mere 300 feet down the street from the subject property. The appraiser’s property was clearly a potential competitor for prospective tenants with the property being appraised.
On March 11, 2013, the owner of the subject property paid $5,200 to VMG for their services and the appraiser’s services. On March 18, 2013, a deed was executed conveying the vacant property to the appraiser.
On March 19, 2013, the appraiser met the owner of the subject property being appraised at the subject property. The appraiser never revealed that he had just bought the vacant property down the street and he would be competing for tenants with the property being appraised. The appraiser asked for and received from the owner confidential information about the subject property’s tenants, rents, lease termination dates, and overall business strategy. The appraiser also learned that the owner was going to use about $425,000 of the loan proceeds to make improvements that would increase the subject property’s appeal to prospective tenants and that the loan amount was approved to be $2,000,000 subject to an appraisal of a minimum of $3,076,923. At the meeting the owner gave the appraiser a list of 18 sales of commercial properties in the neighborhood which indicated the subject property should appraise in the range of about $7,000,000 to $10,000,000.
In April, 2013, the appraiser sent his appraisal to VMG. The appraisal was for $2,100,000 and revealed to VMG and the owner that the appraiser had purchased the vacant property down the street. The appraisal did not have the agreed required sales approach and cost approach, but only had an income approach in which the appraiser cooked a low value by using an arbitrary low rental rate. The missing sales approach should have resulted in a minimum value of $7,000,000. The missing cost approach would have shown the land alone to have been at least $4,000,000 and the buildings at least another additional $4,000,000 for a total of $8,000,000 or more.
On April 18 and 19, 2013, the owner complained to VMG about the missing sales and cost approaches, about the appraiser’s manifest conflict of interest, and about the appraiser not using the 18 nearby sales. VMG was shown on a map their locations and the sales price per square foot for each sale. The average of the sales would have given the subject property a minimum value of $7,000,000
The bank and the owner asked VMG, on whom they were both relying to manage the appraisal process properly, to “appropriately follow up on the matter.” The appraiser, of course, refused to increase his appraisal by any amount. Notwithstanding overwhelming evidence of conflict of interest, lack of the sales and cost approaches, sales data indicating a value for more than the minimum of $3,076,923, Valuation Management Group did not do a review of the appraisal concluding the value was at least $3,076,923.
Because of this inaction by VMG, the owner could not close the full $2,000,000 mortgage loan and could not put in the improvements to its property. Several months later, the owner paid for a new appraisal with a reputable disinterested MAI appraiser who appraised the subject property for $8,900,000. After that, the owner engaged another reputable disinterested MAI appraiser to review the $8,900,000 appraisal. The review appraiser concluded that the $8,900,000 appraisal was “reasonable and appropriate.”
It is the owner’s opinion that Valuation Management Group negligently fell down on its job and cannot recommend Valuation Management Group or Vicky Thompson to anyone.