So we’ve learned that the price is not always right and that’s a clue to a bad marina appraisal. Why?
Fluffy is Nice… But Not When It’s My Appraisal
Back in the day, it was the conventional wisdom that the thicker the report, the better it was. That lead to some rather humongous addendas. As far as marinas are concerned, the market description is where the fluff is. It’s not uncommon to see 20, 30 or even 40 page market sections that talk about all kinds of things other than what’s relevant. For instance, the office market, population growth, household incomes, etc. It’s not that this couldn’t be of some use to some person out there, it’s just that it has such an indirect effect on any one marina as to be useless, so it should be regarded as irrelevant.
Now here’s my second tip. Add up the number of pages in the market section. Now add up the number of pages in the valuation section. Are they similar? I’ll bet they aren’t because it’s uncommon to find a valuation that is even 50 percent of the length of the market section. Yes, I’ve seen 40 page market sections with 5 pages of valuation. There are only three possibilities here:
- There’s too much fluff in the market section
- There’s too little analysis and discussion in the valuation section
- Both of the above
You be the judge.
In Part 3, I’ll delve into typical marina valuation techniques and how they can be abused to provide you with a sloppy appraisal report.
