Something interesting about me is that I am the fourth consecutive generation of my family to operate a local appraisal firm, originating in 1916 in South Seattle. I am also the third consecutive generation of Appraisal Institute designated members here in the Puget Sound. My grandfather bought out my great grandfather following the War; my father bought out my grandfather in the late 70’s after the “lights went out on Seattle” due to a decade of Boeing layoffs; and my opportunity to purchase the company was in 2009 while in the midst of the Great Recession. Apparently, our family motto for business acquisitions is, “it’s never too late, as long as you have a son who can wait.”

Roughly 10 years ago I got caught up in this idea of “change” in my work environment. I thought the company was dysfunctional. There were many frustrating things about the firm relating to the culture of competition within, (lack of team mentality), as well as a lack of an acceptance of technology and modernization. It was frustrating to say the least. I had some ideas that I thought would improve the situation that were falling on deaf ears.

Someone told me about this book called “Who Moved My Cheese”, you’ve probably heard of it, it was a quick read that I enjoyed. In short, it is a brief fable about four mice that were confronted with change in their lives. The book was very popular at the time, and it struck a real chord with me. It was hard not to be motivated by the simple and direct message. I thought it presented a clear case to address the issues within the company and help us move in a more productive direction.

I was inspired. The next day I went down to Barnes and Noble and asked the clerk where to find this book. He directed me to the shelf and I proceeded to buy the whole lot of them. 35 books to be exact, one for every employee and the owner in the company. That night, overwhelmed with optimism, I inscribed in each book this message; “This book is the key to our future! Let’s get together next week to discuss it…Sincerely, Patrick”.

Next week came, but to my surprise, nobody showed up to my meeting. Not a single call, note, or message from anyone saying they couldn’t make it. What a slap in the face I thought. This was exactly the type of behavior demonstrated in the book that led to the collapse of the way things were for the mice that wouldn’t accept change, Hem and Hah. I was furious!

I stormed into my dad’s office and commanded his attention about this book and how the entire company just ignored me. Which was very odd considering the book has been proven to have a tremendous positive impact on millions of people around the world. I told my dad how could his employees be so immune to such a pleasant and inspiring book? Were things that far gone for them? Or were these people so stubborn and callus that they couldn’t bring themselves to even read about change. I let him know quite sternly that he had a serious problem here, and that this culture, this attitude must be the result of his failure at leadership.

He asked me to take a seat, and then he leans back into his chair, folds his arms across his chest, and just looks at me with his head tilted a little to the side and his eye a little squinted. He looked for a second and says “Patrick…I read the book, and I have to ask… you really can’t believe in what that book is telling us, can you?”

I lost it! I said to him, “ this is exactly the problem with this company… it all stems from your attitude about change”…he cuts me off and says,

“you honestly believe that the way to succeed in life is to lie, cheat, and manipulate others to get what you want”

…I froze, and confusion rushed over me. What does he mean by that, I thought?

With the book in his hand he says, “I cannot believe that you could promote this kind of crap!” I’m still frozen, staring back at him with a confused look on my face. I ask him to throw me the book so I could examine it. It seemed to be the same as the one I have at home. The color scheme, the thickness, the print type, and the font size were all right…but wait…something was different. The title was off, just a little. Instead of “Who Moved My Cheese” one of the words was changed to say “Who Stole My Cheese”.

I opened the book and read the authors inscription. There was a picture of a man wearing what appeared to be an orange prison jump suit. Below, it read, “if you’re reading this inscription you’ve probably just embarrassed yourself in front of your colleagues. I wrote this book from prison as a hoax, meant to intentionally scam all you naive business people into thinking you were buying “Who Moved My Cheese”, which is actually an effective book for managing change. Tough Luck!”

Oh no!…I doubt you can even imagine my embarrassment.

I’ve thought long and hard about the moral of this story. This was definitely a brilliant failure- one for the books. Not for several years did I even dare tell this story to anyone. However, after I shared it with a close friend who openly shared some of his own leadership struggles, did I realize that, in a counter-intuitive way, it had revealed a powerful and motivating insight about the task of change…possibly even more so than that now irritating fable.

Many of my friends who hear this story continue to tell it to their friends, family, and business colleagues, (hopefully never mentioning my name). It’s a funny story, good for a laugh…but there is also something intangible about it. Like an artist or photographer who is taught to portray negative space instead of the subject itself. It’s an eye opening vantage point that most of us don’t recognize until we experience it directly.

I learned I wanted to make changes on behalf of my ego – so that I could be right. My first instinct was not to seek change because it was in the best interest of others – my instinct was to create change to satisfy my ego. However, humiliation taught me an important lesson: for change to be long-lasting and effective, the change cannot be about my ego – it has to focus on others. Change that is sustainable creates a better solution for everyone.

This is part 1 f a 3 part series of short essays discussing issues impacting the appraisal industry.

Changing Course

Implementing change is hard. I’ve failed at it on many occasions. In most instances, powerful forces of human nature are strong at work against it. The use of the word alone can cause people to become defensive and uptight. Think of every time you’ve heard someone say “YOU HAVE TO CHANGE”. Coming from a spouse, a family member, a boss, or an employee, it always feels accusatory no matter what their intentions.

Change is often not a politically smart word to throw around these days either, considering the voting majority is typically the target of this change, and may be put off. In my organization, one solution I keep hearing is that the Boomers will just have to keep on working. Due in part to the financial aftermath of the Great Recession, coupled with an extended expected life spans, or possibly out of the fear that the “R” in retire subliminally stands for the “R” in R I P, it is a reasonable assertion that most Boomers will work well into their seventies and beyond.

The average age of a dues paying member in our association is 62, which is down from 64. (The decline is more so the result of death and retirement rather than young people entering the profession). Our current leadership suggests that if these members keep working for another 15 years we can avoid the financial collapse. According to the actuary tables, today’s standard white male will live to 79 to 81 years old, our saving grace. However, that’s cutting it pretty close. Additionally, we’ve underestimated the fact that most 70 year-olds now have to learn how to use unfamiliar technology. This has reduced their earning power substantially, and draws many questions about the economic sustainability of paying their higher wages.

Ah hah! We just hit something. We uncovered a need in the market place. How can we find an economically sustainable way to utilize the knowledge of the seasoned professional while also figuring out how to modernize their technical skill set? More importantly, how do we treat everybody with the level of respect they deserve as we look for solutions.

Looking for Solutions

Do you mind if I make a suggestion? There are 76 million millennials in our country today, people under the age of 34. Only 17% of this population has entered the work force so far, with a tsunami visible on the horizon. Currently, many of these folks are suffering worse than others from unemployment factors, and many are desperately seeking opportunities.

It’s time to realize that smart phones and online networking has changed our game- from business to politics. As a result, the ability to recruit and attract Millennial talent is greater than ever, and comes at a tremendous ease anywhere across the County, and even the world. However, to be effective at courting and maintaining a meaningful bond with them we need to change something about how we operate. This demographic has a dramatically different upbringing and exposure to the world.

The computer and the internet have been with them all their lives providing unfettered access to nearly all information ever generated. And their ability to form deep and lasting impressions on people anywhere in the world via video games, online networks, or massive open online courses is as expansive as the cosmos. However, for us to attract them we must meet them on their level, not on ours. Connecting on Linked-in, or just responding to a text, an email, or an online correspondence is just the starting point.

Saved by the Millenial

If it wasn’t for Millenials, I don’t think my business would have made it through the recession. In 2008 we had over 30 employees, currently we have 14. The recession and subsequent government regulations destroyed the way we did business. The only way out was to lay people off, cut services, and renegotiate contracts. In the course of this event, we got rid of our large industrial printers, eliminated paper consumption by going all-digital, reduced our space needs in a move, and invested in our technology systems.

Consequently, through this disturbance we lost a lot of senior staff between 2008 and 2010. In order to maintain the work flow coming in, as well as the emerging gluttony of appraisal work relating to the FDIC closing 15 banks in our State, I turned to hiring Millenials right out of Linked-in. I was blown away by the quality of the applicants. In fact, many of these candidates fit much better into our technology-centered systems than the folks that left or were laid off. They also tend to be better aligned with the vision for the future.

As such, my job shifted from being a technician to becoming a director. Every appraisal report was essentially broken into many small tasks - several of which were automated, while several were assigned to my new hires. Systems allowed us to train the new employees incrementally; progressing them into more complex task once they show proficiency each step along the way. Moreover, in this fashion, I had much more time to focus on the root of what makes our credentials stand out –predicting and articulating the future value of real estate.

Understanding Communication Preferences – Smart phones & App’s!

There are 1 billion smart phones in the world today, yet another 4 billion not-so-smart phones still exist. This gives a good picture of current communication preferences. However, in three to five years, there will be 5 billion smart phones. Each of which is far more powerful and effective than any computer you’ve ever used. They are the best known interface between humans, the internet, and the cloud; and it’s the forum where we will all operate in the near future.

It’s time to realize that we will never be cool or inviting to Millennials based on our pre-conceived notions. Our communication preferences tend to cater to our predecessor needs, not their needs. Someone once asked my why I dress so nice at work, and I responded, “it was the way my father and grandfather dressed, so why should it not work for me.”

I repeat, change is a difficult task. To let go of the attitude that the way we’ve been taught how to behave and act in a business setting is the only way. We need to let down our guard, replace our egos with a little self doubt and humility. The key is to figure out ways to make our success dependant on others success.

Part of the solution to this immediate need is to figure out how to bring Boomers and Millennials together. What if we could help facilitate a clean swap between their strengths and weaknesses?

If you have trouble following and understanding technology and how to modernize your firm…simply hire a Millennial.

They will be eager to teach you everything you want to learn, and even better, they will do most of it all for you with pleasure. They see opportunity in a different light. To them every business task we’ve been undertaking for decades, the old way, has the potential to be modernized via some type of computer, tablet or smart phone applications.

Ambitious Mellennials are thinking about how to convert every outdated technical task they can find into an efficient and easy to use smart phone app. This has the potential to bring inefficiencies to every function of your business- from technical skills, operations, finance, and especially advertising and marketing. In exchange, you can use your experience to help those Millennials build a diversity of knowledge-based skills, foster a winning reputation, and find security in a turbulent world.

It turns out change isn’t always bad, it’s just different. Like comparing four quarters to a dollar bill- you’re not losing any value. From my experiences owning a business, the change we’ve endured has been an important step towards securing a more stable future.

Dear Patrick,

The support for appraisal values that Lamb Hanson Lamb provided by way of the testimonies of Bryan Boyce and yourself for our estate at the arbitration hearing was much appreciated and a very important piece of the estate’s presentation. Context was provided for the judge and, in my opinion, was instrumental in helping him understand the demand for the portion of land that is represented and the upside potential for development. It was also important for the Judge to discern the other appraiser’s limited ability to appraise to the best and highest use. This was articulated well. Well done!

I was told by counsel for the estate that one of the best things that was done as personal representative, was to retain a high quality appraisal firm that could provide solid support for the values that were assigned to each of the properties. We are very pleased that the judge has decided in favor of the estate while declining to reassign legal fees between the two parties. You have done a fine job for the estate all the way through and should we have any appraisal needs going forward, we will be predisposed to look to your firm first for assistance.

As personal rep, I have been asked to gather and pay all outstanding bills for the estate within a short period of time and prior to any disbursements being made. I would be pleased to receive an invoice from your firm for your services so that you can receive our payment.

Thank you again for your assistance,

Larry Carlson, PR

Real Estate Appraisal during a Divorce

You’re a spouse going through a divorce – friendly or hostile. One of you has probably moved out, and you’re both wondering what your share of the real estate will amount to. You’re going to have to deal with a division of property – usually, the family residence.

What’s the best way to find out the value of your property, so that you’ll know what you have coming?

Your attorney has probably already told you – you’ll need a professional real estate appraisal. You’ll have to have one to go through the divorce process. No mediator or judge can rule or determine how much your property is worth without one. So how does the process work?

Often, your attorney knows a reputable appraisal firm that will give an unbiased, arms-length, and stand-alone valuation of your property. He or she will arrange for the appraisal report on your behalf. Or, your attorneys may leave the choice of appraiser up to the two of you. This could be problematic. If you each have your own attorney, the best scenario may be for the two attorneys to agree to hire one appraiser.

The fee for the appraisal is paid for by the divorcing parties – usually split down the middle, unless each party orders a separate appraisal. Appraisers collect their fees in differing ways. Sometimes, it’s billed to the attorney that retains them on your behalf. Other times, it’s collected from the spouse that stayed in the home during the property visit. Ask your attorney or appraiser what to expect.

The appraisal process begins when the appraiser does a “property visit”. He or she will ask questions of the homeowner about the house. “Are there any problems or concerns with the property? “Any special circumstances I should know about?” He/she will take measurements, look into crawl spaces, check for updates to plumbing and electricity and any other amenities and do a visual inspection of the siding, roof and yard. She’s looking for features or conditions that may require a higher or lower value than is the norm for the neighborhood. Sometimes, features that the homeowner greatly values may not contribute to the home’s value in proportion to the price paid for them – such as a swimming pool or wine cellar.

Following the property visit, the appraiser compares your property with at least three similar properties in the surrounding vicinity that have sold within the last six months. The sales prices of the homes that sold determine their value. Using a standardized template, s/ he makes an itemized comparison between your house and each of the “comps”. He compares the number of bedrooms and bathrooms, square footage, existence of a fireplace or view, the general condition and so forth, making dollar-based adjustments in each category between the subject house (your property) and comparison house #1, #2, and #3. He will also provide comments and clarifications in the report, if necessary.

Finally, using his or her professional expertise and judgment, the appraiser will make a definitive analysis, giving the most weight to the comparable home that most closely resembles the subject. Thus a market-based value is arrived at for your home. Often, this final analysis is explained in narrative form.

Professional appraisers are bound to the utmost practice of fairness and objectivity through USPAP (Uniform Standards of Professional Appraisal Practice), and for members of the Appraisal Institute, the Professional Code of Ethics. Confidentially is a major requirement, as well. In no circumstance is an appraiser allowed to divulge information to either divorcing party or their attorney before the final valuation is made.

In the case where two appraisers, each representing one of the divorcing parties, arrive at two different values, then testimony is taken in divorce court regarding the appraisals. The judge will hear the opinion of each appraiser and make a judgment. It has been known that a judge will add up the two differing values, and divide the sum by two. Something like Solomon’s law, it might be said.

Self education can only help divorcing people, as well as any other segment. At an often confusing and stressful time of life, knowing the steps involved in separating one’s property in a divorce can bring a measure of comfort.

For more information on obtaining an appraisal during divorce, call or write:

Lamb Hanson Lamb Appraisal Associates Incorporated, 206-903-1500, Ex 216.
Patrick Lamb, CEO, will gladly answer your questions. He can also be reached at [email protected].

From my perspective, a good approach to help engage and build relationships with Candidates and Affiliates is to focus on three major aspects; 1. in-person chapter meetings, 2. in-person social activities, and 3. online social network connections.

In Seattle, we host a candidate/affiliate meeting one hour prior to the main chapter dinner. This is a great way to meet each other and get familiar with names and faces. We typically host at least four of these events a year. Also, we have had a variety of interesting topics and presenters that focus on the needs of newer appraisers who are in the process of developing their skills. Here is a brief list of some of the topics:

1. Presentation going over the AI website features and updates, as well as COP’s.
2. Panel discussion with 3-4 experienced designated members regarding their career paths. (See attachment for talking points and outline of the event).
3. Panel discussion with 3-4 professionals from complimentary industries to talk informally about how they interact with appraisers. (i.e. an Architect, and Land Use Attorney, and an Environmental Specialist).
4. Presentation from a experienced appraiser who has been published in the Appraisal Journal. He discussed what the Journal looks for in an article submission, as well as provide a behind-the-scene take on the editing and selection process, as well as providing writing and presentation tips.
5. Presentation from a marketing/PR expert who explained and demonstrated how to use sites like Linked-in, as well as other useful online networking sites.

At our last event we even put on a raffle for a $200 education voucher for Candidates who attended the meeting. However, I think it would be quite easy to incorporate a multi-user Skype session to allow remote candidate members, or members who can’t attend in person, to be apart of the meeting. This may double or even triple the attendance numbers.

These are just a few ideas that had a pretty big attendance and interest. Please share with me any past program ideas that you enjoyed so I can pass the ideas along.

On a side note, these meeting are a way for emerging leadership to practice public speaking on a smaller scale, which is great preparation for future chapter roles.

As for in-person social networking activities, we try to hold at least one event outside of the chapter in a more casual setting. Last year we met a trendy bar for drinks and small talk. I find it’s best to hold these events in late summer (August or September). This will give people the opportunity to get familiar with each other from the prior chapter meetings held earlier in the year.

Lastly, online social networking, especially Linked-in, has been a great asset in organizing, promoting, and connecting candidates with information that is relevant to them. When we set out to create a Candidate Linked-in group, we were hoping for 15 to 25 members, (based on typical attendance at chapter meetings). However, we ended up with 166 members (mostly local candidates and affiliates). Our reach and exposure was exponentially greater than we thought.

We use the group to promote chapter Candidate events and news, relay messages from the Chapter and National, promote local courses and online seminars, as well as provide a general forum for appraisal-related discussions. What’s great about this venue is that it provides ground-up communication from local emerging appraisers, as well as top-down communication from National and the Chapter.

Please feel free to reach out to me at any time.

Thank you

Patrick M. Lamb, MAI (Region 1 Candidate Liaison)

We’re often called on to determine the contribution cell tower leases have on property value. In most cases, the Discounted Cash Flow Approach (DCF) is an appropriate and reliable method in determining the market value contribution of a property’s leased fee interest, encumbered by a cell tower lease. The concept holds that future income or benefits are worth less than the same income or benefits now and that they decrease in value systematically as the time for their receipt is further deferred into the future. The process of discounting is the arithmetic procedure of applying a specific rate of return, usually derived from the market, to the anticipated future income stream in order to develop a net present value. This approach is predicated on the principle of anticipated economic benefits and, therefore best reflects the investment characteristics of the cell tower interest (leased fee) being appraised. This approach also closely parallels the anticipated analysis that is be employed by the most probable purchaser of these rights.

May 23rd, 2013. We just heard about the I-5 tragedy. Our hearts go out to everyone involved. Don Jury and I were stuck on the tarmac at Reagan Airport in DC when we heard the news.

Our flight was being delayed due to a big thunder storm. Coincidentally, we had quite the cast of characters on our flight including Patty Murray, Maria Delbene, Slate Gordon, and Dave Rietcher, (they all sit coach by the way). Everyone was heading home for the holiday weekend. It was great being able to follow up with Patty again after our luckily run-in just the day before on the underground tram below the capitol.

More importantly, something quite remarkable happened relating to how we all heard about the bridge disaster. It turns out Don Jury, who is quite tech savvy, was the first person on the plane to receive a text update from a special newscast subscription. He personally informed our senators and congressmen about the situation, which allowed them to immediately respond to the crisis right there on the plane. Don was the information point person for the whole event. He also had a link to a WA State DOT report that mentioned the Skagit bridge was functionally obsolete, (a word us appraisers know all to well). We were stuck on the plane for nearly 2 hours, and everything was hectic due to not knowing what was going on, however, Don turned out to be the only guy in the know. it was somewhat heroic in my opinion. Don scored some major points. Appraiser by day, hero by flight…well done Don!

May 22nd, 2013. Great day on the hill yesterday! We met with Patty Murray, Jim McDermott, and Maria Cantwell’s offices within a two hour dash across the Capitol grounds.

It was 88 degrees, humid as possible, and we’re all dressed in dark suits. We definitely gained a good amount of sweat equity 🙂

We pitched our issues regarding the extension of the conservation tax incentive, as well as encouraging a few amendments to the Financial Institution Examination Fairness and Reform Act, (try opening a conversation with that statement…yikes). Overall, we feel our efforts were a victory as far as being able to deliver our message. However, we’re pragmatic about the likelihood of seeing any real movement with these issues considering the gridlock and dysfunction that exist in our government. Nevertheless, we’re proud to have had the opportunity to express our opinion and be a part of the political process. We are all extremely energized about this experience, and can’t wait to do it all over again next year.

On a side note, did you know there is an underground tram system below the Capitol building that runs between the senate and the house offices? We’ve got a great story about that. You won’t believe our dumb luck. Our fist meeting was with Patty Murray’s office at 1pm, while our other meetings were at 1:30 and 2:30. To say the least, we had to hustle to make our appointments, with little time to give an effective pitch. Patty was busy voting on the floor when we got to her office, so we met with two of her staff. These people were awesome, and very sincere about hearing us out and understanding our concerns, (p.s. I have their contact info if you ever need a good line to the senator). Later in the day, on the way back to the senate offices, we decided to take the underground tram, instead of melting on the street. After several levels of security checks and hallway mazes, we reach the tram station. Unbelievably, there was Patty Murray waiting for the next train! It was an amazing coincidence. We got a private one-on-one with her in the cab of the tram.

For the most part we talked about Dungeness Crabs, and how she doesn’t tell anyone in DC about them because she doesn’t want to share. It was a fun chat. We were able, however, to deliver a quick pitch about the bill on conservation tax incentives before her stop. In that short period of time, Patty was open and receptive. At the very least it felt like we made a good first impression

May 21st, 2013: Hey all, we had a great first day at LDAC. It’s been amazing meeting so many colleagues from across the nation. Here are a few highlights of the days events:

Jim Amorin, 09′ past president and current chair of the strategic planning committee, gave a nice presentation on the state of the AI. We have 16,000 MAI members; 7,000 SRA members; and roughly 26,000 members when including candidates and affiliates. Our group accounts for over 25% of all appraisers in the county, (we’re the big dog in the field). The AI’s financial statement is improving with revenues on a 6.5% rise and expenses declining slightly. However, despite gains in revenues, the number of paying members is on a declining trend. Jim mentioned the average age of a designated member is 62, and he’s worries about how we plan to fill the gap and attract the future pool of members. On a side note, Sarah Stevens added over 500 new members last year, which is an all time record, and Rick Borgess is on a good pace this year as well. Much credit is given to the new Capstone course, and the roll out of the candidate/adviser program. (FYI, there are 767 enrolled candidates across the country and advisers are needed badly!!).

Jim finished up by confirming that the AI will be adding a Residential/General Reviewer designation in 2014. Also, as the chair of strategic planning, Jim is reaching out to develop a working group made up of AI members from across the county to address residential issues. He’s looking for residential success stories, as well as input from knowledgeable practitioners to help our members strategize about the future of residential appraising. If you’re interested in contributing to this group, please sign up for LRR (Leadership Resource Registry) on the AI website, as well as reaching out to Jim personally.

A few other notes: we had a great keynote speaker, Faith Rolland from Bellevue, who gave a great performance on developing leadership presence by focusing on how we look, talk, think, and act in leadership roles and opportunities. She was great! Got us all fired up for our lobbying efforts tomorrow. I’ll keep you posted.

The purpose of a Reserve Study is to provide a long range plan (up to 30 years), for the timely replacement of key components of the structure that have usable economic lives of shorter duration than the foundation and framing. The Study is made up of two parts, 1) the information about the physical status and repair/replacement cost of the major common area components the association is obligated to maintain (Physical Analysis), and 2) the evaluation and analysis of the association’s Reserve balance, income, and expenses (Financial Analysis).

The Physical Analysis is comprised of the Component Inventory, Condition Assessment, and Life and Valuation Estimates. The Component Inventory should be relatively “stable” from year to year, while the Condition Assessment and Life and Valuation Estimates will necessarily change from year to year.

The Financial Analysis is made up of a finding of the client’s current Reserve Fund Status (measured in cash or as Percent Funded) and a recommendation for an appropriate Reserve contribution rate (Funding Plan).

A critical element of the Reserve Study is planning for funding of replaceable components, preferably with a Reserve Account which will have sufficient funds to pay for items as they need replacement. An alternative is to use special assessments which may create a financial hardship on individual unit owners and/or interfere with sales of units. Depending on the Board of Director’s wishes, a study can be either extremely exhaustive or restricted to only the major assets. In either case, each item included must be evaluated to determine the current condition, the remaining useful life, and the replacement cost. This information is then synthesized into a spread sheet format which determines the contribution needed.

All costs and balances are shown both in constant dollars and adjusted for annual inflation and interest earned (rate assumptions are clearly shown). Ideally, an even level of contributions is established that maintains a positive balance in the account. The Reserve Account, per accounting and tax guidelines, should be separate from the funds for the annual operating budget.