Niche appraisal firm expanding in Reno
When a bank puts together a deal to finance the purchase of a high-profile, big- dollar commercial property, the appraisal and due-diligence documents generally fill thick notebooks.
But who’s going to do the due-diligence for a property that includes a butcher shop with two upstairs apartments in Brooklyn? How about the real estate appraisal of a rock quarry in Kansas?
A year-old Reno company positions itself squarely in that niche, combining sophisticated software with a network of appraisers and brokers that combine to deliver real estate appraisals of smaller commercial properties quickly and inexpensively. It specializes in properties valued at $5 million or less.
So far, the strategy is paying off.
InsideValuation a few days ago moved into new quarters at 245 E. Liberty St., adding about 750 square of office space from its previous location in south Reno.
And the company is slowly beefing up its staff, which now totals six. That number is projected to grow to about 30 within the next couple of years, says Barry Bates, the president and chief executive officer of InsideValuation.
“We decided to expand now, while volume is still ramping up, because we don’t want to be in a position to fail our clients merely because of internal logistical issues,” Bates says.
InsideValuation got off to a fast start not long after it was launched by Bates, who has three decades experience in the appraisal business, and a group of investors.
Capital Crossing, a subsidiary of Lehman Brothers, signed on as the first client of InsideValuation. Other clients include banks that originate small commercial loans as well as companies that package the loans for sale into the secondary market.
Even though the secondary market for residential mortgages seized up this summer, the market for packages of commercial loans has remained strong, Bates says.
And if sales of smaller commercial properties fall off, it’s not the end of the world for InsideValuation.
“If you can’t sell your building, you’re going to look to refinance it,” Bates says. And refinancings require appraisals.
Still, he acknowledges the company’s founders don’t have a clear picture of how the secondary market for commercial lending will unfold in coming months, and that’s something of a worry as they stay on track to build a company that’s expected to reach at least $100 million in sales in the next few years.
To complete its appraisals, InsideValuation relies on a network of real estate appraisers and commercial real estate brokers, and provides them with data that helps ensure their appraisals are accurate. The software also allows for quick completion of reports.
The appraisal fee $250 for a basic report that’s delivered in five days is split between the appraiser and InsideValuation.
Appraisal professionals also are drawn to work with InsideValuation because it pays quickly an important consideration for appraisers who often get stiffed by clients.
To market its services, InsideValuation so far has relied heavily on a public relations campaign in which its executives wrote articles that were placed in financial industry publications and on Web sites.
Faith Murphy, who oversees business development for the company, relentlessly cold calls potential prospects, and Bates works his many contacts in the industry.
Before launching InsideValuation, Bates held appraisal and management positions with companies ranging from Wells Fargo and Ameriquest Mortgage to Morgan Stanley Mortgage Capital.
“I point out many cases of where privately owned companies do just as bad a job as publicly owned companies,” says Reno resident and former teacher Robert (R.D.) Gardner.