According to the industry standard E2018-08 “Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process” published by the American Society for Testing and Materials (ASTM), the objective of the PCA is to observe and report on the physical condition of the subject property. This sounds simple enough, but we’ve all learned that there are numerous factors that influence both the observing and the reporting at any given property. What is the client’s interest in the property and reason for hiring the consultant to perform a PCA? Is the property in pre-foreclosure, being acquired, or refinanced? While the observation methodology at any given property may be generally similar (although generally more detailed in an acquisition), each of these scenarios will greatly influence the reporting and recommendations for a property.
One of the standard descriptions of purpose that can be found in a typical consulting company’s Property Condition Report (PCR) reads something like this: “The purpose of the assessment was to observe the general physical condition and maintenance status of a property and to suggest repair or maintenance items for the property to continue in its current operation compared to properties of similar age and condition.” That last part is obviously very important. Our job in a standard PCA is not to compare a 40-year old building to the building next to it that was built last year and create a laundry list of renovations/upgrades for our client. Rather, our job is to compare that 40-year old building to similar buildings built around the same time in the same region and recommend repairs as needed. That’s why experience is even more valuable than professional licenses in this industry. This is also the value of mentoring new field staff and sharing our experiences. We have to know what the similar properties are like in order to compare our subject property with them. It is a common pitfall of those consultants first learning this field to fail to make that distinction and to recommend inappropriate renovations or upgrades.
Over the past year or two, we have seen an increasing amount of properties that have fallen into disrepair and are in the process of foreclosure. Vacancies are up, maintenance budgets are down, and the result is poorly maintained facilities that have increased the typical time and effort required to prepare a PCR. We have seen apartment complexes that haven’t had the budget to repair the piping leaks and all they can do is close down more and more of their units and hope the mold growth doesn’t get too bad. The challenge is to sift through the data and make sure the important issues such as the roof leaks, settlement issues or trip hazards are highlighted and not to get lost in the details of the rest of the maintenance deficiencies. To observe and report still sounds easy, but has become more challenging these days.
