So, you need to have your club appraised. It might be for financing, real estate tax assessment, sale, purchase or estate tax purposes. Maybe there’s a dispute or maybe ownership simply needs the information to make decisions. Often appraisals are needed quickly and one of most common factors in delays is getting the appraiser the information needed.
After selecting a qualified and (golf) experienced appraisal firm, a club can expedite the process and contribute to the quality and accuracy of the valuation by being prepared. To start with, have available, in presentable form, the following items:
☒ Financial Statements (3 years w/ detail)
☒Balance Sheet
☒Current Budget
☒Membership Census by Zip Code
☒Membership Documents
☒Rounds Analysis by Zip Code
☒Real Estate Tax Bills
☒Deed or Legal Description
☒Property Survey/Site Plan
☒Building Floor Plans
☒Golf Course Routing Map
☒Prior Appraisal Report on Property
☒Cost Estimates for any planned capital improvements/repairs
☒Golf Course Maintenance Plan
☒Equipment Schedule
☒Lease Summary
☒Scorecard
☒Insurance Report
Having these items along with a membership and rounds played history will assist the appraiser and minimize delays in completing the appraisal. If financial statements are available in a spreadsheet file, that also helps expedite the appraisal by eliminating the need to manually copy all the operating numbers into a spreadsheet.
Make sure that key staff (GM, Superintendent, Golf Professional, Membership Director) will be available on the day of the appraiser’s site visit to speak with the appraiser and answer questions. We send a property information checklist in advance of our visit to ensure that it goes smoothly and to minimize the disruption of key staff members and management. This checklist also provides a “heads-up” as to the items that will be discussed and what the appraiser needs to see during the visit.
If possible, schedule the site visit for a day when there are no major events demanding time of the staff but on a day when the appraiser can observe normal operations. Be prepared to identify areas of deferred maintenance and if there are cost estimates to correct, provide that information. Be prepared for the site visit to take as much as a half day (18-hole course) and share with the appraiser whatever you might know about happenings in the marketplace.
One area where the club (ownership, leadership, staff) can help is with deferred maintenance and capital improvements. For sure, an experienced golf course appraiser will observe some of this, but some things require the club to point it out, like the age and condition of the irrigation system or pumps. Sometimes, owners are reluctant to point these things out because they think it might impact the appraisal in a direction opposite to their best interests. The more we’re aware of, the more we can help clients achieve their goals and provide useful advice. When deferred maintenance exists, it will show and when updating is needed it’s easy to observe. If ownership has reliable cost estimates, it’s better for everybody.
It’s important to understand that an appraisal is not simply a valuation of the past year’s income/expense statement. The property’s potential, the conclusions from the market analysis and the physical state of the facilities all factor into a reliable estimate of market value, and an appraisal that can be used effectively by the client. As appraisers, we often know a good deal about what is occurring in the market, but we’ll never know as much about a given golf facility as the people that operate it.
An accurate appraisal takes a considerable amount of time and is a team effort on the part of all involved. If a lender, legal counsel or other third party is involved, it’s critical to communicate with the appraiser on particular issues that may affect the appraisal from the perspective of how it will be used. These can include specific court decisions, lender requirements, governmental guidelines or insurance requirements.
The appraisal of a golf course facility is a team effort. Be ready, compile the information and plan to cooperate. The ultimate value conclusion may not be exactly what you had in mind but the investment will normally prove to be more useful in the long run.