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Appraisals and Valuations

Gridiron Capital acquires Class Valuation

Terms of the deal were not disclosed

Private equity firm Gridiron Capital has acquired Michigan-based appraisal management company Class Valuation from another private equity player, Narrow Gauge Capital, the firms said in a statement on Friday.

Terms of the deal were not disclosed, though Narrow Gauge will retain a minority share in Class Valuation, which claims to be one of the top five appraisal management companies in the country.

Gridiron, which closed a $1.35 billion fund in December, focuses on tech-enabled firms with business-to-business, business-to-consumer and niche industrial businesses. It would appear a good fit with Class Valuation, a fast-growing AMC with a technology bent.

“What makes us successful today is we rely heavily on data,” John Fraas, Class Valuation’s CEO, said in an interview. “And we’re believers that you can find trends and success within the data. So when we look at our appraiser panel, it’s really who do we work with best, who has the best results, and those are the appraisers we want to continue to utilize and make sure they’re doing the abundance of the work with us.”

Fraas said Class Valuation measures all the data from an appraisal, from speed of acceptance to the turnaround time, to how often the appraiser is on time to appointments.

“We also measure the quality, how often does a report have to go back for revision. How severe are those revisions that are happening,” he said. “Once it goes back, how long does it take for the appraiser to be responsive to us and eventually complete the order?”

Fraas said Class Valuation is targeting the top 20% of its appraiser clients, whom it categorizes as its “Class Act Appraiser Panel.”

Class Valuation pays its appraisers within 24 hours of the assignment being completed. The firm’s typical turnaround time is under 10 calendar days on most appraisals, according to Fraas.

Class Valuation is busy working to integrate technology solutions to address the considerable capacity issues in appraisal, mostly due to record volumes but also a shortage of appraisers. The application, called the “Property Fingerprint Technology,” allows the user to measure rooms and stitch it together in 3D, creating computerized floor plans. They’re currently hiring partners – known as professional scanners – to walk through properties and capture the data for the appraiser. (Fraas said the partners cannot be the property’s listing agent; he declined to say how much they’re paid.)

“So what we’ve done is we’ve invested in technology that we believe can be transferred to a non-appraiser to adequately gather all of the inspection criteria, and provide that to an appraiser downstream,” Fraas said. “The appraiser can trust the data that they’re getting and have very clear data so they can actually do an appraisal report without having to inspect the property.”

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