There are a couple of reasons behind a commercial property appraisal. It would be required for financing a loan for that particular property, or when buying or selling that property. To help settle an estate in the event of death or divorce or to assess property taxes.
Going in for a commercial real estate valuation is important for determining the true value of a commercial property, providing you the much- needed peace of mind in the knowledge that you are offering and receiving a fair price for the property in sale. A commercial real estate appraiser will determine the highest and the best use of the commercial property after which its value will be determined. He will examine the property for its capability to provide a positive annual return on the capital taking into consideration the rent the property can be expected to earn, the market value of the land or site and its resale worth.
Unlike residential appraisals, a commercial real estate appraisal is more subjective as it is based on how the appraiser interprets its value based on its income generation capacity and location.
If you are in the process of getting a commercial real estate valuation done, here are some enlightening bits of information that you should keep in mind.
An appraisal goes beyond inspection
An appraisal isn’t a short piece of work. It may take weeks as it involves more than a check of building requirements. It includes searching previous titles and zoning regulations, gathering information from the county property appraiser and tax collector, speaking with utility providers and more.
Be honest for a smooth appraisal process.
Do not inflate information in a commercial real estate appraisal to fetch a higher appraisal. If contradictory information is discovered later, it will pose a stumbling block to the process.
Transparency works in an appraisal
The appraiser is at liberty to ask you to provide a property tax bill, a set of drawings of the property, income statements, and other things. You should provide this information promptly. The more information he is provided with, the quicker he will complete the assignment. If you later dispute the appraiser’s value options and produce additional information that wasn’t furnished earlier, you would have wasted valuable time.
Appraisers follow a code of ethics.
Appraisers are unable to comply with requests that conflict with their code of ethics. In other words, no funny business. He is refusing to do something you want because he has to adhere to the Uniform Standards of Professional Appraisal Practice, a strict code of ethics that appraisers must follow. A failure to follow this and he is liable to face disciplinary action imposed by the State.
The appraiser reports to the user of the appraisal.
If an appraiser is hired to complete an appraisal for financing, tax appeal, or a potential buyer, it’s important to remember that the appraiser works for that party and cannot disclose findings to other parties due to client confidentiality.
Three types of appraisal reports.
In a commercial real estate valuation appraisers prepare three kinds of reports. The restricted report is an abbreviated document with limited analysis, data and reasoning. Most of the documentation for a restricted appraisal is kept in the work file of the appraiser. A summary report is more frequently requested, and the analysis, reasoning and supporting documentation used in the valuation development is presented in the limited narrative discussion. The self-contained report consists of a comprehensive document, with most of the analysis and reasoning included within the report itself.
For more information on commercial real estate appraisal or to have a property appraised, please contact RD Clifford Associates, a name to reckon with in the realm of commercial real estate appraisals in New York, New Jersey, and Pennsylvania.
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