If you’re thinking about selling a commercial property, you might be interested in learning more about conducting an appraisal. This article will walk you through some key things you should know about the commercial real estate appraisal process.
Explaining the Basics
Unlike residential real estate, commercial real estate appraisals are not focused on the value of single-family homes. Instead, they’re used to value properties that include office buildings, retail spaces, and multifamily units. An appraisal is used to determine the value of a property in the current market, but it’s important to note that it’s also used to determine the amount of financing needed.
An appraisal is also a valuable tool for investors, as it can help them determine the property’s market value before they buy it. It can also help them make informed decisions about the type of renovations that would benefit their investment.
1. Appraisals Take Time
Depending on the complexity of the property, it can take up to several hours to thoroughly inspect it. However, this is only the beginning of the appraisal process. After conducting a comprehensive analysis of the property, an expert will prepare a report that includes the sales price, replacement costs, and rental information. This process requires a lot of research from the appraiser on zoning laws, demographics, etc. This can take up to several weeks, so plan accordingly.
2. Share Honest, Accurate Information
Appraisers are experts trained to verify every piece of information you offer, so don’t try to withhold crucial information. They also want to make sure that the people who show them the property are credible. If they suspect that something is not right, they will often try to disprove it.
When it comes to an appraisal, the first thing that an expert asks is if you can provide them with a copy of the property’s tax bill, income statements, and drawings of the property. This is the first step in the process, and you must provide as much information as possible. If you dispute the value opinions of the appraisers, then you’ll waste valuable time.
3. The Appraiser Works for The Ordering Party
The person who ordered the appraisal is the client, and the appraiser is obliged to maintain the confidentiality of all information they provide. If the property is being appraised as part of a property tax appeal, the appraiser will not release the results to the board without your permission. Additionally, know that if the appraisal is for financing, you will not be able to receive the report.
Make sure that if you ordered the report, you list all the people authorized to use it. When buying a property, you may want the information shared with the seller and your lender, but you have to authorize that expressly, or the appraiser will not be able to release it to them. This ensures that the report is only used by those authorized to use it.
4. Ensure the Appraiser Know Your Interest
Tell the appraiser what you want to know about the property. For instance, if you’re interested in using a warehouse for your business, there is different information the appraiser can provide then if you’re interested in learning how much a property is worth to a landlord planning on leasing the space. Telling the appraiser your specific interest in the property will ensure you get the most helpful information.