10 Must-Knows About Commercial Real Estate Appraisal

Small business owners may find the process of a commercial property appraisal to be a confusing process. Whether you need an appraisal for financing, buying or selling a business property, an Orlando Florida MAI commercial real estate appraiser can give you peace of mind that you’re offering or receiving a fair price. Here are some must-knows when it comes to the appraisal process.

1. An appraisal involves more than a building inspection. A commercial inspection involves much more than a check of building requirements. The process involves searching previous titles and zoning regulations, gathering information from the county property appraiser and tax collector, speaking with utilities providers, discussing surrounding projects with city planners, and many other tasks which may take weeks to complete.

2. Honesty is the best policy. Appraisers want the facts, and just the facts. Never inflate information in hopes of getting a higher appraisal. Contradictory information will only hinder the appraisal process.

3. 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!

4. Cooperation gets the best results. To ensure your appraisal goes smoothly, provide all the requested property information to the appraiser promptly.

5. 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.

6. There are three types of appraisal reports. 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 limited narrative discussion. The self-contained report consists of an all-inclusive document, with most of the analysis and reasoning included within the narrative discussion within the report itself.
 

7. Copies of the report. Before completion of the appraisal, it’s important to designate a list of recipients who will receive the report.

8. The date of valuation. Remember to select a date of valuation for your appraisal. Appraisers have the authority to post-date their findings to reflect values before or after a worth-altering event in a retrospective or prospective appraisal.

9. Choose a property interest for the appraisal. An appraiser can determine the value of your property according to different interest scenarios, such as a fee simple interest, leased fee interest, or leasehold interest appraisal that analyzes just the value of the property. In addition to the value of the real estate, the going concern value or value in use can also be estimated.

10. Understand the amount of work involved. Appraisals aren’t always cheap. Your appraiser has to compile large amounts of data to determine the value of a property, and a lot of the information gathered to generate the report doesn’t necessarily appear in the report. Appraisals that take a lot of time come with a higher price tag.

For more information on commercial real estate appraisal or to have a property appraised, please contact Commercial Investment Appraisers at 407-369-8080 or info@commercial-appraisers.com.