Commercial Real Estate Appraisal – A Crucial Aspect to Understand

If it’s been quite long that you are dealing with residential property appraisal and now you are about to switch to a commercial property, you must know that there is a big difference in this context. A commercial real estate appraisal can be a bit more complicated and you should know a lot of things relating to it. In fact, if you are one of those small business owners, it is quite essential for you to know that commercial appraisals are a lot more subjective in nature. A commercial building’s major portion of the value is dependent on the rents received in comparison to the paid out expenses. Just like a residential property values assets, the valuation process initiated by commercial properties is not the same.

If you are, therefore, looking forward to getting a commercial real estate appraisal, you must extend your learning boundaries and know everything about it. Whether you want to sell or buy it, you want to find the lease value or raise a property tax appeal, you must know how to proceed correctly. So, let’s take a look at some of the most important things that need to be known about commercial property appraisals:

  • Property inspection – Although it’s a minor part of the commercial property appraisal process, it can be said as the first step towards understanding appraisals. Property inspection might not take an hour or may take several hours. Appraisers look for information on demographic and lifestyle and even research on zoning records and ownership. They also work by compiling rentals, replacement costs, and even comparable sales. Once done, they analyze all these data because it simply relates to the property value. A report is finally prepared based on these findings.


  • Misrepresenting facts is a big no – You cannot play tricks with appraisers as they are experts in skepticism. They will apply all types of sources to find out anything and everything that you ask them. It’s the basic nature of appraisers to try and defend their opinions if at all they are produced in court. In fact, they might not regain the trust and confidence on your facts if they once discover that you are trying to misrepresent the same.


  • Try providing everything to an appraiser – It might be quite obvious for you to wonder as to why an appraiser would ask for a good number of things at a time or one after another. For instance, you might be asked to produce the tax bill of your property, a few sketches regarding the property, statements of income and many other things. Well, instead of turning too curious, simply provide everything your appraiser wants from you. Remember, an appraiser is one of the world’s busiest persons, and therefore, he will not ask you unnecessarily to ask you for such files. He will need certain information to proceed. The more information you can provide him, the better it is. Rather, always try to cooperate with a commercial property appraiser who too will wrap up his assignment as soon as possible.


  • Appraisers must follow a standard code of ethics – All appraisers must follow a standard and stringent code of ethics that will always make them come up with an unbiased opinion. If they fail to hold on to this, disciplinary actions will be taken on behalf of the state. There might be certain cases where the appraiser would not like to act as per your instructions. Well, this might be because of any obligation to abide by these ethics. So, make sure that the appraiser you appoint is quite ethical in respect to his duties.


  • The Appraisal order comes from the client – In case the appraisal is regarding finance, the lender will always be the client here. As a law, it’s an obligation for appraisers to keep everything confidential about their client. Therefore, if you are from the other party or the borrower, the appraisal report will not be released by the appraiser and given to you. The appraiser will have every right to keep the information confidential and not share with you.


However, there is no need for you to stay afraid of the fact that you might be misled by the appraiser in knowing the right property value. Even if you doubt whether the value of appraisal would be shown higher to you than the assessed one during an appraisal order as part of an appeal for property tax, be assured that the results won’t be released by the appraiser without your consent to the property tax board.

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