Commercial Appraisals

Are you thinking about buying or selling a commercial property? If so, then you should also make sure to secure a commercial appraisal before finalizing the transaction.

A commercial appraisal is essential for the same reasons that a residential appraisal is important. If you are selling, you might want to know the ballpark value of your property before you list, so that you can choose a smart sale price. If you are buying, you probably want to verify that the property is worth the asking price.

What many people don’t realize is how different commercial appraisals are from residential properties. Appraisers can arrive at extremely objective value estimates when inspecting and evaluating a residential property. The asset itself—the house, the features, the condition of the property, and the lot where the house is built—tells appraisers a lot of what they need to know. Other factors come into play, of course. Appraisers use comp homes to get a baseline for market demand, location value, and a few other items. However, the appraisers are mainly looking at the house itself to determine market value.

With commercial properties, though, the appraisal process is further reaching and more complex. The property itself still matters, as do its features, size, location, age, and condition. Ultimately, though, the value of a commercial property is more difficult to assess, largely because of rental factors. How much the property costs to maintain versus the rental revenues, it can bring in dramatically impacts its value. A commercial property in a hot part of town can easily bring in a lot of income, just because so many companies are eager to find business space in those areas. A commercial property in a less in-demand part of town might struggle more to make revenue, which absolutely impacts value.

This added complexity even impacts who might request a commercial appraisal. Residential appraisals are primarily done when a property is bought or sold, or maybe to figure out refinancing opportunities. With commercial properties, appraisals are undoubtedly important during the buy/sell transaction, but they also have other applications. For instance, a landlord trying to determine a smart lease or rental rate for units in a commercial building might use an appraisal to do so. You might also use a commercial assessment to appeal property taxes you believe are too high.

To determine the value of a commercial property, appraisers must analyze a substantial amount of information. The inspection process and the details it yields about the building itself are merely the first steps in a lengthy process. Appraisers also pull zoning information, research demographics and lifestyle details (about the neighborhood where the building is located), look at ownership and/or rental history, and search for comparable sales. All these steps help the appraiser to determine the value of a commercial property.

Because commercial appraisals are more subjective (and more challenging) than residential appraisals, not as many companies offer them. However, at Authority Appraisals, we are happy to provide commercial appraisals as part of our client services. To learn more or for more information please Contact Us. If you are ready to get started please complete our Order an Appraisal form and we will be in touch with you a free appraisal quote.

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