7 Facts You Probably Didn't Know About Commercial Property Appraisal

 Alice Johnson
  Jul 25, 2019

Commercial Property Appraisal Facts

Business owners have a lot to worry about when it comes to commercial property.

Values of commercial properties are going up with the average building being worth close to $200,000. That's good news if you're a property investor and not so good news if you're a business owner that's thinking of purchasing a commercial facility to work out of.

In any case, if you have some sort of vested interest in buying or selling commercial property, you're not going to want to build your transaction off of averages. You're going to want to build your transaction knowing exactly what the commercial building you're interested in is worth given its current condition.

Since understanding a property's worth and the condition is difficult to do at a glance, professional commercial property appraisers are key to ensuring that all parties involved in a building changing hands are getting an honest picture of what they're dealing with.

Here are some commercial property appraisal facts.

1. Appraisals Can Take Weeks

A lot of people that are going to get commercial property appraisals done assume that the process will be similar to that of a home inspection. Unfortunately, unless the commercial property that you're considering is uncharacteristically small, you should be prepared for the process to take much longer.

Commercial property owners are held to different standards than residential property inspectors. That's not to say that residential inspections are held to a lower standard, it's just to say that the differences in both party's workflows often leads to commercial inspections taking longer when all things are equal.

In most cases, all things won't be equal though. Commercial buildings that are larger than your average house might take a very long time to properly asses.

The process might even take weeks if you're having an appraiser look over a hotel or a similar type of building which you can find out more about.

2. Professional Appraisers Are Truth Seekers

Believe it or not, people that are selling buildings often try to finagle their way into a better deal by trying to guide a property appraiser's search. They assure them that certain things are fine when they aren't, they try to restrict access to certain rooms and do a bevy of other things to try to improve the outcome of a report to reduce your negotiating power as a buyer.

Fortunately for you, commercial property appraisers are well trained to deal with this and are experts at finding the truth.

In many cases, commercial property inspectors will ask building owners questions that they already know the answers to. If the building owner answers these questions dishonestly, property appraisers know that they're going to have to be more diligent in digging up information.

3. Appraisers That Lie Could Lose Their License

If you're a seller that's doing an appraisal so you can tout the condition of your property, never ask your appraiser to gloss over things or lie. If you do, you're putting them in a position where they could lose their job.

Commercial proper appraisers are licensed by a central board that imposes strict standards.

Lies can result in the permanent forfeiture of their license.

4. Confidentiality is Assured

As a commercial building owner, you're likely beholden to maintaining certain standards set forth by your state. If you don't meet those standards you could be fined or shut down.

If you're in a position where you'd like to get your building appraised but are afraid that your appraiser will report you if they see anything that's out of order, don't be.

Appraisers are under no legal obligation to report their findings to anyone but their client so you can count on their confidentiality.

5. Appraisal Reports Change Based on Your Needs

During a commercial property appraisal, an appraiser will inspect the condition of a whole building. The way that they parse the information that they turn up and present it to you though will vary based on what your needs are.

To ensure that you're getting the clear picture of your building in a way that the picture is valuable to whatever your intended ends are (showcasing to a buyer, sharing an opportunity with investors, etc.) you'll want to let your appraiser know ahead of time what it is that your intended ends are.

6. Buyers Find Bad Appraisals Advantageous (Most of The Time)

If you're a buyer and your property appraiser turns up a report that's less than stellar, don't get discouraged. A bad appraisal is ammunition in your negotiating chamber and can get you a great deal.

Have your appraiser estimate how much it would cost to get the building you're interested in back up to par, add a little extra to that number and then reduce your offer by that amount of money.

You might end up saving thousands on your purchase price.

7. Appraisal Prices Vary by Area and Appraiser

Commercial building appraisals are quite a bit more costly than most home appraisals. Furthermore, depending on where you live and the popularity of an appraiser, your price will vary accordingly.

Be prepared to pay $5000.00 or more for your professional appraisal if you're going to have a single building looked at.

There are a number of commercial building appraisers that offer discounts for larger business clients or investors. For example, if you have multiple commercial buildings that you need to be looked in a specified span of time, you may be able to negotiate bulk-pricing.

Even if you don't have multiple buildings to review at once, if you develop a working relationship with an appraiser that knows you'll call on them whenever you need assistance, they may be able to offer you a lower than advertised rate.

Wrapping up Facts You Didn't Know About Commercial Property Appraisal

A commercial property appraisal is a necessary step when commercial buildings are changing hands. Now that you know a little bit more about the process, we hope that you feel confident in the following:

Ordering an appraisal. Requesting what it is that you need from it. Leveraging the results of your appraisal to your advantage.

If you'd like more information on all things property, we recommend pouring over the host of excellent information on our blog!

7 Facts You Probably Didn't Know About Commercial Property Appraisal

Alice Johnson

This is Alice, a full-time professional blogger. He loves to travel and try new food, surfing and definitely a music addict. She also loves to write on trending ideas on various topics that prove helpful to others with their personal and the business works.

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