When investing in commercial real estate, a vital segment of the process involves property appraisal. Compared to residential homes, appraising commercial properties can be more complicated due to factors like rental rates and property market performance.
Here are 5 things you should know about getting your commercial property appraised:
- The inspection is just the first step
Depending on the size and complexity of your property, it may take a few hours to a whole day for an appraiser to inspect it from top to bottom. While the inspection is a big part of the appraisal process, it doesn’t stop there. After looking at your property, other things that the appraiser will do include:
- Looking up records on zoning and public ownership
- Comparing similar properties for sale
- Researching rental and replacement costs
Once they’ve studied all the data, they’ll then write a final report. This could take anywhere from a few days to several weeks.
- Provide all information
Don’t withhold any vital data from the appraiser during the appraisal process. If they ask you for documents like an income statement and property tax bill, give these to them as soon as you can. They’ll need these to give you the most accurate appraisal possible.
Don’t spin facts about your property, as well. Giving the wrong information in the hopes of getting a better appraisal will only make their jobs harder. They also have sources to verify everything you tell them, so be honest and straightforward so you can get your appraisal done fast.
- Consider the date of valuation
The date of valuation can shape the whole appraisal, so make sure to set it right. Depending on your needs, an appraiser can establish either a retrospective or prospective date of valuation.
Get a retrospective date of valuation if you need to get the estimated value for a past date. This is usually needed for legal purposes like divorce, tax appeals, and estate settlements. Meanwhile, a prospective date of valuation assesses a property’s potential value. This one is needed for construction or conversion proposals.
- There are different kinds of reports
A self-contained report shows everything about the appraisal, including the data and reasoning used to make it. These kinds of reports are usually used for commercial property lending. If you only need a short description of the appraisal, a summary report will do. A restricted-use report is also minimal on the details, but it can be used by the client for legal matters.
- Identify the intended users
Only authorized people are eligible to use the appraisal report, so let the appraiser know who’s going to need it. For example, if you want to buy a property, then you’ll have to share it with the seller, your lender, and the local property tax appeal board. On the other hand, the property owner and construction firm may need to use it if you’re proposing a construction project.
Do you need to have commercial real estate in Missouri appraised? The Cardinal Realty Group can connect you with a professional real estate appraiser. Contact them at 636.225.0385 or via email at Hal(at)CardinalRealtyGroup(dotted)com to get started.