Stay informed and be prepared to get the most out of the appraisal process
If you’re looking at buying, selling, or signing a major lease on a commercial property, you likely want to get a property appraisal first. But before you do, it pays to understand a bit about how appraisals work, an appraiser’s responsibilities, and which type of appraisal might be best for your unique situation.
Providing accurate information is key
It’s important to realize that appraisers are publicly-licensed officials and that the actual inspection of a property is only a small part of the entire appraisal. Much of the process will involve looking through public records and other data to determine information like historical property prices and the suitability of a piece of land for future business use.
Therefore, any information you provide the appraiser will most likely be checked and verified multiple times for accuracy – so any misleading or inaccurate information will only slow down the appraisal process and reduce the appraiser’s trust in any further information that you provide.
Prepare in advance by compiling any documentation or paperwork
Whether you’re looking to get your own property appraised in order to sell it or lease it, or someone else is looking to buy or lease your property and wants it to be appraised, you’ll likely need a good amount of documentation for the appraiser. This might include a property tax bill, income statements, drawings or plans of the property, and a variety of other information.
Get the right type of appraisal for your situation
There are three types of reports that you can commission an appraiser to create: a restricted use report, a summary report, and a self-contained report. A restricted use report is the shortest and least expensive, but it can only be used by the client, so it’s of somewhat limited use if you are trying to sell a property. A summary report is slightly longer and costlier, but it can be used by anyone, and it is often the best option for someone trying to sell a property. A self-contained report is the longest and priciest, as it contains detailed analysis of the property – but it’s also rarely commissioned, as a summary report will usually provide enough information for most business purposes.
Tell the appraiser why you want the property appraised
If you’re hiring an appraiser, it’s a good idea to tell them who the report is intended for, and why you want to use it before you begin the process. Commissioning the wrong report could lead to a significant waste of time and money, so it’s best to make sure you’re going in the right direction from the start.
More specifically, you also want to communicate with the appraiser what exact financial estimates or values you would like to get from the property appraisal process. For example, if you are interested in buying a property to start or relocate a business such as a store, you want to know the full value of the building and the property, otherwise known as the “fee simple interest.”
Comparatively, if you are considering signing an expensive lease for a business and you want to know what a fair rent price is, you’re more likely to want to know a property’s “leasehold interest.” These are just a few examples of the essential values an appraiser can calculate and another reason why full and open communication is the best way to get the most out of the commercial property appraisal process.
If you want to learn more about the property appraisal process or about how to effectively buy, sell, lease, or manage property in an ever-changing market, contact the commercial real estate experts at Morris Southeast Group for a free consultation. Our team can be reached at 954.474.1776, call Ken Morris on his cell at 954.240.4400, or email kenmorris@morrissegroup.com.
Tags: Commercial Real Estate Appraisals
