Overview of Commercial Real Estate Appraisals
The appraisal of commercial real estate is without a doubt, one of the most important aspects of commercial real property purchase transactions. The commercial real estate appraisal touches every part of the purchase contract and everyone involved in the purchase or investment process, including buyers, sellers, lenders, borrowers and their brokers. Choosing the right commercial real estate appraiser and understanding what goes into a thorough valuation can make or break a deal. Appraisers are licensed to perform a detailed appraisal , where commercial real estate brokers are not.
There area 2 Designations for appraisers SRA for residential and MAI for commercial real estate. Commercial real estate brokers provide “opinions” not appraisals on commercial real estate. The advice the commercial real estate broker provides to a buyer an opinion of value, remember your broker is an advocate for you as the client. Appraisers are unbiased, the physical the characteristics, zoning issues and a detailed valuation versus an overview given by a commercial real estate broker.
Commercial Real Estate Appraisers are utilized always by lenders and a detailed valuation should be done by an appraisers. Brokers can provide street data to appraisers; appraisers can provide supply demand data, Argus information etc to the commercial real estate broker. Argus is a discounted cash flow projection on a property.
An appraiser may get referral work from a commercial real estate broker, as an example the seller may feel their property is worth more than what it really is worth and therefore, the broker can bring an appraiser in for a buyer client. There is a lot of data that has to be combed thru for provide an accurate valuation of commercial property. Bottom line, if a buyer needs more detailed appraisal information, a licensed appraiser should be brought into the transaction.