The Appraisal is Scheduled – What’s Next?
Purchasing commercial real estate is an investment worth venturing if the buyer is knowledgeable about the product and the processes involved. Knowing what to expect with regards to the commercial real estate appraisal is a significant element of the commercial building purchase, and should be understood as well. A business owner will have a lot to take in when purchasing a commercial property. The factors entering into the decision seem endless – location, square footage, floor plans, and asking price are just the beginning. Once a satisfactory property has been found and a meeting of the minds has been achieved, the commercial real estate appraisal will soon follow. All parties can ease possible worries by keeping in mind a few notable attributes involved in the appraisal process.
Your Commercial Real Estate Appraiser is Governed by a Strict Code of Ethics
There are several codes of conduct responsibilities outlined in the Uniform Standards of Professional Appraisal Practice, which all appraisers must consider and adhere to at all times when practicing commercial real estate appraisals. A most significant commercial real estate appraiser’s obligation is his or her promise to provide an entirely objective report that is based solely on facts and data, and not influenced by any outside sources. Sometimes a seller or buyer may request something of the appraiser that is refused, most likely because it is against the code of ethics. The appraiser could potentially lose his or her license as a result of acting contrary to these regulations.
There is Much More to the Appraisal than the Inspection
The designated appraiser working to create a commercial real estate appraisal may spend a mere hour or less at the actual property. This short amount of time spent inspecting does not infer that he or she is skirting responsibilities, however, or that he or she is rushing through his or her job. In addition to the inspection, the commercial real estate appraiser will spend hours at the computer or the county buildings, researching public records and comparable property data and values, as well as aspects of the neighborhood, its demographics, zoning types, and employment trends within it. He or she must also consider the cost to replace the building and all of its improvements, and then finally draft a lengthy formal written report. The commercial real estate report may not be submitted for about week to ten days after the actual inspection, and this is to be expected, considering the amount of research it takes to create a thorough and trustworthy report.
The Appraiser Will Need to Know the Intended Use of the Report
There are different circumstances which may call for a commercial real estate appraisal. A lender may need to establish the value of a property it is financing. A property owner may wish to submit a property tax appeal, or may just be curious to determine the property’s value for purposes of selling in the near future. Regardless of the purpose of the appraisal, whoever has hired the appraiser will need to disclose who the intended audience is, so that the cover letter can name these parties. No unauthorized users are allowed access to the report.
