Posted on August 22, 2025
Who Pays for a Commercial Appraisal?
When you’re buying, selling, or refinancing commercial real estate, one of the most important steps in the process is the appraisal. An appraisal gives an unbiased opinion of the property’s market value, which is often required by lenders, investors, and sometimes even courts to assist in making informed decisions regarding commercial real estate. But a common question many property owners and investors ask is: who actually pays for the commercial appraisal?
Let’s break it down.
The Role of a Commercial Appraisal
A commercial appraisal isn’t just a formality. It’s a detailed report prepared by a licensed appraiser that examines:
- The property’s condition, size, and use
- Comparable sales in the market
- Rental income potential
- Local market conditions
Because commercial properties are often complex and unique, these appraisals can take longer and typically cost more than residential reports.
Who Usually Pays?
In most cases, the party requesting the appraisal is the one who pays for it. Here’s how that works in different situations:
- Buyers & Borrowers
If you’re applying for financing to buy or refinance a commercial property, the borrower usually pays. Lenders often require an independent appraisal before approving a loan to ensure the commercial property serves as sufficient collateral for a loan. While the lender orders the appraisal, the cost is typically passed on to the borrower.
- Property Owners
Sometimes, a property owner might request an appraisal before listing their property for sale. In this case, the owner pays because they want to set a fair asking price and understand the property’s true market value.
- Sellers & Developers
In competitive situations, a seller or developer might choose to pay for an appraisal upfront to present to potential buyers. While not as common, this can aid in building trust and speed up negotiations.
- Courts or Legal Proceedings
During disputes like divorce, estate settlements, or partnership dissolutions, a court-ordered appraisal may be required. The court usually decides who pays, which could be one party or both.
How Much Does a Commercial Appraisal Cost?
The cost depends on factors like:
- Scope of the assignment and complexity
- Type of appraisal report (restricted vs. full narrative)
- Location and available market data
On average, commercial appraisals can range from $2,000 to $10,000 or more. Specialized properties like hospitals, schools, or manufacturing plants may cost even higher due to their complexity and limited availability of similar market data.
Can the Cost Be Shared?
Yes. In some transactions—especially large or complicated ones—the buyer and seller may agree to split the cost of the appraisal. This arrangement is less common but can happen when both parties benefit equally from the valuation.
Why You Shouldn’t Cut Corners
It may be tempting to look for the cheapest appraisal option, but quality matters. A well-prepared appraisal provides credible, defensible results that can hold up with lenders, courts, and investors. An inaccurate or rushed appraisal, on the other hand, can delay financing, derail deals, and even lead to costly disputes.
Final Takeaway
So, who pays for a commercial appraisal? Most often, it’s the borrower or property owner, but the responsibility can shift depending on the situation. The key is understanding the role the appraisal plays in your transaction and planning for the cost upfront.
At LPA, we know commercial appraisals are an investment in your success. We deliver accurate, on-time reports that are easy to read and give you the confidence to move forward. Call us today or contact us online to get started with the commercial appraisal firm you can trust.
