Commercial Property Appraisal FAQs
All of your questions about commercial real estate appraisals and property valuations answered here.
How do I get a property appraisal? Or how do I get my property appraised?
For lender related work, federal lending regulations require that the bank order the appraisal, as the bank is the appraiser’s client, not the borrower. That being said, any private party is welcome to order commercial appraisals directly; those appraisals would just be precluded from federal lenders being able to fund with them. For purposes of legal, litigation, or property tax appeal work, it’s common that attorneys may engage commercial appraisers on behalf of their clients.
How much does a commercial real estate appraisal cost?
Costs range widely. Most range between $500-5,000, but can easily exceed $10,000+ depending on complexity and urgency of the completion date.
How long does a property appraisal take?
Completion times may vary, however most lender related work is completed in 2 to 6 weeks from the date of engagement. For large Right of Way (ROW) or litigation related projects, completion times can easily be 2 to 6 months.
Do appraisals affect property taxes?
In Texas, county taxing authorities set the market values of properties annually, so obtaining one appraisal does not directly have any influence on a tax assessment. So, obtaining one appraisal does not directly have any influence on a tax assessment. In the case of a tax appeal / consulting assignment, a privately ordered commercial appraisal can be utilized as a tool to assist in mediating / negotiating the final assessment and would thus have secondary influence over property taxes.
What is property valuation vs. an appraisal? Or What is a property assessment vs. appraised value?
A valuation and an appraisal are effectively one in the same. A property assessment generally refers to the taxable value assigned by a taxing authority. An appraised value can refer to a number of figures; it can be the appraised value by mass appraisal, or the opinion of value produced and supported by one appraiser.
How accurate are commercial real estate appraisals?
Real estate appraisals are inherently an opinion of value. Given that every piece of real estate is unique, the level of accuracy often depends on the efficiency of the market in which the property lies. For example, for a very homogenous property in which a plethora of directly comparable data exists, appraisers can pinpoint the market value with a high degree of certainty, reliability and accuracy. In contrast, for a unique and more specialized property, the process of developing a credible opinion of value becomes more of an art and less of a science.
How to become a licensed commercial real estate appraiser?
Entrants into the profession must first become an Appraiser Trainee, then complete the following.
- 3,000 hours of experience over no less than 18 months
- 300 hrs of coursework
- Bachelor’s degree or higher
- Pass state certified exam
What are commercial real estate appraisal guidelines?
All appraisals for federally related transactions are required to comply with the Uniform Standards of Professional Appraisal Practice (USPAP). So, this means that if a lender is involved, the appraisal must comply with USPAP. Failure to comply with USPAP could result in disciplinary action from a state regulatory board.
What is the commercial real estate appraisal process?
1. Lowery Property Advisors is given the opportunity to bid on providing the commercial real estate appraisal.
2. Bid is awarded to LPA.
3. Appraisal is assigned to the appropriate team in one of our strategic offices.
4. Team communicates regularly with client throughout the process and completes report by promised delivery time.
What happens if a property appraises for less than expected?
Never forget that an appraisal is an opinion of value. Most clients have a protocol by which the end user / borrower has the right to contest the opinion of value. Most appraisers take a very humble, approachable posture with this process and give all parties involved the opportunity to locate market data that might revise the opinion of value. While notable revisions are rare, they do happen.
How to find comparable properties for appraisal?
There are subscription sources such as Costar, MLS, or Loopnet in which appraisers pay to access market data. Data also comes from relationships with brokers, other appraisers and from previous appraisal assignments.
What are the appraisal requirements for commercial real estate?
Appraisers are required by USPAP to include necessary data and analysis to support the conclusions and opinions their appraisal.
Who pays the appraisal fee on a property?
Usually, the appraiser’s client pays the appraiser. For lender / bank related appraisal work, the borrower is generally not the client of the appraiser and the appraiser has no fiduciary responsibility to the borrower, which is the customer of the lender. Even though the appraisal fee frequently ends up on a closing statement paid by the borrower, it’s nearly always the lender that pays the appraiser. For private party work, some appraisers collect payment from the property owner, but many also receive payment from a representative of the property owner such as their attorney.
What is the average cost of a commercial real estate appraisal?
Fees range widely. Most are between $2,500-5,000.
What is a commercial appraisal?
It’s an unbiased opinion of value for commercial property (written or oral) produced by a licensed appraiser.