Seeking a Commercial Real Estate Appraiser for the new year? Whether you are a business owner, investor, attorney, financial institution, or mortgage broker these tips will guide you in the right direction.
Finding the right Commercial Appraiser is important not only for the value of your investment, but it ensures that you have peace of mind, knowing that an experienced and competent appraiser will address and appropriately report an accurate value. It also helps to know who you are working with, getting to know their experience including education and background. Commercial Real Estate Appraisals are much different than residential appraisals, as they require more detailed analysis and almost always require two or all three approaches to value. A commercial real estate appraiser must have a Certified General License which requires more education and a minimum number of hours of commercial experience then a residential appraiser. All appraisers must be USPAP compliant, this means they are bound by the rules, regulations and ethics of the Uniform Standards of Professional Appraisal Practice (USPAP). Don’t be afraid to ask questions, an experienced appraiser will be able to answer any questions you may have. Find an appraiser in your geographic area. If the property is a general commercial building and isn’t a special use property, there is no reason to hire an out of state appraiser or appraisal company. If the property is a special use such as a marina or golf course then an appraiser from out of state that specializes in that type of property is common. When requesting a bid from a commercial appraiser, he or she should always ask if the subject property is currently leased, vacant or owner-occupied, and the intended use of the appraisal report. This helps the appraiser identify the necessary property rights to appraise and analyze the scope of work when providing an appropriate bid. Essentially, finding an appraiser to suit your needs should be a seamless task, but do not let the fees sway you from selecting a commercial appraiser. Fees vary based on property type, scope of work and location.
Tips for Choosing the Right Commercial Real Estate Appraiser in 2014
1. Make sure the Commercial Appraiser is Licensed in your State An appraiser with an active State Certified General License can appraise any type of commercial real estate in California. You can search for appraisers with license status at the Bureau of Real Estate Appraisers. As of December 30, 2013, an appraiser with an active state certified residential license can appraise commercial real estate in California up to $250,000, however it is recommended an appraiser that only deals with commercial real estate handle your property, as they will be more familiar with commercial real estate market trends.
2. Ask for a copy of Resume/Education and Experience All experienced and competent commercial appraisers should have this handy and be willing to provide it to you. Most appraisers include this within the appraisal report.
3. Verify with the Appraiser National Registry How would you know if a licensed appraiser has any disciplinary actions, suspensions, or revocations? The Appraisal Subcommittee (ASC) provides a National Registry Database which contains selected information about all State Certified and Licensed Real Estate Appraisers. It only contains information about appraisers who currently are, or have been, certified or licensed by a U.S. State, Territory or possession to perform appraisals in connection with Federally-related real estate transactions. Only State Certified or licensed appraisers who are listed on the National Registry with a valid certification or license are authorized under Federal law to perform appraisals in connection with federally related transactions. The National Registry reports active disciplinary actions that limit an appraiser’s ability to appraise (current revocations, suspensions, and voluntary surrenders in lieu of discipline).
4. Make sure the appraiser has experience with your commercial property type
Ask the appraiser if he/she has any experience in your property type. A competent appraiser will tell you if he or she has or has no experience in your property type. According to USPAP (Uniform Standards of Professional Appraisal Practice) Competency Rule- Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently.
Or the appraiser must:
• disclose the lack of knowledge and/or experience to the client before accepting the assignment;
• take all steps necessary or appropriate to complete the assignment competently; and
• describe the lack of knowledge and/or experience and the steps taken to complete the assignment competently in the report.
5. Find a commercial appraiser who knows your Market Area Look for an appraiser in your geographic location. If your property is located in the city of Los Angeles or San Diego then find an appraiser in Southern California that covers those markets, not out of state such as Arizona. Most commercial real estate appraisers cover multiple market areas.
6. Don’t let fees sway you in ordering a commercial appraisal Sometimes the saying “you get what you pay for” applies to commercial real estate appraisals. When receiving a bid from an appraiser, always understand the type of report you will be receiving (form or narrative) and turn-around time. Don’t always hire an appraiser just based on fee. The lowest fee does not always result into a credible, quality appraisal report. Typically narrative commercial real estate appraisals vary from $1,500 to $5,000 depending on property type, scope of work and location.
Author: Michael Hadrys