What is a commercial real estate appraisal ?

A commercial real estate Appraisal or valuation is similar to a normal residential property appraisal except that there are more criteria involved in the calculation.

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With a residential market appraisal or the agent usually makes comparisons between houses with similarities such as number of bedrooms, features and the age of the property, so the likelihood of two or more properties within one area having enough similar basic criteria is very real.

But with a commercial real estate appraisal using direct comparisons is alot more difficult thus making a ‘market value’ appraisal because of direct comparisons tricky if not impossible.

For example, you can have a shop on a corner block and just 50 metres away there might be a factory or warehouse: Both commercial buildings, both very different in terms of size, shape, use and rental returns.

How does a commercial real estate appraisal work?

Although a commercial real estate appraisal may or may not include market comparisons, it will include rents per square metre; a search for tenancy and rent history which go a lot further back than an agent completing a residential appraisal would go.

Because 90% of commercial properties are tenanted (where 70% of residential properties are ‘owner occupied’) there are many more figures to search out, read through and include in the final calculation.

Not only that, there needs to be an idea of how long the property may have been vacant, what similar properties in the area might lease for and a history of the duration of its commercial success, etc.

What is the difference between an commercial real estate appraisal that is free ?

Not all commercial real estate appraisals are equal. You will find that some are ‘desktop appraisals’ generated via a database of standard information and physical appraisals completed by your agent.

Then there are specialised appraisal’s completed by a licensed commercial appraiser or valuer. This type of commercial real estate appraisal will have a cost associated with it.

Computer generated online commercial appraisals rely on statistics from a database to produce a figure. While they can be quite accurate, (depending on the age and accuracy of the information used) particularly when used in areas where properties are essentially alike, they can be inaccurate where a property is unique from those around it.

Additionally, because they are computer generated they won’t take into account extra considerations such as particular machinery, equipment and business property.

Often a real estate agent who specialises in commercial property will offer a free commercial real estate appraisal, this is different to the valuer.

Even though they will have to spend time to gather and calculate information and put it into a report for you, it is often worth while for the agent as it goes towards building a relationship with the potential seller and because commercial properties sell for such large sums spending this time can pay off considerably for the agent.

Degree of accuracy will vary from agent to agent depending on their resources and experience and this is why is it recommended to seek more than one commercial real estate appraisal. In the end, an estate agent’s appraisal can save you money and give you a better idea of the financial risk involved.

Before signing on the dotted line, always you should contact our consumer helpline on 1300 729 540 we can give you advice how to choose the best agents to interview.

We also have compiled consumer ratings scores on real estate agents in your area and we can show you how to save 10% off the real estate agents fees which ever agent you choose to go with.

Commercial real estate appraisal when buying

If you are seeking finance, your lender will have the property appraised, by a certified appraiser of their choice, before agreeing to the loan.

However, if you are in a position where you do not require finance, the best time to request an independent certified commercial property appraisal is when you have decided you would like to go ahead and purchase the property.

Certified commercial property appraisal’s can cost into the thousands and, depending on the property, and can take any where from a few days to a few weeks to complete.

Having an idea of the value of a commercial property based on facts and figures will give you the confidence to negotiate a good price and give you a better idea of the financial risk and whether it is worth taking.

Before signing on the dotted line, always you should read our consumer reviews on who are the best agents, we can give you advice how to choose the best agents to interview.

We also have compiled consumer ratings scores on real estate agents in your area, search now for the best real estate agent just click on link at top of page.