How to Hire a Commercial Real Estate Appraiser
The commercial real estate market in the U.S. is worth more than $1.1 trillion. That’s right, trillion.
Have you been considering investing in commercial real estate? If so, there’s a lot of opportunities out there for you to earn a significant living.
In order to do this, though, you need to find the right commercial property. That only comes from having a thorough appraisal done before you move forward with the purchase.
If you need to hire a commercial real estate appraiser, you’ve come to the right place. Read on for some tips that will help you find the best person for the job.
What Does a Commercial Real Estate Appraiser Do?
Commercial real estate appraisers have a very important job. Their main responsibility is to estimate the value of a commercial property to ensure you’re paying a fair price for it.
They perform a variety of other tasks, too, including the following:
- Verifying legal descriptions of properties
- Inspecting properties to take note of unique characteristics and potential problems
- Photographing properties (both inside and outside)
- Using comparables to determine property value
- Preparing written reports detailing a property’s value
- Preparing and maintaining current data on various properties
Many appraisers work with real estate companies (both residential and commercial). Some also work for banks and mortgage companies.
What Happens During the Appraisal Process?
An appraisal is almost always necessary when you’re buying a commercial property. This is especially true if you’re hoping to get a loan to help you with this purchase.
The idea of having a property appraised might be a bit intimidating at first. It’s not as scary as it seems, though.
In most cases, the appraisal process goes as follows:
- The appraiser inspects the property and takes note of unique characteristics, its condition, and whether it fits with the potential buyer’s intended use
- They analyze and verify the data they’ve collected on the property using general market data and comparable property data
- They form an opinion on the value of the property and create a report explaining their opinion in detail
The appraisal process usually takes anywhere from a few days to a few weeks. It depends on the amount of investigative work needed, as well as the size of the property and your intended use for it.
Choosing the Right Appraiser
Now that you have more information on what goes into an appraisal, let’s talk about the appraiser themselves.
Having the right appraiser on your side can make the whole process much easier. Here are some tips that will help you hire a great appraiser:
Ask About Their License
Start by making sure the appraiser has a valid Certified General appraisal license.
Their license should be up-to-date and certify them to perform appraisals in your particular state. This proves that they’re acting in accordance with the law and have the credentials necessary to perform an accurate appraisal.
Find Out About Special Designations
Special designations aren’t required. They can be helpful, though, and they indicate that your appraiser takes continuing education seriously.
Some common special designations include the RM or MAI from the Appraisal Institue and the ASA or AM from the American Society of Appraisers.
Consider Their Experience
Find out how long they’ve been working as an appraiser.
Ask about their experience performing appraisals in this particular area, as well as their experience appraising properties like the one you want to purchase, too.
Remember, the more specific their experience is to your situation, the better off you’re likely to be.
Ask About the Familiarization Process
It’s not an automatic dealbreaker if an appraiser doesn’t have a ton of experience with properties like the one you’re buying, though.
Before you write them off, ask them about their familiarization process. What will they do to make sure they have the necessary knowledge to appraise this property?
Learn Their Appraisal Techniques
Regardless of their experience, be sure to ask about their specific appraisal techniques. Find out what they do during the appraisal and make sure they don’t take any shortcuts.
Find Out What They Need from You
The appraiser should need some information from you. This includes floor plans, income and expense statements, and rent rolls.
If they don’t ask for any of these documents, that’s a red flag that they might not be the right person for the job.
Consider the Cost and Timeline
Find out how much they charge for their services and ask them what they do to come to that number. Ask how long it will take for them to complete the appraisal as well.
Finally, request a few references. Any appraiser worth hiring will have plenty of satisfied customers to whom they can refer you.
If they’re hesitant to do this, be wary of hiring them to handle your appraisal.
Bonus Tips for a Smooth Commercial Real Estate Purchase
Hiring a good appraiser is very helpful when purchasing commercial property. It’s not the only thing that matters, though.
The following are some additional tips that can help the process go as smoothly as possible:
- Have plenty of cash in hand (lenders require a larger downpayment for commercial properties)
- Look for highly motivated sellers
- Study neighborhoods with care and attend lots of open houses
- Work with a real estate bird dog who can help you find great leads
- Never buy a property you haven’t seen
- Start with a small, more manageable property
These simple tips can make things a lot easier for you, especially when you’re buying your very first commercial property.
Hire an Appraiser Today
Now that you know more about finding a good commercial real estate appraiser (and the other steps you need to take to have a good commercial real estate purchasing experience), are you ready to begin your search?
If you keep these tips in mind, it’ll be much easier for you to find someone who meets your needs and tells you everything you need to know about the property you’re considering buying.
Do you want to learn more about buying commercial real estate? If so, visit the Real Estate section of our site today for more helpful articles.