Property transactions are common throughout the nation. Apart from homeowners, the business entities often own commercial properties, with the land and building structure being valued separately or together as deemed proper. Hiring the services of an evaluator for commercial real estate appraisals is important to understand the actual value of the property. A certified appraiser must conduct the process to determine the market value of the real estate.
Facts Related to Commercial Real Estate Appraisals
It is important for the existing owner of the property to be aware of its market value. This enables them to improve their ROI when it is time to sell. Parties who need to contact an appraisal firm or individual appraiser to request evaluation of a commercial property usually include the following: –
- Buyers/Investors– They are eager to know the right value of the property, thus ensuring that they do not pay more for buying it.
- Sellers- Those hoping to sell the property are also happy to obtain an official value for their property. This ensures that they do not end up asking less for the property, thus losing financially.
Apart from the parties who are directly involved in a real estate transaction, the following parties also request a proper appraisal of the concerned property from a certified professional: –
- Lender– The lenders need to assess the value of a property before it is provided as collateral to the lender. The entity or person releasing the funds must be certain that the value of the property is equal in value to the loan amount.
- Borrower- While most borrowers do not consider getting an appraisal done, the certified appraiser often provides a copy to the borrower after the evaluation of the property is completed. This enables them to be convinced that they are not being cheated and are getting a fair deal. This also ensures mortgage and refinancing for the borrowers, thus ensuring peace of mind for them.
Several organizations also seek appraisals for various properties, both residential and commercial, to ensure that the concerned party is not doing anything illegal. Such organizations include the following: –
- Tax Authorities– The tax is calculated based on the market value of the property.
- Government Agencies– The authorities often need to compensate the existing owners when their properties are taken over for public use or rebuilt to form a public utility building. The concerned agency needs to know the true valuation of the properties to pay the right sum to the property owners.
- The IRS– The tax authorities, especially the IRS, may ask for a “qualified appraisal” for specific tax situations.
A certified appraiser may follow diverse procedures to find out the right value of the commercial property. It may be done to find out any of the following: –
Independent Valuation– The certified appraiser may calculate the value of the commercial property based on specific procedures. It is an impartial assessment of the property’s value, such as a retail store, showroom, or industrial facility.
Market Value– The commercial real estate appraisals are also requested to find the right market value so that the existing owner may sell it at the right price.
