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Many are dumbfounded by the process commercial appraisers go through to complete an appraisal of their property. They often don’t understand why the appraisal fee is so high and why we are quoting anywhere from three to six weeks to complete their appraisal. It is my sincere hope that this article will shed some light on the appraisal process.

Conversely, last year we appraised a ski resort. The income approach drove the appraisal process, and suffice it to say that it took many more man-hours than the industrial building described above. Simply put, the scope of the assignment was far greater, hence the time into the assignment and the resulting appraisal fee were higher accordingly.

Further, the size of the property has little to do with how complex the appraisal process will be, or become. Some of the most difficult commercial properties to appraise can be small mixed use properties, such as a retail building with a house behind it, or office over retail. This is because there few similar property transactions, thus cash-flows and sales data sets need to be blended.

To come to that conclusion, however, required the Appraisal Guys of each of the properties individually, followed by the appraisal of the land underlying the properties. To make things more difficult, land sales of that size in that market were very hard to come by and required significant analysis. Samples of each can be reviewed on our Sample Appraisals page of this site. More often than not the user of appraisal services has little control over the required report format.

If the appraisal assignment is complex, however, it becomes more likely that a lender will require a full narrative analysis, which can cost thousands of dollars more than the same commercial appraisal reported in a summary format. It is important to note that USPAP defines the level of detail that is contained in each of these formats, but that no matter the reporting format, the scope of the appraisal is to be the same.

The most economical of formats, the restricted report, is what some refer to as a letter appraisal. However, these reports can be relied upon only by the client thus, if there is potential that a third party will need to rely on the value conclusions, this format is not allowable. A great example would be the appraisal of a property for estate taxes. However, we are often called upon to complete a commercial appraisal for purposes where the restricted format is allowable.

To sum it all up, the best advice I can give anybody in need of a commercial appraisal, is to give the appraiser as much latitude as possible. If you have it in your power to utilize a restricted report, your fee will be lower than if you require a summary or a full narrative appraisal. If you have a recent appraisal of the subject, or confirmable comparable data that is useful, let the appraiser know. Most importantly, if you can order your appraisal with a due date of four to eight weeks out, you will no doubt get a better fee quote than if you wait until two weeks before you need it.

Published at: Recent Health Articleshttp://recenthealtharticles.org

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