Commercial Appraisers

Commercial appraisers do substantially the same job as their counterparts in the residential market, although there is one extra factor which they have to consider. Commercial property is there to help the businesses renting or buying it to make a profit. Part of the appraiser's job in a commercial environment is to assess this potential and quantify it.

Appraisals in the residential market begin with a detailed analysis of the land site, and any property located upon it. This is used to compile the report upon which the lender will rely when deciding whether to lend money on the property, and if so, how much to lend.

The appraiser will then produce a detailed statistical analysis of the property market in the area, paying particular attention to any substantially similar properties which have sold in the same area, or in other nearby areas where the statistics show that property tends to sell for similar dollar values.

The commercial appraiser operates in a substantially similar way. Assessment of the site value is often more difficult as the vast majority of commercial sites can be used for more than one purpose. The perceived value of the site will be different for each business which will consider buying it. The appraisal will need to be based on the potential borrower's intentions to a large degree, as they are the ones who will have to pay back any loan. Nevertheless, the appraiser mush also be aware of any potential improvement in value which may be conferred by a change of use.

The analysis of the site and the property itself should be relatively easy, especially if the property is located in an area where many other properties of the same type and size have already been built. The identification of structural faults which could necessitate extensive repairs is one of the most serious responsibilities the appraiser will face. Overlook something here, and the consequences for the potential lender could be severe.

The other crucial part of the report, the assessment of value based sales of similar property in the area, or in areas where property tends to sell for similar amounts, can be harder for a commercial appraiser. Many industrial units are built in bulk, and sold or rented to businesses in advance. These properties can have the same occupiers for decades, meaning that the volume of traded property is small in comparison with residential property, and even with other sites of industrial property.

This is the point at which the commercial appraiser has extra work to do. Having completed what is basically the same process as a residential appraiser would have done, the commercial appraiser now has to try and assess the potential return a business can expect to receive from the site. This is never an easy assessment to make, as there are many variables which can influence this.

Businesses slect properties for a variety of reasons. Retail businesses will choose property where they have easy access to customers, usually in an area where shoppers congregate, whereas warehouse businesses are more interested in proximity to good transport links, allowing for the quick and easy movement of goods on and off the site. These are all factors which need to borne in mind by the commercial appraiser.

Appraisers, Real Estate

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