There are many reasons a commercial real estate appraisal might be needed. Some examples include:
- Helping prospective sellers set selling prices or prospective buyers make decisions about offering prices
- Assisting the lender in establishing a value of security for a mortgage supporting lease negotiations
- For tax assessments
- For appeals of tax assessments
- To help with business dissolutions
- For corporate mergers, issuance of stock, or revision of book value
- For government purchase of private property for public use
- Determining the cost of damages created by weather conditions or environmental contamination
- Determining gift or inheritance taxes
- Assessing potential construction or renovation of a property
- Estimating the liquidation value for forced-sale or auction proceedings
- Advising zoning boards, courts, planners, and other government officials regarding the probable effects of proposed actions
Whatever the reason an appraisal is needed, everyone agrees that the faster the appraisal process goes, the better. If an appraisal is taking longer than it should, the transaction timeline can be negatively impacted and possibly derail the deal.
Here are some tips to ensure a timely appraisal turnaround for commercial real estate transactions:
Provide Correct and Accurate Information
Many documents can be requested during the appraisal process. Providing correct and accurate information the first time will move the appraisal along. The information requested is necessary for the appraiser to do his or her job effectively and so he or she can abide by the industry’s code of laws and regulations. Some documents commercial real estate investors or buyers might need to provide include:
- Site plans
- Building drawings
- 3 years of income statements
- 3 years of operating expenses
- Leases
- Rent rolls
- Tax information
- Intended use of the asset
- Results and reports of any environmental assessments
Be Clear about the Intended Use of the Appraisal
Because there are so many reasons an appraisal might be ordered, it is important to be clear about the intended users of the appraisal and why they will be utilizing it. With information provided, the appraiser will tailor the appraisal to the specific needs of the party requesting it.
Manage Assumptions
To keep the appraiser from making inaccurate assumptions, make sure every missing or expired lease is addressed or explained; explain how the property is valued—either in fee-simple ownership or leased fee estate; if necessary, include “to-be” estimates along with any “as-is” information.
Manage the Timeline
Requesting the appraisal as soon as possible will get the appraisal in the appraiser’s queue. And while you’re waiting for the appraiser to handle your request, do everything you can to gather the necessary documents so they’re ready when it’s time for your appraisal to be conducted.
Timely Responses Make an Impact
Whenever an appraiser asks a question of any party involved, it is very important to respond as soon as possible. Providing clarification and answers the next business day or later instead of the same business day can significantly slow the appraisal process.
Work with a Trusted Appraisal Management Company
When a bank or lender is requesting an appraisal, working with an AMC like Oxford AMC can keep the appraisal process moving along. Oxford will keep all parties in the know, effectively manage the appraisal process, and partner with you on a long-term basis so future appraisals are also completed in a timely manner.