Utilizing the services of an experienced local appraiser is very important when you are purchasing commercial real estate. An appraiser’s job is to perform a market analysis on the property to arrive at its appraised value. This appraisal value reflects the property’s condition and the current market – all of which can help you make an informed buying or selling decision for the property.
In order to accurately assess the sales price of a commercial property, it’s vitally important to have a current commercial real estate appraisal performed. A significant difference between the sales price and appraised value may be cause for concern.
There are many reasons and benefits for having a commercial property appraised. Some of these are as follows:
Insurance companies that provide commercial property insurance coverage often require a value appraisal that supports the asset replacement cost of a property. The insurable features of the property are used in the valuation conducted by the appraiser. Items typically excluded from the insurance cost estimate can include basements, site improvements, and the underlying land, among other property features.
Selling commercial real estate
When an owner or investor wishes to sell commercial real estate, they often have a natural bias to believe that their property’s value is higher than it actually is. As well, the real estate agent who helps the real estate property owner sell a property may set the sale price too high, hoping to receive a bigger commission. Properties often sit on the market longer than they need to because of overpricing. On the other side of the coin, a property priced too low is often the result of inexperience and/or lack of knowledge about property values and selling property. It is for this reason that using a commercial real estate appraiser is highly recommended. An appraiser can provide an unbiased estimate of a property’s value based strictly on current market conditions.
Purchasing commercial real estate
When a buyer purchases real estate they are often looking for the best deal they can get. For the buyer, sometimes it is advantageous to obtain a confidential appraisal prior to entering into negotiation. With this appraisal in hand, the buyer can negotiate the sale price more effectively with the confidence he or she is not paying more than the property’s market value, at a minimum. A seller may obtain an appraisal as well. In some instances both the seller and buyer may agree to hire an appraiser in cooperation with each other and use the appraised value calculated by the appraiser to determine the sale price.
At times, incorrect real estate assessments performed by local government authorities can occur due to volatile real estate market conditions. When property values fluctuate arbitrarily as a result, property owners can end up paying much higher property taxes than they should. A reliable local appraiser can provide a homeowner the appraisal they need for an appeal to their property’s assessment. This type of proof is helpful in making an appeal that will hopefully result in a reduction of the owner’s property taxes.
When you need to use funds from the refinancing of an existing loan or borrowed capital for a real estate purchase, your lender may require an appraisal of the property. The lender may require this in order to have confidence it can sell the asset for the loan amount if the borrower defaults on payments and the property is foreclosed upon.
Estate planning and settlement
For the relative of a deceased loved one, the estate settlement process can be a difficult. However, it is a necessary process when the loved one has held estate assets. Any real property that is part of an estate and requires an evaluation of market value must be valued by a competent real estate appraiser. This often includes having a forensic retrospective appraisal performed to establish the fair market value of the property. Estate planners, beneficiaries of the estate, executors, attorneys, trust administrators, court-appointed receivers, accountants, enrolled agents, partnership entities, and corporations can all utilize appraisals for estate planning purposes.
Have you been harmed through the failure of an insurance company to fulfill its insurance policy obligations? If so, McWherter Scott & Bobbitt can fight vigorously on your behalf to help you receive prompt payment on your claim. We offer our services to residents of Nashville, Chattanooga, Memphis, Jackson, Knoxville, and throughout Tennessee. To set up a free, no obligation consultation about your claim with Jonathan Bobbitt, Clint Scott or Brandon McWherter, fill out our contact form or call us today at 731-664-1340.