How to Review a Commercial Appraisal in Canada
Are you moving your business to a new location? Then getting a commercial real estate appraisal done before you sell is definitely worth your time. Firstly though, it’s important to understand what a commercial real estate appraisal is, how to review a commercial appraisal, and how you can improve the value of your commercial real estate property.
What Is a Commercial Real Estate Appraisal?
A commercial real estate appraisal is an appraisal of commercial real estate property to discover the true value of what it’s worth. The most common type of properties that fall under this appraisal includes multifamily housing units, office buildings, or retail spaces.
There’s more value to this kind of appraisal though than just understanding what a commercial building is worth, they’re also important for underwriting. Typically, lenders won’t lend more than an asset is worth, so a commercial real estate appraisal helps lenders determine how much financing they can safely provide.
How to Review a Commercial Appraisal and What You Need to Know About Evaluations
Commercial property appraisals are designed to be relatively easy to review when they’re complete. They will have what you need to know detailed in the final document. The actual appraisal process itself may involve one or all of the following approaches:
- The cost approach
- The income approach
- The direct comparison approach
Each approach looks at appraising differently and may be used in combination with other approaches to better define the true value of a commercial piece of property.
How You Can Improve the Value of Your Commercial Real Estate Property
There are no shortcuts to improving the value of your property but there are a couple of things you can do that will help increase its value.
1. Maintain the Building
As boring as this tip may be, it’s one of the best ways to keep the value of your commercial real estate high. Properties and structures that are in good condition and running smoothly are naturally more favourable for buyers, so by staying on top of everyday maintenance and replacing or repairing systems as necessary can greatly improve your property’s worth.
2. Add More Ways to Generate Revenue to the Building
The income approach is often used in commercial real estate appraisals, so by adding additional ways for your property to increase your income like coin-operated laundry, a parking garage, or vending machines, the value of your property can also improve.
Overall, commercial real estate appraisals are definitely worth your time and money to get, even if you don’t plan on selling your property anytime soon.
