When you buy something, you always know what you pay, but you don’t always know what the item is actually worth. This is especially helpful to know when it comes to your property, especially if it’s a piece of commercial property through an appraisal. But when do you need a commercial real estate appraisal? Can you just do it yourself?
We break down some of the biggest myths surrounding appraisals below.
Myth 1: You Can Do a Commercial Real Estate Appraisal Yourself
No, you cannot. Getting a commercial appraisal isn’t something that you can get from browsing commercial listings or looking up benchmark values from Google. Appraisers are extensively trained, nationally accredited, and understand the nuances of property. There’s often a lot of paperwork involved, in addition to understanding what components and conditions of a building actually improves or decreases the value of property or equipment.
Plus, appraisers’ years of experience in the field can give you a much more accurate estimate of what you could sell for. They’ve witnessed past and present trends that inform their current decision as well as understand how trends will impact value in the future.
Myth 2: The Final Appraisal You Get Is the Exact Market Value
No, it is not. The values of properties and equipment change monthly, weekly, or sometimes even daily, so the final appraisal you get is as accurate as possible but isn’t a 100% exact figure. Depending on the day (if you decide to sell) you could get more or less than what your commercial property was appraised for. Appraisers give an opinion of market value as of the effective date of the appraisal and its exposure time. This is the period of time preceding the effective date of the appraisal. Exposure time is an opinion of the length of time a property would have been exposed to the market in order to sell at the appraiser’s opinion of market value (typically 6 – 12 months).
Myth 3: Appraisers Just Make Up What a Commercial Property Is Worth
This couldn’t be further from the truth. Appraisers spend significant resources and attention pouring over the details of determining the proper value of commercial real estate and/or commercial equipment. This is why commercial appraisals aren’t something that can be done in a day. It typically takes a couple of weeks to get a complete estimate. In fact, the final appraisal report itself can actually be up to 100 pages long in some cases.
Appraisals are a detailed process that appraisers put extensive time and effort to provide the most accurate picture of what something is worth. Through them, businesses can get a good understanding of the value of both their property and equipment and better leverage that in future business decisions.