Is the Value of Your Commercial Estate More than the Selling Price?

Commercial properties have their worth in billions. Commercial properties can be offices, factories, warehouses, shops, malls, or any others that are meant for trade and business. The prices of commercial estates vary as per market fluctuations and various internal factors.

Commercial Property Appraiser – Inevitable

Evaluating a piece of commercial property is much tougher than finding out the price of a residential apartment. Moreover, at times, you could do without a professional appraisal for your residential property, but doing the same to your commercial land is a grave mistake. Thinking of selling your business without involving a commercial real estate appraiser is a risky proposition. You could get into legal hassles and further problems with your client to whom you sell your property.

Selling off a commercial piece of property or the whole of a business is a decision not done based on mere likes and dislikes unlike residential property dealings wherein the emotional factors play a prime role. You don’t decide to pay a certain price for a piece if it is located opposite to sea just for the love of sea breeze. Similarly, you cannot buy a business for the love of its brand name and popularity in the industry. You could do these things in case of a property dealing of a personal nature, but commercial real estate dealings go much beyond that.

Appraisal Parameters

Factors like the state of bankruptcy, condemnation, insurance valuation, machine and equipment assets, and partnership disputes contribute to the overall valuation of a commercial piece of property. Even if you are a small or mid-sized company, you must go for a Commercial Real Estate Appraisal carried out by legally certified professionals. There are many legal aspects attached to many commercial estates which need to be resolved before selling them off.

Pointers to Note:

1. Time - A commercial real estate appraiser will inspect your property thoroughly before noting down his findings. This is the 1st step toward evaluating a piece of commercial property. The complete appraisal process may take several weeks.

2. Honesty - If you have hired an appraiser for your property’s evaluation, be honest with him on every single detail. Lying to him could land you in a ligation hassle where the only winner will be the appraiser. Keep in mind that he is an expert at legal matters and not you.

3. Transparency - Provide all the necessary documents to the appraiser if you want him to come to a sound and real valuation price for your property. Withholding certain information may not give a complete picture of the value of your property.

4. Breach of Ethics - If you feel that an appraiser is being biased on a certain matter, you could drag him to the court for breaching the laws set down by the Canadian Uniform Standards of Professional Appraisal Practices. Appraisers are bound by laws to follow certain standard rules and ethics

5. Intentions - Communicate clearly to the appraiser about your underlying interest in getting the property appraised. Whether you need to sell off the property, lease it, or buy it, be clear on your intentions with the appraiser.

6. Confidentiality - The appraiser report shouldn’t be shared with any random party. Only the one (client) who got the appraisal done, the opposite party (to whom the property will be sold), and the

local property tax appeal board are authorized to refer and use the report. The appraiser is supposed to maintain confidentiality with his client’s valuation report and not spill the results without the latter’s permission to any other party.

7. Appraisal Date - The date of appraisal could be the date of inspection, past date (retrospective), or future date (prospective). Analyse your needs and get it done accordingly.

If you are planning to sell off commercial property to a party, make sure you know the real market value before you finalise the deal. With a professional property appraisal done, you will ensure that you do not quote a selling price that is less than the actual value of your property. I’m sure you don’t want to incur losses!