What to tell your real estate appraiser?

July 24, 2016

Everything! Us appraisers we are curious folks read both strange and inquisitive… When we begin an appraisal engagement we often know very little about your property and its history. Bringing us up to speed in a quick and organized fashion is a great way to give us confidence that you are both sophisticated and up front with the information requested. During our engagement we will be seeking and confirming data from a variety of sources including public records, market participants, lenders, etc.; when data doesn’t sync up between sources we need to take a step back and dig deeper.
Oftentimes to begin an appraisal we are looking for:

• Copy of most current real estate tax bills
• Copy of survey
• Copy of basic building floor plan
• Copy of easement agreements
• Information on the cost to maintain the property: landscaping, snow, and maintenance, and insurance (property only) for the past three years
• Information on any sales (or purchases), offerings, or options over the past three years of the property

One example, having your leases organized in PDF format where you can share them with us quickly will speed up the appraisal process and ensure that the final conclusion is thorough without unnecessary Extraordinary Assumptions.
Another example is to have your building’s operating expenses for the past three years available to us in a summarized format. This allows us to see how your building performs relative to others. Some shopping centers we appraise are in northern Michigan where there is a snow belt – understanding how this affects the CAM expense is important in our income capitalization approach to value.

That said, it is not critical that you have all (or any) of the subject property’s information. We have appraised properties across Michigan for clients that were not the owner, but who wanted to know the value for a prospective purchase on a confidential basis. In such cases we undertake the same level of due diligence, but focus instead on public records and other confidential sources to produce the most credible appraisal possible.

So, when you engage an appraiser to value your commercial real estate, be organized and transparent about your property so the appraiser can be efficient and thorough with his analysis.

Please feel free to contact us with any questions you have about commercial real estate appraisals in across Michigan.