Commercial Property Appraisal, Preparation For

What can make my commercial property appraisal process go more smoothly?

No one knows more about your property than you do. It is helpful if you put together a file for your loan officer or attorney with the following documents:

Leases in place
Purchase agreement
Any recent offers to purchase
Historical expense information
Recent rent roll
Receipts for repairs and improvements
Bids for pending repairs
Previous appraisals
Copy of floor plan or proposed project blue prints
Name and phone number of the manager and real estate agent

In addition, if you are aware of any recent leases or sales on your street or in your area this is also very helpful. Sometimes recent sales that could help with your commercial appraisal take a few weeks to be picked up by reporting services, thus the only way your appraiser has to learn about the transaction is through you or your commercial real estate broker.

What will slow down my commercial appraisal?

The following items may potentially slow the appraisal process and the closing of your loan:

Missing Construction Information – Especially blue prints for a proposed building or a cost bid for a proposed building. Both blue prints and cost information are required in order to legally submit an appraisal of a proposed property to a bank.
Missing Income Information – Signed copies of final leases are required exhibits for Self-Contained appraisal reports. Current rent rolls are critical for all multi-tenant, income properties.
Conflicting Information – For example, if the appraiser is told a building is fully occupied, and they inspect the property and find it to be 50% vacant, then they are obligated to research what is occurring at the property on behalf of the parties who will be relying on the appraisal. If your report was to be due at the bank in a few days – it is not going to happen.
Inability to Access the Property – Such as apartment units that can’t be inspected.
Aberrant Transactions - An unusually high sale or low sale, or unusually high or low rents in place.

It is best to inform your loan officer of any unusual circumstances associated with the property early on. Your loan officer handles many complex transactions all year long. Often they can develop a wise solution if they know soon enough about any unusual aspects of a property.

Jennifer L. Chandos, of Chandos Pacific Appraisal is a San Diego Commercial Appraiser, who has underwritten over two billion dollars in commercial property and has over fifteen years in private practice.

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Commercial Property Appraisal, Preparation For