An appraisal provides a basis for a decision concerning real property. Society generally perceives real property to be a good investment, allowing individuals to achieve economic goals through the ownership and successful management of real estate. Real estate markets have always been turbulent and probably always will be. Nevertheless, real estate markets remain an important investment vehicle and a generator of economic activity. Commercial real estate includes a variety of property types ranging from professional and medical office, industrial warehouse, multi-family, single family subdivisions, shopping center and freestanding commercial properties; as well as land. Specialized properties include ski resorts, hotel-casinos, golf courses, airplane hangars, redevelopment projects, public infrastructure, right-of-way and master planned communities.
An appraisal may be requested for many different reasons. Appraisal services vary from consultation analyses, complete appraisal reports or appraisal review of another appraiser’s work. Typical uses of appraisals include:
Buying or selling a property.
Loan underwriting.
Appealing real estate tax assessments.
“Just compensation” analysis for acquisitions for freeways, street improvement and utilities expansion projects.
Feasibility studies for a proposed new construction or renovation project.
Estate planning, gifting or settlement purposes including partial interest valuation.
Litigation purposes, expert witness testimony, eminent domain, divorce proceedings.
Property valuation for foreclosure proceedings.
Market-rent analysis for a ground lease or improved property lease.
Assessing one’s own financial position.
Investment counseling and decision-making.
These do not include all possible uses for appraisal services, but do provide a sampling of professional appraisal activities.
The intended use of an appraisal is determined by what the client needs to know or the client’s problem to be solved. Users of real estate appraisals typically include
Private-property owners.
Banks.
Developers.
Attorneys.
Accountants.
Government entities.
An experienced, professional appraiser can assist in many real estate decisions. For example, if you are planning to sell your property, an appraiser using market data arrives at an opinion of market value that can help you decide on a fair listing price. Similarly when buying a property, a professional appraisal can assist you in determining if you are paying market value. Developers may use appraisers as consultants to determine a development plan that will maximize value. Banks retain appraisers to establish the amount of financing they should provide to a borrower.
Appraisers can also provide an opinion of property value as an expert witness for the courts in litigation cases. Appraisers are also needed to provide values for estate taxes or gift tax purposes.
Whatever the reason that calls for a commercial property value estimate, you should engage the services of a licensed, qualified appraiser.
Like the CPA designation for accountants, the MAI or SRA designations signify a high level of professional achievement, years of proven, real-life valuation experience and a commitment to strict professional ethics and standards. The MAI and SRA designations are achieved through rigorous education and experience requirements of the Appraisal Institute.
Cindy Lund Fogel, principal appraiser with Johnson-Perkins & Associates in Reno, holds designation as Member of the Appraisal Institute. Contact her at 775-322-1155 or clf@johnsonperkins.com.
