The Key Factors Commercial Appraisers Look For

A commercial property appraisal is a crucial component in purchasing a commercial property. It helps to determine the property's value, informing the business owner if the investment is worth it. Commercial property appraisals are so effective that realtors win multiple offers by using appraisal addendums when making an offer. Understanding how the commercial appraisal process works and what appraisers look for can help buyers and sellers properly prepare for a property sale.

What Do Appraisers Check for During a Commercial Appraisal?

When comparing a commercial property to another in the same location, appraisers look out for several factors. These factors include the following:

  • The Property’s Location
  • The General Condition of the Property
  • The Age of Property
  • The Building’s Design
  • Safety Features
  • Size of the Property

The Property’s Location

Location plays a crucial role in the valuation of real estate properties. When estimating the value of a commercial property, appraisers will look at its location. They assess if the company is located in a valuable commercial area and the other commercial properties in the location. They also assess the property’s proximity to valuable social amenities. The more valuable the location is, the more value the property will have. 

The General Condition of the Property

Another important factor appraisers look out for is the property's general condition. During the appraisal process, the appraiser takes note of the general details of the property: This includes the property's condition, the materials and finishes used throughout the property, and other notable physical aspects of the property. The appraiser will also scan the property’s upkeep and evaluate maintenance-related issues. If they discover anything that seems structurally unsafe or unsound, it will be noted and taken into account for valuation purposes.

The Age of the Property

Many business owners are unaware that appraisers look for the property's age during a commercial appraisal. However, this significantly impacts the property’s value: A new property is often valued more highly than a similar but older property. But both old and new properties offer their unique advantages and disadvantages.

In fact, just because a real estate property is new doesn’t guarantee that it will be appraised at a higher value. This is because some older buildings are sometimes better maintained than newer ones. Also, they are often located in historic districts, which increases their value. Nonetheless, the age of a commercial building will impact the appraisal process. 

The Building’s Design

Appraisers ensure that they take the design of the property into account. A commercial building that hasn’t been updated for several years or is extremely dated may perform poorly during an appraisal. This is because an outdated property will only appeal to a limited number of buyers, making it more challenging to sell.

Safety Features

During an appraisal, the appraiser looks out for specific safety features in the property. For instance, the appraiser will look out for smoke detectors. They also check for signs of infestation. Although the appraiser won’t perform a full pest inspection, if signs of an infestation are noticed, it can impact the appraisal score negatively. 

Size of the Property

The size and use of the commercial property is a key factor that impacts its value. When appraisers appraise a commercial building, they consider other properties of similar size and use in the area. They ensure they measure the property’s square footage. The size of the interior and exterior parts of the building will be put into consideration. 

Appraising a commercial can be complex and challenging for some appraisers. Based on this, many appraisers have adopted the use of advanced technology to ease things and achieve more accurate results. 

Valcre is an end-to-end appraisal platform and software many appraisers now use for their processes. It is designed to empower users with a more organized, intelligent, and efficient path for commercial property appraisal. 

To learn more about how Valcre works, reach out to us today.