An appraisal of a commercial property is a complex procedure and involves a lot of paperwork and some legal formalities. It can seem even more complex if you have never had it done it before. There can be several visits by the appraiser to your property and several rounds of discussion with various parties involved. The nature and scope of work also vary from property to property and the appraiser may adopt various techniques for appraisal depending on the type and location of the property.
Here are some of the most common questions and their answers related to the appraisal of a commercial property:
Q 1: What is a commercial property appraisal?
Ans: An appraisal is a procedure to determine the value of a property through well-established norms. The property can be of any type-shopping mall, office complex, hotel, factory or a warehouse. The appraisal can help in the process of buying or selling, taxes and various other purposes.
Q 2: Who conducts an appraisal?
Ans: A professional appraiser, who is usually a real estate company, can assess the value of a property. The historical data and value of other properties in the area are taken into account, apart from various other factors. There is a scientific approach in the collection of various data and their analysis. An appraiser requires a license to operate in many Western countries. However, there is no such requirement in India.
Q 3: What is an appraiser required for?
Ans: There are occasions when an appraisal is required. When the property is to be sold, the seller wants to have the maximum possible price for it and may initiate an appraisal process. The buyer of the property may start an appraisal if the amount asked by the buyer is too high in his/her opinion. There are times when the government wants to assess the value of a property to ask for the correct taxes or for compensating the owner if the property is being taken over for public good.
Q 4: Who can initiate an appraisal of a commercial property?
Ans: The owner or the manager of a commercial can initiate an appraisal process for the property. Sometimes, the buyer of a property on sale can also initiate the process with prior permission from the seller. Sometimes even the government can begin an appraisal. It is to be noted that the government does not need prior permission from the owner of the property.
Q 5: Who pays the appraisal fee?
Ans: The party which is initiating the appraisal process will have to bear the appraisal fee. However, there are cases when the buyer of a property on sale passes on some or all of the appraisal costs to the owner, especially when the owner also wants to get a fair valuation done.
Q 6: How to look for a professional appraiser?
Ans: The first step towards finding an appraiser is looking at your own needs for appraisal. Sometimes, you may want to know the value of your own property (such as when you want to sell it). When you have decided what kind of property is to be appraised, then you must conduct a thorough research as to which appraisers are capable of carrying out the appraisal process for such a property. Internet research can help you somewhat in that. Once you have shortlisted a few appraisers, then a physical visit to their office and getting quotes of their fees will help you further decide whom to settle for.