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Buying a Tavern and Need an Appraisal?

by Administrator on Jul 6, 2018 Business Appraisal 231 Views

The initial reaction of most appraisers to that comment is to ask “are you buying the real property, the business entity or both?” It’s amazing when at times you discover that a buyer doesn’t even know what he or she is wanting or trying to buy.  For appraisers the assignment is dramatically different if it’s just a real property appraisal versus a business appraisal that includes the real property.  Most qualified real property appraisers wouldn’t have a problem completing an appraisal of the real property.

If the party needs a business-only appraisal most real property appraisers would pass the client along to someone who appraises businesses.  An assignment can however swerve quickly if it has to include both the real property and intangible assets like licenses and business income and it’s then described by the client as a “going-concern” appraisal including the real property. That usually means that it’s not just a real property appraisal that’s needed, it’s real property together with the business entity.

Real property / business property reports are a point upon which appraisers and their organizations diverge regarding whether an appraiser can consider themselves qualified to complete an assignment.  For many years no one took exception to experienced real property appraisers completing assignments with both real property and business entities.  Times have, however, been changing and valuing a business entity has become more and more of a specialty.

While recent reports indicate that doing business appraisals has not been lucrative work, in fact the fees have been falling, that may be due in part to the fact that no protection has been afforded to business appraisers as it has to real property appraisers.  Some real property appraisers consider themselves competent to complete business appraisals which includes the valuation of intangible assets since many have some courses and some have experience doing them. Others may have had little or no experience completing them but they are not restricted by licensing.

Some appraisal organizations suggest that their members complete specific business appraisal educational courses before they complete business assignments. The problem with the current state of the industry is that there is little or no licensing in place to guarantee that an appraiser has the education and experience necessary to complete a business appraisal.

There are assignment that go beyond the consideration of the real property value and include additionally only the value of a license or licenses.  Without an appropriate license a finished tavern building for example may cost hundreds of thousands of dollars to convert to another use, so a transferable license while a business asset, can effectively become an integral part of a property.  Does that make the appraisal of the building and the license together a business appraisal?  Some appraisers would say “yes” but does that mean you have to have special training just to consider a license?

A business license on its own may have no value, in fact it may be tied to the land and evaporate if not transferred.  There may be a grandfathered license to do something that hasn’t happened on the site for 20 years, maybe never, does that factor still make the assignment a business appraisal?  Having the opportunity to do something on a site sometimes enhances value.

If you continue questions along this vein you get to Overlay Districts.  Some properties in Las Vegas fall into Overlay Districts that allow things like “adult uses.”  Many would argue that since an Overlay District is similar to zoning and runs with the land it’s not a business asset but a real property right.

Some real property appraisers complete “going-concern” appraisals every day that have both business and real property components but the appraisers consider themselves competent.  Few states have any special business licensing in place related to business appraisal.  Licensing was implemented to assure competency so why wouldn’t regulators license business appraisers?  In Nevada the state licenses business brokers, and it makes no sense that they would ignore business appraisers, yet they do.

I’m an appraiser who has appraised many business entities in the past, but I have been doing fewer and fewer over time. I understand that it is nearly impossible for someone to appraise a property like a golf course without being a real estate appraiser first, to understand and correctly analyze the underlying land value, and then someone can go on to consider the business.

I have seen some assignments split with both a real property valuation and a business valuation, with the seller, buyer of lender having to pay for both.  Since licensing is clear that a real property appraiser must do the land some owners would still rather seek out a business appraisal specialist for their business entity.

For more appraisal information contact Glenn J. Rigdon MA, MRICS, IFAS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (, or, or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at

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