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What Does a Commercial Appraisal Cost?

by Administrator on Feb 8, 2015 Business Operation 643 Views

Like any general question that lacks specific detail the question "what does a commercial appraisal cost?" can't be answered, but if we create a question like, "how much would it cost to  complete a current, "as is" commercial narrative appraisal report on a detached, single-user, 5,000 square foot office building, with no rush, for acquisition or disposition purposes?" Then you will get bids for that specific service.

To give you some idea about the cost of the office appraisal that I described I called a few cities to see what kind of bids that I would receive.  In Phoenix, NV I got a bid for a complete narrative appraisal as described for $ 3,200.  In Salt Lake City, UT I got a bid for the same type of job at $ 2,600, in Sacramento $ 3,500 and in Las Vegas I got a competitors bid for $ 2,800. I contact other appraisers in Atlanta, Austin and Seattle and the bids were surprisingly not that dissimilar.

Of course the appraisal bid would likely have been higher if the building was an office building with 20,000 SF or 50,000 SF not simply because it would be a larger building but because it takes more time to inspect and describe and it takes more time to analyze the income stream since larger buildings generally have more tenants.

It's likely that different appraisal firms would have provided an even wider range of bids because some are well known and can command higher fees while others may have a higher overhead.

If you search on the Internet and find a generic appraisal service site, one that isn’t owned by an appraiser in the market area that you are seeking an appraisal service in, you definitely won’t get any information on the property or even a quick response.  What people who own these sites do is take your information and contact a real appraiser in a market area, take their bid and add a fee to it, and call you back with the inflated fee. 

It’s my opinion that sites of this type shouldn’t be allowed to exist, but I have found them in many markets.  When the same logo comes up over and over again and when you click on “contact information” and you get only a phone number which isn’t even in the correct area code, you know you are going down the wrong road.  If you call you will not be talking to an appraisal expert in the area you need services in but a “transaction coordinator” who knows nothing about the area.  Take the time to ask the party who answers your phone call a couple of simple questions about the market area.  Do they know the major arterials roadways?  Can they tell you about the market?  Can you hold while they look up the property and give you Assessor details?

If an appraiser is licensed to perform an appraisal assignment that doesn't mean that he or she is qualified to complete it.  For example many appraisers have never appraised a golf course.  I have and I would accept an assignment of that type.  If however I was called and asked to bid on a Las Vegas gaming property, I would disclose the fact that I haven't completed an appraisal on that property type.

Many potential clients shop for appraisal bids, and for some of them it's all about dollars and cents.  They don’t care how much experience you have, what your designations and degrees are and they don’t care how many years you have been appraising. 

Others potential clients are more interested in how long it will take to complete the assignment since they have a deadline.  I have had clients who want an immediate response on a Saturday afternoon.  They ask “can you inspect it today?” and “when can you have it completed for me.”  If it’s not soon enough you will hear a click or they will begin a negotiation for an expedited service.    

There are also a few clients who believe that their property is so special that only certain appraisers can do their appraisal work, so they usually end up paying more for their services.  It would be nice if individuals who are so selective that they don’t like the way you answer your phone do their research before they call.  Personally I don’t pay for a secretary to answer my phone calls and I’m not a secretary so you don’t get the same kind of telephone answering sweetness or formal phone answering from me, half the time you will probably get me on my hands-free car phone.

The choices available to a client and their motivations can make a big difference in what the ultimate fee will be.  If a potential client has been directed by a financial institution to a specific appraiser the client may end up paying thousands of dollars more than a competitive appraisal would have cost them.  The appraiser who you have been directed to by the bank knows that you have no choices as soon as you mention the bank’s name, so grab your wallet.

As I mentioned the best way to know who you are talking to is to spend a few minutes on the Internet before you make your phone call identifying the firm and the appraiser.  It’s best to know who you are talking to, otherwise you end up talking to someone who knows literally nothing about your property, nothing about the market and nothing about what it will take to complete your assignment.

Having to bid for appraisal assignments is not an easy task.  As soon as you think that you know where the market price is for your services you can lose several bids in a row.  If you bid too low you can regret having done it and spend painful time completing a task for very little compensation.  So appraisers bid low during lulls in the market and bid higher when the real estate market heats up. 

For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email at grigdon@cox.net or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.

Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/General-Appraisal-Articles/Business-Operation//4532-What-Does-a-Commercial-Appraisal-Cost.html

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