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[{"id": "hepnrd2", "text": "Both are relevant.  The appraisal will be based off of comps and systematically compared to your property. There are always issues with the comparison and it is not always very accurate- especially with unique properties.  But the bank does rely on it so it will play a role in determining how much a buyer can borrow to finance the acquisition. \n\nA true Broker Opinion of Value (not just a verbal guess at value) is probably closer to the true value provided that the broker has experience selling similar assets and understands the buyer pool for the asset.  \n\nI would suggest that you ask a few brokers for a BOV and see how they compare.", "replies": [{"id": "hevkyly", "text": "A 2018 appraisal is no longer relevant.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hepo5ji", "text": "You need to do your own research on whether the excess land is big enough to build on or split out. That will answer your question. If it has extra labs that really isn't useable than the income of the property is all that matters. If someone could potentially add improvements to the property or replat it into a separate parcel there is additional value to be considered on top of the property income. \n\nI would hope the appraisal talked about the land size in the highest and best use section. Did they make adjustments for the excess land?", "replies": [{"id": "hepq990", "text": "The appraiser mostly mentioned that traffic count and the desirably of the location. He said there is development potential if you were to purchase and rezone a few neighboring properties. \n\nHe mostly talks about comps. The most similar property sold for $1.05m last year and mine is double that lot size but smaller building. I will be talking to another broker though.", "replies": [{"id": "heps84x", "text": "If the only way you can develop the land is by acquiring neighboring lots then the current size of the lot does not contribute much value to your property  The building and it's income potential is most important.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hepsmr6", "text": "a BoV (and especially an appraisal) is problematic without a sales comparison approach", "replies": [], "depth": 1}, {"id": "heptqlw", "text": "Not enough info to give you a meaningful answer.", "replies": [], "depth": 1}, {"id": "hepush8", "text": "Appraisers can use different methods/approaches to appraising. 1. Highest Use/Value. 2. Income Approach or 3. Replacement cost.\n\nBrokers usually focus on comparable sales, cashflow, &amp; who the most likely buyer is. If it's more of an investment type property (going to be sold to an investor) all they care about, mainly, are the numbers. If it'd be sold to an owner occupant, some of them can pay a lot more (Walgreens can &amp; will pay more, because they can make up the difference in sales).", "replies": [], "depth": 1}, {"id": "hepuuz7", "text": "There are different valuation models.  An appraiser should run all or any relevant model to come up with an appraisal value and should be less biased.  A competent agent should do the same but usually they only run one model,  will be less technical and more based off his experience in the local market.  \n\nThe agent has an incentive to price lower, if you will allow him so he can more easily make a sale.  Real estate is no where near a perfect market so your sale timeline will affect selling price.  If you want a sale within a week the agent might be closer, if that perfect buyer at 1mill is not in the market at that time.  If your willing to wait a year, the appraiser may be closer to its true value.", "replies": [], "depth": 1}, {"id": "hepwymz", "text": "You need to talk to another broker and hire another appraiser.  If you hire a new appraiser, make sure it's a local person with an MAI designation.  Without a ton more info, 3 year old appraisal isn't worth much, and the fact that there's a $600k difference between the appraisal and what your broker is saying means spending $5k on an appraisal is well worth it.", "replies": [], "depth": 1}, {"id": "hepx7qw", "text": "The lender only cares about cash flow value. How much cash does the property generate and how much debt can it service. This can be drastically different to what an investor may pay for a property based on its perceived value / upside / development potential.", "replies": [], "depth": 1}, {"id": "hepza0v", "text": "Are the broker's assumptions/facts true? Can the land be developed or not? Get that answer and you'll have your valuation answer.", "replies": [{"id": "heqr0mk", "text": "And find out: what is the variance procedure in your jurisdiction? What is the process for making an exception (variance) or rezoning to higher use. How did it get to be commercial if you can't develop it?  What is the current zoning? what structures and uses presently exist on the property? Sounds like you should do more due diligence on your own property, especially if you lean toward the higher value.", "replies": [], "depth": 2}], "depth": 1}, {"id": "heqampp", "text": "I\u2019m speculating they are both correct, but used entirely different methods to determine the property value. \n\nThe broker is providing his best determination of the \u201cAs-Is Value\u201d of the property using the income approach methodology. \n\nThe appraiser\u2019s value is some type of prospective value (as-complete, as-stabilized). Read the appraisal fine print, especially the sections pertaining to extraordinary assumptions, highest and best use, and zoning.", "replies": [], "depth": 1}, {"id": "heqcx1s", "text": "Sounds like a highest and best use.  Solve that first.", "replies": [], "depth": 1}, {"id": "heqsefp", "text": "Broker here. \n\nIs it currently producing income (already a lease in place with a tenant)? If so, then the value of the real estate in most circumstances will be solely based on that income. This would also be assuming there is a lease term greater than 2-3 years. This is due to the buyer pool for such a property being made up mostly of investors. If there is no lease in place or has less than 2 years and no lease extension options the tenant can execute at will remaining, then the real estate will be valued from a land/development play because a developer will be able to come in and add value to the real estate. \n\nTLDR: the appraiser is probably closer to value if there is no lease jn place, if there is a lease with more than 2 years (give or take) remaining, then the broker is probably closer in value", "replies": [], "depth": 1}, {"id": "heqt8i7", "text": "I do not hesitate to hire another one especially it is an unique property.  2018 is a long time ago can not be used today. \n\nAll the best.", "replies": [], "depth": 1}, {"id": "her0frh", "text": "Brokers are only good for tossing around files. They dont know shit to begin with.", "replies": [], "depth": 1}, {"id": "herm2q0", "text": "I am both a broker and appraiser. As a commercial real estate appraiser, yes we know how to value commercial real estate. That\u2019s literally our entire specialty. We are analyzing BOTH the land value and the income producing value. Certified General Appraisers spend approximately 3 years studying commercial real estate valuation methodology in order to become licensed.", "replies": [], "depth": 1}, {"id": "hesrvsw", "text": "What\u2019s the highest and best use of the property?  That\u2019s the basis of any real estate evaluation.  Typically you\u2019ll want to use a combination of the sales comparison approach, the income approach, and the cost approach and place weight on the most appropriate method - what would a \u201ctypical\u201d investor focus on?  A single family, most buyers focus on sales comps, while with  a 20-unit apartment building, the focus would be on the return and the income approach will get the most weight.", "replies": [], "depth": 1}, {"id": "hevsv1i", "text": "Have you considered calling the city?  \n\nIf one person told me my land was worth 500k because the city was going to fuck me on zoning and one person said nah it be fine, its worth 1.1 mil don't worry about the city, I mean I'd call the city and have a chat about this personally.\n\nAlso never trust a bank appraisal for anything.  You aren't the client, and their info is limited.  They don't have to sell it, and they aren't going to take the time to do a full development analysis on it.  If you want that it will cost way more than a lending appraisal does.", "replies": [], "depth": 1}, {"id": "hezu6ft", "text": "There should be a zoning analysis section in the 2018 appraisal. Ask the broker what specifically is incorrect in the zoning section. Does the appraiser misreport which uses are permitted at the location, or did he misreport the development envelope? \n\nIdk what he means by \"not zoned for development\". Are there special restrictions for this site? \n\nYou can also review the local zoning code online.", "replies": [], "depth": 1}, {"id": "hgduxgg", "text": "Hi! that broker is ripping you off \n\nget a second, 3rd opinion, its your money, your time your investment :)\n\nalways get 2nd and 3rd opinions", "replies": [], "depth": 1}]