Should I get an appraisal before I list my commercial property?
I might be in the market to sell a commercial property in the coming months. Would it be worth it to pay 3-4K to have an appraisal done to know the approximate value instead of relying on a brokers opinion that's just trying to get the listing?
[{"id": "gr2ynav", "text": "How large is the property? The price seems a bit high but I don\u2019t deal with appraisers too often. I would say reaching out to a small handful of brokers and asking for a BPO and tell them you are doing it for accounting/will/tax purposes versus to sell (so they tell you an honest price) is a cheaper route, potentially. \n\nIMO, if it will get the property sold for 3-4K more then it is worth it in the end \ud83d\udc4d\ud83c\udffb", "replies": [{"id": "gr37lbj", "text": "2 buildings that total a little over 12k sq. feet. Office/warehouse use.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gr2zmhd", "text": "An appraisal probably isn\u2019t worth it, but what kind of property is it? \n\nIME BPO\u2019s tend to err on the generous side, which is what you want if you\u2019re a seller.", "replies": [{"id": "gr37jm2", "text": "2 buildings that total a little over 12k sq. feet. Office/warehouse use.", "replies": [{"id": "grbgejh", "text": "I\u2019d go with a BPO.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gr2zr72", "text": "Not unless the property is worth over $5 million, and even then I probably wouldn't. A good broker will be able to gauge the value of your property as well as any appraiser, and a bad appraiser will screw up the appraisal just as much as a green broker can.\n\nReach out to a couple of the most active brokers in the market, tell them that you're interested in selling and that you would be interested in seeing an opinion of value. I would be honest and let them know that you're getting a few opinions. Look at their metrics, look at their comps and see how accurate a comparison they are, and look at what marketing material they have.\n\nFull disclosure, I am a commercial broker for 20 years and I've seen *so* many crappy appraisals. To be fair, you also need to worry about brokers who will tell you that the property is worth more than it actually is just to try and get the listing. I wouldn't go with the highest BOV unless they have some good data backing it up.", "replies": [{"id": "gr37fy0", "text": "Thanks for the input.", "replies": [{"id": "gr3bq5s", "text": "I am a commercial appraiser and I generally agree with the opinion above. Reach out to several brokers. However, I wouldn\u2019t disclose that I am shopping multiple brokers.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gr34v8q", "text": "Getting an appraisal could potentially put a number in your head you may not get. Plenty of appraisals with absurd cap rates that make no sense as they mostly appraise properties for lenders Loan to value thresholds. The appraiser isn\u2019t the one writing a check anyway. You could also speak quietly with a few qualified buyers off market.  No gun to your head to have to take an offer u don\u2019t like anyway.", "replies": [], "depth": 1}, {"id": "gr37w64", "text": "I would only do this if you're selling to an acquaintance and trying to keep a broker (and their commission) out of the deal.  Otherwise, interview 3 brokers, see where they'd list it at and why, and then get it advertised online through one of them.", "replies": [], "depth": 1}, {"id": "gr3l9yr", "text": "There are cheaper appraisal options. The formats the banks order are more in depth and for compliance for a federally regulated transaction. If you just want to know what your property is worth, speak to several appraisers and ask for an Eval or Restricted use format. They\u2019re much shorter and cuts out all the filler and market data that most people don\u2019t read anyways. Depending on the complexity of the property, you should be able to get it under $2k.", "replies": [], "depth": 1}, {"id": "gr43fhr", "text": "Residential or commercial, I have found non-purchase related appraisals come in low.  The appraiser will not have a price to try to meet.  Yeah, they are not supposed to do that, but it is like magic appraisals come in at or near the contract price....\n\nI am not saying do not do it.  I am saying two different appraisals will probably come in at different prices. \n\nAppraisals are merely the opinion of an appraiser.  The property \"value\" can vary significantly depending on the comps used, which is 100% up to the appraiser's discretion.  The god-like status placed on appraisals frustrates me to no end.", "replies": [], "depth": 1}, {"id": "gr4bhka", "text": "In my experience the BPO is going to be pretty accurate if from a reputable firm. Appraisers are not all that accurate I have found.  At the end of the day, a property is worth what a buyer is willing to pay and what a seller is willing to accept and a broker is going to have a better finger on the pulse than an appraiser in most cases.", "replies": [], "depth": 1}, {"id": "gr5poj3", "text": "I\u2019m an industrial broker who specializes in these transactions. Feel free to message me on the side.", "replies": [], "depth": 1}, {"id": "gr5r5ya", "text": "Most quality buyers already know what they're willing to pay, not based on the market trends or other sales, but on their cap rates...each of which will differ from one buyer to the next.\n\nLet them tell you what it's worth.", "replies": [], "depth": 1}, {"id": "gr7hu54", "text": "No, a broker can provide a valuation for you. Commercial brokers are knowledgeable in their market and are typically very good at assigning value. Personally, I\u2019ve not had an appraiser disagree with a valuation yet. I\u2019m not sure what market you are in, but where I am, brokers are highly professional and definitely don\u2019t blow smoke to get a listing. That would be residential brokers. :D", "replies": [], "depth": 1}, {"id": "gre4vhl", "text": "I am an appraiser and I recommend getting the opinion of a couple of broker's. They should be able to give you a very reasonable range if they are active in that market. \n\nI would caution against letting an unknowledgeable agent handle the listing for you. Too many times I have seen new or residential agents list a commercial property for well below what it was worth. \n\nMany of the older commercial broker's I talk to say you should make your asking price 25% more than what you think the property is worth.", "replies": [], "depth": 1}, {"id": "grv3n0z", "text": "I'd get couple of reputable commercial brokers to do the analysis. Doesn't cost you anything.", "replies": [], "depth": 1}, {"id": "gszg3ql", "text": "I have not heard of an appraisal being done before the due diligence period, but I work in the hospitality industry and have been active as an agent for about 6 months. From my limited knowledge, and based on the assumption that you are dealing with properties in the $1mm-$10mm range, I would suggest three things. Find a reputable, trustworthy broker. Do a little research on how to find a ballpark estimate for your businesses value. Then let the market tell you what it\u2019s worth. Most of our clients list too high and have to slowly learn it\u2019s not going to sell. But hey, better than selling under value quickly and later realizing. I have not had training on how to do a BOV yet, but I don\u2019t think it\u2019s too complicated if you are up to date with your financials and can put in the time to learn. Oh, also appraisals usually come in lower than market value, at least in my line of work with hotels and resorts. FYI.", "replies": [], "depth": 1}]