The Perfect Property

Four Essential Uses Of Commercial Real Estate Appraisals

by Zachary Thompson

Commercial real estate appraisals are the assessment processes buyers and sellers conduct to determine the real estate's property value. One should hire certified real estate appraisers because it indicates their competence in determining the property's market value. They rely on their experience to evaluate various factors affecting the property's value, such as its condition, location, security, and the needed improvements. Thus, buyers and sellers should consult qualified real estate appraisers for a reliable property valuation that helps them when negotiating commercial real estate transactions. These appraisals are also essential in legal proceedings, such as determining the property's value in divorce cases. Here are four important uses of commercial real estate appraisals

Determining the Property's Value 

Commercial real estate appraisals help people identify the property's value. These real estate property prices vary depending on multiple factors, such as accessibility and location. For instance, a real estate property far from various amenities, such as good roads and shops, will be valued at a low price. As such, people should consult competent real estate appraisers to assess the commercial properties before proceeding with the sale to avoid selling the properties at a loss or paying above the market value.

Disputing Property Tax Assessments

The reports from such real estate appraisals can be used to dispute property tax assessments. One must pay a specific percentage of the property's value as tax. Thus, over-valuation of a commercial property leads to people paying more taxes than what is required. As such, these real estate appraisals help people determine the property's valuation, thus avoiding over-taxation.

Underwriting Loans

People use commercial real estate appraisals to underwrite loans. Lenders usually assess borrowers' capacity to repay loans based on their credit score, assets, debts, and income. Thus, these real estate appraisals are essential because they enable people to evaluate their property before using it as collateral for their loan application. Additionally, having your property's valuation is essential because some lenders may undervalue your property to convince you to include more assets as collateral.  

Calculating Fair Compensation for Eminent Domain Acquisitions

Eminent domain law refers to the government's power to acquire private properties from a citizen for public use. However, the government must offer someone a fair compensation equal to the property's current market value. Commercial real estate appraisals help people determine whether the government's compensation is reasonable. Thus, those with commercial properties subject to eminent domain law should consult a real estate appraiser to determine the property's correct value.