Whether you are interested in purchasing a business property in Pennsylvania or you want to sell your building, an appraisal will be conducted. A commercial appraisal is more complicated than a residential one, so it is important to understand some of the terms and considerations.
The SF Gate discusses the three main ways of appraising commercial property. They are:
- Cost approach – the value of the property equals the land value as well as the amount to replace the building as it currently is
- Market approach – the property value is based on similar buildings in the surrounding area
- Income capitalization approach – typically used by investors, this method compares the ability to generate revenue with its market value
Inc talks about some additional things to consider when it comes to commercial real estate appraisals. One is to never lie or stretch the truth about an aspect of the property, as the appraiser verifies everything. An appraiser is also held to certain ethical standards so their assessment is unbiased.
Keep in mind that the appraisal process can take awhile and the inspection itself is only part of it. When asked for information and certain paperwork, you can speed up the process by providing it as quickly as possible. There are also different types of reports, and the appraiser can help determine which one is necessary based on the information you provide. Expect to pay anywhere from $2,000 to more than $3,000 depending on the report type. You should also let the appraiser know which other parties, such as the property tax appeal board or buyer, are authorized to view the end report.