As property-owners, from time to time we find ourselves needing to know how much our property is worth or where the local market stands right now. There might be a variety of reasons for such interest, from re-financing and/or making strategic changes to thinking about improving or selling the property. But ‘guesstimating’ the price is not the best decision no matter what the situation. The best way to get answers to questions related to your property’s value is to seek out a professional opinion from a designated appraiser.
How then should one go about choosing an appraiser to ensure the job is done right the first time? Here are the five most important questions we think you should ask before making a final decision as to which firm and appraiser to trust with this important job.
Does the appraiser have the knowledge to value your property?
Why this is important – All properties are unique! They differ not only in age, look and style, but more importantly in usage. What seem like similar buildings may have entirely different purposes and to appraise them requires a different skill set. For example, appraising a community church or a suburban office building may be beyond the skill set of an appraiser familiar with valuing hotels or high-rise apartment complexes.
With over 30 years of experience in the field, West Central Property Services has had the opportunity to deal with almost any property type, big or small, however we have come to specialize in providing valuation services to small and medium-sized businesses and property owners. If there is something that we are not familiar with, we will either associate with another expert in the field or make a recommendation as to whom to work with. It is important to us that our client gets the level of service they need, without compromising the quality of our work and our company’s reputation.
Has the appraiser valued properties in your area?
Why this is important – The price of the property greatly depends on the market it is located in. An industrial shop in a small town usually won’t command the same value as a similar shop in a capital city. There are many variables that must be considered in its market value, so it is important that the appraiser you chose be familiar with the area. Everything looks different from afar, so if the specialist learnt about the market from pictures on Google or through on-line research only, there is a high probability that they may not be familiar with the market and will value your property incorrectly (e.g. they could undervalue it). At West Central Property Services, we make sure to know well the markets we service; in fact, we not only know the markets but live and work in them, and thereby often obtain access to confidential information about transactions (sales and leases) that others may not have. We will have our local specialists completing your job!
Does the appraiser have access to the local real board data and other data sources?
Why this is important – As much as a good appraiser should be able to make projections and apply information from another market to the one where your property is located, they must also be aware of what’s going on in the local community. This information can be obtained from local market participants but also from the greater real estate community. In our practice, there was a recent case where an appraiser from outside the area didn’t have local knowledge, and significantly undervalued the property of our client’s. One of the reasons was they didn’t use MLS data from the immediate area. We, at WCPSI, subscribe to the local real estate boards (MLS) as well as regional and national data providers, along with maintaining good relationships with agents, assessors, etc. to be aware of any changes in the markets we service.
Is the fee your being charged for completing the assignment reasonable?
Why this is important – Everyone is sensitive to price – its an easy thing to measure. There is no right or wrong answer to this question, it is more a question of degrees. That’s because the Commercial Real Estate Appraisal business is not a ‘one-size-fits-all’ product where one price can be applied to all valuation assignments, as properties and circumstances are unique in pretty much every situation.
A while ago, it was common to set up the price based on some combination of three parameters: how quickly the job could be done (turn around time), how cheap the service would be done for (fee) and how comprehensive the report should be (quality). The expression (not unique to our industry) was that “you can have it cheap, you can have it fast, or you can have it good” but you can’t have all three.
With valuation the argument was that if the job was done quick and cheap, it couldn’t be good because obviously the appraiser would have had to have cut corners or not put a lot of effort into it. Conversely, to deliver a good quality report, the argument was that the appraiser would have to spend more time researching their data and this would not only take longer but cost more (sometimes a small fortune). Lastly, of course, if the service was provided for a reasonable price and the quality was good, most likely the process was taking a while. This is how things ‘used to be’ but not any more! At West Central Property Services we are working hard to dispel this business practice, particularly for more straight-forward type of assignments, and can assure you that you will get a high-quality appraisal report in a short time-frame and at a very reasonable (competitive) price.
How quick can the appraiser finish this work?
Why this is important – We partly answered this question in our previous paragraph. There are situations when the appraisal requires additional research and deeper analysis, but any standard work (by ‘standard’ we mean single-tenant or owner-occupied property that isn’t overly unique) might be done within two to five working days from the date of inspection, which may coincide with or be shortly after signing of the engagement agreement. Doesn’t that sound great, to be able to move forward with your decision-making while everything is still fresh!
We truly hope that this information will help you to make the right decision while choosing your service provider. If you think this article was informative, please share it with your friends and colleagues. And we would be happy to discuss your valuation needs further – such consultation is free so you have nothing to lose!