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November 25, 2014

Why Are Commercial Real Estate Appraisals So Expensive?

November 25, 2014

Property owners new to the commercial real estate appraisal process are often shocked by how expensive an appraisal actually is. These reports, however, are invaluable in the selling or financing process.

If you are looking to sell a piece of commercial property in the near future, you have probably been told that you need to hire an Arkansas commercial appraiser before you get it listed. Unfortunately, many commercial real estate owners make the mistake of assuming that a simple building inspection is all they need to proceed with a real estate transaction; however, this simply isn’t true. Some are often shocked by the cost of a full commercial real estate appraisal, but their inherent value far exceeds your initial investment.

What is a Commercial Property Appraisal?

A commercial building inspection is just the first part of the appraisal process, which is used to actually determine your property’s overall value (also referred to as the property’s “highest and best use”) based on one of three possible approaches:

  • Cost Approach – A valuation made by estimating the cost required to recreate a similar property.
  • Sales Comparison Approach – A valuation approach that relies on recent sales prices of other commercial properties.
  • Income Capitalization Approach – A method that converts its anticipated cash flows into a solid property value figure.

Regardless of the specific method used, you will receive an in-depth, narrative analysis of your commercial property’s estimated value from an Arkansas commercial appraiser that adheres to the strict Uniform Standards of Professional Appraisal Practice (USPAP), which helps you better determine what price you can expect to sell it for.

What to Expect from a Commercial Appraisal

Many commercial building owners looking to sell find themselves a bit unpleasantly surprised when they learn that the average appraisal costs several thousand dollars and takes anywhere from 3 to 6 weeks to complete. However, this cost can vary greatly depending on a number of factors, such as the owner’s or investor’s time-table, the size and type of property, and the availability of comparable valuations in the area.

Despite the cost and the fact that commercial real estate appraisals take some time to complete, you simply cannot afford to not order one. In fact, in most cases, an appraisal is an absolute requirement. The amount of research, analysis, and reporting you are provided will be invaluable during the sales process.

Furthermore, a lender generally will not loan a buyer the money needed to purchase property without knowing that it’s actually worth the money they’re lending out for it.

How a Commercial Real Estate Appraisal Benefits You

$2,500 or more may seem like a lot of money to put into finding out what property is worth, but commercial real estate owners and developers find that this is money well spent. After all, with an accurate commercial real estate appraisal, you can enjoy the peace of mind in knowing the true, accurate value of your property. As a result, you will have better chances of getting an easier sale or procuring attractive financing when you decide to market your property and less trouble trying to decide on a listing price or negotiating a sale price.

If you are in need of an experienced Arkansas commercial appraiser that you can trust, contact Ferstl Valuation Services. Let us know a bit more about your property by requesting a commercial appraisal online to get started. Call our Little Rock office at 501-313-0641 or our Fayetteville office at 479-595-0245 if you have any questions.

Filed Under: Commercial Property Appraisals, Uncategorized

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Ferstl Valuation Services Headquarters

5905 Forest Place, Suite 100
Little Rock, AR 72207

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About Ferstl Valuation Services

Ferstl Valuation Services is an appraisal company with offices located in Arkansas founded by Tom and J.T. Ferstl. The father-son began their business with a simple goal – to offer their clients reliable, trustworthy, certified real estate appraisals.

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