Whether a property is being appraised for estate tax purposes, a refinance, or a purchase, there are times when an appraiser’s opinion of value may differ from your own. If this happens (and you know that your opinion is more accurate), there are a few steps one can take to ensure that an opinion of value is reconsidered.
1) From the start, use an expert
Before the appraisal even begins, it is best to make sure that the best appraisal firm is valuing your property. If possible, make sure that a San Diego appraisal firm is used that knows how to appraise your property type. According to the Uniform Standards of Professional Appraisal Practice (commonly known as USPAP, which is similar to quality control for appraisers), an appraiser must be competent in order to complete the assignment (or acquire the knowledge to become competent) or they must not accept it. Choosing an experienced San Diego appraisal firm with knowledge of your property’s submarket ensures a greater chance that the appraisal will be done competently. It is also best to use an MAI appraiser as they have spent years obtaining additional education and experience beyond state-certified requirements.
2) Ask for clarification
Appraising commercial real estate can be a complex task. Unlike a house appraisal where a single approach to value is used (sales comparison approach), two or even three approaches to value are commonly used to appraise commercial property. If, after receiving the report, you have questions about the value conclusions, adjustments, or assumptions, be sure to ask the appraiser for clarification. He or she should be able to provide their reasoning that is supported by market data.
However, we caution that an appraiser can only share assignment results with their client or people specifically authorized by the client. For example, in a typical refinance appraisal the client is the lender, which means that an appraiser can only share assignment results with the lender (even if the property owner paid for the appraisal and provided all the property information). If this is the case, be sure to contact your lender regarding clarification and use them as the intermediary between you and the appraiser.
3) Write it down and be specific
Now that you have asked for clarification about the appraisal, it is time to draft a response stating why the value may not be accurate. In some instances, the reason a value may be inaccurate is due to different comparables. For example, the appraisal may not contain certain sales better suited for the property. In cases like this, it is important to give the appraiser specific sales, leases, or other data to support a different value.
A way to help find specific data is to use a local broker. To do this, drive around your immediate neighborhood and look for signs from local companies that say “for sale” or “for lease.” If there are one or two names that keep showing up, they will probably be an expert in that particular area and can help you. That said, be sure to let the broker know what kind of data you are looking for. For example, if you have a leased industrial property, having a broker send you sales of owner-user properties will not support your opinion. On the other hand, having the broker give you capitalization rate data will.
It is the appraiser’s role to provide the most accurate, unbiased appraisal based on comparable and specific market data. However, there are times when their opinion of value may differ from your own. If there is support for a different value conclusion, be sure to ask for clarification and give the appraiser specific data to consider. However, if the appraiser stands by their value, it may be best to use another appraiser to either review the report or complete another appraisal altogether. While this may be more costly than originally planned, it may be the difference between saving thousands in taxes or completing a deal. Above all, be sure to use a recognized expert in the appraisal field.
IRR San Diego is the leading commercial valuation firm in the area, with four MAI-designated appraisers and over 100 years of experience in the appraisal of all property types. If you have any questions about the appraisal process or are in need of a valuation, please contact us today at 858-259-4900 or firstname.lastname@example.org.Social tagging: Challenge real estate appraisal > Eric Schneider MAI Appraiser San Diego > industrial appraisal > San Diego Commercial Appraisal > San Diego Commercial Real Estate Appraisal