Who decides that a commercial appraisal is needed
There is no single rule that says every commercial property needs an appraisal. The requirement comes from the party relying on the number:
- A lender that finances or refinances a commercial property may require an appraisal as a condition of the loan.
- A court or an attorney may need one in an estate, a partnership dispute or a divorce that involves a business property.
- A tax authority or an assessor may be involved when value is contested.
- A contract between owners, partners or a buyer and seller can require an independent value.
In each case, ask the party that will rely on the report what it requires before you hire anyone. The answer decides the report type and the appraiser's qualifications. If you are unsure whether the law requires an appraisal for your situation, ask an attorney, because this page cannot answer that.
Where residential appraisal ends
Randy M. Sonns operates a residential appraisal practice. His site says that if you need a land, mobile home or commercial appraisal, you should get in touch, and that he can connect you with a skilled local appraiser who has commercial-specific experience. He does not say that he performs commercial work himself, so ask first.
California's license classes help explain the line. The Bureau of Real Estate Appraisers documents that a Certified Residential appraiser may appraise one-to-four unit residential property and non-residential property up to a transaction value of $250,000, and that a Certified General appraiser may appraise all property types. A property outside the Certified Residential scope needs a Certified General appraiser.
How a commercial request differs
Commercial and income properties are valued with attention to income, expenses, leases and market rents, in addition to comparable sales. That work needs different data and often more time than a house. For that reason a commercial request should start with a conversation: what is the property, what is the purpose, who will rely on the report and by when?
Have ready
What to bring to the first conversation
Checklist
- The property address and type.
- The purpose and who will rely on the report.
- The date the value must apply to.
- Any lender, court or contract language that names the requirement.
With that, you can learn whether the appraisal can be done by the person you called or should go to a specialist. Start with the page on other property appraisals, which sets out the same questions.
Frequently asked questions
Does every commercial loan need an appraisal?
The lender decides what it requires for a given loan. Ask the lender, because there is no single rule that covers every commercial property.
Can a residential appraiser value a small commercial building?
Only within the license scope. A Certified Residential appraiser may value non-residential property up to a $250,000 transaction value, according to the state. Above that, a Certified General appraiser is needed.
Who should I ask about legal requirements?
An attorney. This page explains the usual sources of a requirement, but it cannot say what applies to your case.
What should I send when I ask about a commercial property?
The address, the property type, the purpose, who will rely on the report and the date the value must apply to.