10 Things to Know About Commercial Real Estate Appraisal

A commercial real estate appraisal can be complicated–from knowing what to ask for as well as what to provide to the appraiser–here’s what you need to know.

Small business owners have a lot to digest when it comes to the subject of commercial real estate—especially these days. That goes double for the notion of obtaining an appraisal on a piece of commercial real estate, a process that can differ quite a bit from appraisals done for residential properties. “Commercial is very different from residential in the fact that appraisals are much more subjective in nature,” says Scott Everett, founder and president of Supreme Lending, a mortgage lender in Dallas. “Much of the value derived from a commercial building is based on the rental rates received relative to the expenses paid out. The underlying asset is important, but not even close to the same way that a residential properties value assets.”

In other words, if you’re looking to get an appraisal done on a piece of commercial property—perhaps because you want to buy or sell it or even because you want to establish a value of a lease or lodge a property tax appeal—there could be a bit of a learning curve in knowing what you’re about to embark on. Inc. contributor Darren Dahl asked Douglas McKnight, a 22-year veteran commercial real estate appraiser and managing director at CapStruc Valuation in Malvern, Pennsylvania, for some insight into his profession. What follows is a list of the top 10 things McKnight says you need to know about commercial real estate appraisals: