Commercial Appraisals Services

Our focus at RogerMillerAppraisal.Com is your appraisal needs, be they for estate planning, gifting the asset, insurance purposes, condemnation, financing etc. , you need a supportable and defendable appraisal report. Our real estate appraisal background ranges from single family residential to multi-tenant commercial facilities.  We are capable of under taking commercial appraisal assignments in Indiana and through out the country.  RogerMillerAppraisal.Com is affliliated with members of the Appraisal Institute who carry the MAI designation.

 

When engaging a certified real estate appraiser it is important that the appraiser has a good understanding of all approaches to value. The Income Approach is especially important when estimating value of incoming producing commercial facilities.  More specifically, the Income Approach considers value to be presented by the present worth of future benefits derived from ownership, typically measured by the capitalization of a specific level of income. This approach is widely used when valuing commercial structures, because most of the time these types of assets are income producing.

 

 

Methodology to Valuing Commercial Real Estate

 

 Depending upon the needs of the client and scope of the appraisal assignment there are multiple terms of reference that should be considered when valuing commercial real estate. Below are the most typical value concepts recognized in the appraisal industry. There are three (3) typical approaches to value that should be considered and they are as followed; 1) Sales Comparison Approach, 2) Cost Approach, and 3) Income Approach.

The most recognized approach in valuing real estate is the Sales Comparison Approach. This approach can be described as prices paid for alternate assets similar in nature to the subject property. Adjustments would then be implemented to the comparable properties to compensate for differences in conditions of sale, marketing time, physical and economic differences and financing arrangements. 

The second most common recognized approach to value is the Cost Approach. This approach starts off with the current replacement cost new of the property then deducting for loss in value caused by physical deterioration, functional obsolescence and economic obsolescence. The logic behind this approach is principle of substitution; a prudent buyer will not pay more for a property than the cost of acquiring a substitute property of equivalent utility.

The third approach to value is the Income Approach. The Income Approach considers value to be presented by the present worth of future benefits derived from ownership, typically measured by the capitalization of a specific level of income. This approach to value may be utilized for real property, especially for income producing real estate. It is imparative that the appraiser consider all three approaches to value. However, it is acceptable for the appraiser to exclude a value method if its not applicable to the property, or appraisal problem. 

 

 

 

 Types Of Appraisal Reports & Pricing

 

 
There are three (3) basic types of appraisals that can be performed, either a Restricted Use, Summary, or Self-Contained report.

A Restricted Use Appraisal report is typically requested by individuals that are somewhat familiar with the real estate at hand. A full interior and exterior physical inspection will be performed on the real estate. The Restricted Use Appraisal is a limited report that typically only states the appraiser’s value conclusion with very limited explanation. Many clients request a Restricted Use Appraisal when time is of the essence. This type of appraisal report is considered the least costly of the three (3) report types.  The appraiser must disclose in the report the actions taken or not taken in deriving the data used to support the value conclusion of the real estate at hand. The Restricted Use Appraisal is definitely less expensive than a Summary or Self-Contained appraisal, however it is considered less reliable.

A Summary Appraisal report typically includes the appraiser performing a full interior and exterior physical inspection of the real estate and developing all applicable approaches to value if deemed applicable to the real estate and appraisal problem.  This particular appraisal will include all market research, assemblage of pertinent data (listing and classifying), listing of appropriate analytical techniques and reporting of knowledge, experience and judgment. This type of appraisal is slightly more costly but the final results are more comprehensive, illustrative and reliable. The Summary Appraisal report is the most frequently requested.

 

A Self-Contained Appraisal report typically includes the appraiser performing a full interior and exterior physical inspection of the real estate, and developing all applicable approaches that pertain to the asset and appraisal problem. The Self-Contained Appraisal report provides all the appraisers data and rationale that was utilized in the development of the appraisal analysis. All conclusions and data sources are fully disclosed and discussed. The Self-Contained Appraisal is definitely more expensive than the above appraisal types, however it is considered more reliable. This type of appraisal is the least requested due to the monetary cost, and the amount of discussion pertaining to the analysis is considered over kill.