By Carlo L. Batts, MAI, Rittenhouse Appraisals
There are many roles in the commercial real estate industry, each one with its own set of responsibilities. Collaboration with the necessary individuals in this ecosystem is paramount to successful completion of transactions, disposition of assets, expense management, and overall in maintaining the health of real estate assets and company balance sheets.
An important ally and partner for investors, developers, and operators, especially during changing market times, is a designated commercial real estate appraiser. A designated appraiser means the individual has invested considerable time on improving their valuation and analytic skills of all types of properties. The MAI designation is the highest level of professional certification an appraiser can achieve through the Appraisal Institute.
These individuals serve as a frontline observer, providing analysis and insights which lead to more informed decisions. Their boots-on-the-ground approach and expertise provides firsthand perspectives and essential guidance, especially during a changing market.
Having a designated real estate appraiser on the team brings a crucial role to how well and often a commercial real estate company hits their goals. Well beyond providing an impartial opinion of value for a property based on a particular use, these individuals provide expertise and analysis that impact a portfolio at different times and in different ways.
These services are essential to making informed decisions on whether to invest further or sell. This information is also vital when it comes to evaluating property expenses. Especially as markets continue to shift, keeping a close eye on current property value can be a driver in managing and limiting operating expenses.
For example, is the property assessment accurate? This directly impacts the real estate taxes to be paid and affects the income analysis. Do insurance and liability coverages accurately reflect the proper standard of value? Has a thorough and detailed OpEx analysis been conducted?
Commercial real estate appraisers also help set transaction expectations. Having the opinion of an impartial, third-party that understands the major waves and nuances of a market goes a long way in setting effective pricing strategies and can help bridge the gap between fantasy and realty.
With the right set of expectations based on an appraisal report, all concerned parties in the transition can negotiate with confidence. In addition, the insights a designated appraiser brings to the table are especially necessary in the proper handling of unique or complex properties.
The vast network and important referrals an appraiser can bring a team should also not be overlooked. Whether for an expected or unexpected need, experienced appraisers have navigated lots of muddy waters and have deep understanding of local government, who to turn to when legal guidance is needed, and more.
In conclusion, having an ongoing and close relationship with a designated commercial real estate appraiser is a best practice for real estate professionals. Having open and regular communication with them is crucial to gaining the most of their expertise and services, and ultimately creating the synergies and opportunities to further build a portfolio of commercial assets.
The Appraisal Institute has a searchable directory of designated valuation professionals.
Carlo L. Batts, MAI, is the principal of Rittenhouse Appraisals, a regional commercial real estate valuation firm based in Center City Philadelphia.