Your Commercial Real Estate Appraisal Questions Answered

[.Part 1.] Contacting Us for the First Time
[.Part 2.] Appraisal Cost and Turnaround Time
[.Part 3.] Using the Appraisal
[.Part 4.] Getting the Value Conclusion Before Ordering the Appraisal
[.Part 5.] I'm Confused by the Types of Reports I Can Order
[.Part 6.] Appraiser Independence
[.Part 7.] The MAI Designation
[.Part 8.] Appraisal Myths and Realities

Contacting Us for the First Time .:: top ::.

I have never ordered before, what do I need to do?

You need to contact us at the main office 770-227-4008 or toll free at 1-866-408-2812. You can also use this website to get a quote or contact us by using the links on the menu. This will put you in touch with one of the chief appraisers to discuss your needs. You will then be given a client login username and password to enter into our management system so you can track the status of your report, manage your orders and payables with us, order appraisals, download your appraisal upon completion, etc..

What's in your commercial appraisals?

You specify what you want within the bounds of the Uniform Standards of Professional Appraisal Practice (the law appraisers are governed by). Generally, an appraisal reads like a narrative report, from 50 - 200 pages. It details your assignment and provides:

> an overview of the area, community and neighborhood
> a detailed site and building description
> a zoning analysis
> a highest and best use analysis
> an in-depth discussion of 1-3 different approaches to value
> a recommendation of the most appropriate valuation to use

Do you appraise properties in areas you don't hold a license?

Although we can appraise properties anywhere in the United States, we limit national assignments to portfolios only. Fletcher & Company's primary trade radius is the southeast to include; Georgia, Alabama, Florida, Tennessee, South Carolina, & North Carolina.

What is the range of services you provide?

We can provide:

> Appraisals for federal and non-federal related transaction lending situations
> Tax assessment review, advise and appraisals
> Advice in eminent domain and condemnation property transactions
> Dispute resolution - divorce, estate settlements, property partition suits, foreclosures and zoning issues
> Feasibility studies
> Capitalization rate studies
> Market rent and trend studies
> Expert witness testimony
> Land utilization studies

What property types do you appraise?

We are primarily a commercial appraisal firm covering a large variety of commercial, multi-family, and industrial property types. We also provide residential appraisals for litigation situations and tax purposes. For all property types we cover, please refer to the services link on the menu of this website.

When hiring an appraiser, what questions should I ask?

> What type of professional designations do you have and from whom?
> Are you licensed or certified in the states you practice?

Like any job you are contracting out, it pays to compare the resumes of appraisers whom you are interested in having prepare a bid. This is the first place to start.

What appraisal approaches will you use in appraising my property?

The three most commonly accepted valuation approaches to value are the cost approach, the sales comparison approach and the income approach.

The cost approach combines the value of the land and depreciated site improvements with the depreciated value of the building. The sales comparison approach compares the property to others and adjusts for differences. The income approach takes market rents, subtracts a vacancy allowance and expenses, and takes the resulting net income and turns that into value using a capitalization rate.

We are not required to provide all three approaches and it is rare that all three are done. Appraisal theory has largely discredited the cost approach as reflective of market value and commercial appraisers seldom provide it except in newer construction and special purpose properties.

The sales comparison and income approaches are the primary valuation methods used for commercial properties. Even then, there are times when one of these approaches does not reflect the market and although it might be performed, it is given little or no weight in deciding on the final value conclusion.

How do you determine what approaches to value you will use when you provide a bid?

Having performed many appraisals on a wide range of property types, our fees typically reflect the cost to perform two approaches to value, usually the sales comparison and income approaches. Even if we do not perform an approach, many times we still invest time in searching for data. This occurs most frequently in areas where too few comparable sales occur - we still look for them, but we do not create the market, we merely report it.

There are times when a third party, such as a lender, will require the cost approach to be performed. If that is the case, please tell us beforehand so that we can incorporate this into our estimate. An additional fee will be incurred if we are required to perform a cost approach for a third party and you do not notify us beforehand.

If I don't like the appraised value, what can I do about it?

That depends upon many things. The best place to start is to speak with the appraiser(s) who signed the report. It's possible that he/she may have overlooked one or more important factors which affect the value of your property; if you mention it in your conversation, you may find the appraiser willing to reconsider the value conclusion. Of course, if you are not their client (such as when your bank orders the appraisal), they are not required to speak about the appraisal and may be in violation of the licensing law or professional standards if they do so.

It's important to remember that the appraiser is an unbiased third party. Our job is to find out the good and the bad about a property and report it, not to favor a direction. All appraisals are round-tabled by our review staff and carefully scrutinized before they are released, so you get the benefit and knowledge of more people than just those involved with the report.

If you are still dissatisfied, you can get a second opinion by hiring another appraiser or insist that a review appraisal be performed on the original report. If there is a large discrepancy in value, you or a third party may be able to negotiate an intermediate position.

Appraisal Cost and Turnaround Time .:: top ::.

How much do your appraisals cost?

Every appraisal is different, so we quote fees individually on a per job basis. Generally, prices depend on the number of properties and the complexity of the assignment, though appraisals used as evidence in court cases command a higher price.

Our fees are calculated based on the number of hours it takes to do a report and the fee structure of the personnel involved, with modification for overtime if a rush assignment is required. Please see "pricing" from our main menu on this website for a guideline to typical fees for our commercial properties and report formats.

Why do special purpose properties cost more?

Special purpose properties require us to research a wider trade radius, sometimes the entire United States! Fees are based on time estimates, so the more time we have to invest in finding comparable properties, the higher the fee. Also, the market analysis section of the report many times requires a greater amount of research time and it is not uncommon to have to purchase studies performed by industry experts to properly show the dynamics affecting the property type.

What is your typical turnaround time?

Commercial appraisal delivery times typically range from two to four weeks, depending upon the complexity of the property and your needs. It requires one to two weeks to do the research, verify the factual nature of the information, perform a market study of the area and write the report. Typically, delivery times less than two weeks are rush orders and they command a price premium.

I can't find an appraiser to bid an appraisal of my special purpose property. Will you bid it?

We appraise special purpose properties in the southeast to include; Georgia, Florida, Alabama, Tennessee, South Carolina, & North Carolina only. If the property is located in this region, call us to discuss your situation.

How can I help shorten the turnaround time?

The number one way to help shorten the turnaround time is to provide us with the written information we need as soon as possible. Copies of leases, deeds, rent rolls, income and expense statements and other items listed on our engagement letter are the needed as soon as possible. Delay in providing one or more of the necessary items will almost always result in a delay in the appraisal process. If you cannot overnight this information to us before we inspect the property, try to have it available for the person who accompanies us through the building.

If you don't come up with the value I want, do I have to pay for the appraisal?

Appraisers must maintain a third party position to your transaction. No appraiser can accept an assignment where bias could be interpreted. USPAP has a phrase used verbatim by many appraisal firms on their letters of transmittals:

"Our assignment was not based on the reporting of a predetermined value, a direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result or the occurrence of a subsequent event directly related to the value opinion."

USPAP is very clear on this issue. Appraisers cannot be advocates for any client. Although it may seem unusual to some users to have to pay for a report that did not provide them a favorable outcome, appraisers governed by appraisal licensing laws must remain objective.

If there is any uncertainty in the value, clients should have the appraiser perform a restricted appraisal first and then upgrade the report to a summary or self-contained if the value is satisfactory. This is acceptable appraisal practice and one not often suggested by an appraiser.

Why are the fees for commercial appraisals so much higher than residential appraisals?

There are many reasons why there is such a great discrepancy. The most important difference is the amount of time it takes to prepare each type of report. Most skilled residential appraisers can do a residential report in a half-day whereas a skilled commercial appraiser needs at least a week.

Residential reports are on a common form with a standardized property type whereas commercial appraisals are mainly free-form documents with information that varies with the property type, market and client needs. Special use commercial properties take longer and can have a multi-state data search radius, thus making it more time intensive and costly to perform than more common property types such as office and apartments.

Using the Appraisal .:: top ::.

Can I reuse your appraisal for another purpose?

Only if you receive our permission. Be aware that many financial institutions will not accept an appraisal performed for one of their competitors unless the first source provides a written release. Also, we are not required to testify in an assessment reduction case if the appraisal was done for something other than a tax appeal.

When ordering, please provide a list of all users of the report. We cannot change a client's name in a cover letter. We can add report users as necessary, however.

I want to use your appraisal for financing, but don't have a source. Can you prepare your appraisal for any lender?

We can provide some guidance, but you should make sure your lender will accept our report before ordering. Lenders can have different internal guidelines, so knowing what is required helps prevent the additional time it takes to modify a report or do additional report analyses, increasing the time it takes to get a final product to the lender.

I paid my lender for the appraisal, therefore I should own it.

The appraisal is legally owned by the client, unless the lender "releases its interest" in the document, typically in writing to us. If the lender ordered it, they own it. If you just want a copy of the appraisal, under the Equal Credit Opportunity Act you can be given a copy of it upon written request of the lender.

Getting the Value Conclusion Before Ordering the Appraisal .:: top ::.

If I didn't order the appraisal, can I find out the appraised value?

Only if you ask the person who originated the order and they provide permission in writing. However, Fletcher & Company cannot give you this information because it would violate the ethical standards governing our appraisal practice.

It doesn't make sense to me to hire you if I don't know you'll come up with the value I need. Can you give me a guarantee?

It is a violation of state laws and the appraisal licensing laws to provide a value opinion without doing an appraisal. Although we cannot provide a guarantee, we can perform a restricted appraisal that will tell you what the property is worth. If the value opinion is acceptable, we can upgrade the report to a summary or self-contained format for a higher fee. We can quote both fees to you so you'll know the best and worst case costs. Surprisingly, the fees are not that different since all the valuation work is done regardless of what report format is prepared.

I'm Confused by the Type of Reports I Can Order .:: top ::.

I see there are three types of reports I can order. What's the difference?

The final appraisal product delivered to you depends on the type of report specified by our agreement. The parameters of the three types of appraisal reports as defined in USPAP are shown in the table below. The primary difference is in the terms describe, summarize and state. Describe means to provide a comprehensive level of detail, summarize is providing a more concise presentation of the information and state means to provide a minimal presentation of the information.

Comparison of Report Types




Identify and describe the real estate being appraised

Identify and provide a description of the real estate to be appraised

Identify the real estate being appraised

State the real property interest being appraised

Same as self-contained

Same as self-contained

State the purpose and intended use of the appraisal

Same as self-contained

Same as self-contained

Define the value to be estimated

Same as self-contained

State and reference a definition of the value to be estimated

State the effective date of the appraisal and the date of the report

Same as self-contained

Same as self-contained

State the extent of the process of collecting, confirming, and reporting data

Summarize the extent of the process of collecting, confirming, and reporting data

Describe the extent of the process of collecting, confirming, and reporting data

State all assumptions and limiting conditions that affect the analyses, opinions, and conclusions

Same as self-contained

Same as self-contained

Describe the information considered, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions

Summarize the information considered, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions

State the appraisal procedures followed; state the value conclusion and reference the existence of specific file information in support of the conclusion

Describe the appraiser's opinion of the highest and best use of the real estate, when such an opinion is necessary and appropriate.

Summarize the appraiser's opinion of the highest and best use of the real estate, when such an opinion is necessary and appropriate.

State the appraiser's opinion of the highest and best use of the real estate, when such an opinion is necessary and appropriate.

Explain and support the exclusion of any of the usual valuation approaches

Same as self-contained

State the exclusion of any of the usual valuation approaches

Describe any additional information that may be appropriate to show compliance with, or clearly identify and explain permitted departures from, the specific guidelines of [USPAP] Standard 1

Summarize any additional information that may be appropriate to show compliance with, or clearly identify and explain permitted departures from, the specific guidelines of [USPAP] Standard 1

Include a prominent use restriction that limits reliance on the report to the client and warns that the report cannot be understood properly without additional information in the work file of the appraiser, and clearly identify and explain any permitted departures from the requirements of Standard 1.

Include a signed certification in accordance with Standards Rule 2-3

Same as self-contained

Same as self-contained

Source: Understanding Limited Appraisals and Appraisal Report Options book by the Appraisal Institute (page 39).

What type of report do I need?

The appraiser is in the best position to tell you what type of report you need. He/she is required by USPAP to determine the scope of the assignment, the function of the appraisal and use of the report. To do that, he/she will need to understand your needs, so the appraiser is in the best position to recommend one or more of the above choices and to counsel you on what choice(s) would be inappropriate.

Appraiser Independence .:: top ::.

The appraised value of the property depends upon whether the appraisal is conducted for the buyer, seller or lender.

The appraiser has no vested interest in the outcome of the appraisal and should render services with independence objectivity and impartiality - no matter for whom the appraisal is conducted.

I paid for the appraisal. Why am I not entitled to get a copy?

The client is the person who engages the services of the appraiser, usually in the form of an engagement letter. Many times the lender is the one who issues and/or signs an engagement letter, making them the client. It does not matter who pays the bill. Only the client and those who he has specifically authorized are allowed to receive a copy of the report from the appraiser. If the person who pays the bill is not the client, verbal or written permission is required for the appraiser to release the appraisal to anyone else.

The MAI Designation .:: top ::.

My lender said I need to get an "MAI appraisal". What is it?

The term MAI, which stands for "Member Appraisal Institute", is a registered trademark of the Appraisal Institute. The Appraisal Institute is a trade organization. There is no such thing as an "MAI appraisal." Persons requesting an "MAI appraisal" mean that the report should be prepared by an MAI designated member of the Appraisal Institute. Each appraiser needs to be judged by his/her merits rather than the association to which they belong.   *Note -   it is considered discriminatory by FIRREA to consider or not consider an appraiser for an assignment based on a trade designation. Fletcher & Company houses three appraisers that are associate members of the appraisal institute and one appraiser that is a CCIM candidate.

Appraisal Myths and Realities .:: top ::.

Will the market value equal assessed value?

While most states support the concept that assessed value approximate estimated market value; in practice, this often is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of improvements, or when properties in the vicinity have not been reassessed for an extended period.

Shouldn't market value approximate replacement cost?

Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind. Rarely are they the same number.

My broker performed a market valuation. Why do I need an appraiser to perform one?

There are many reasons why valuations are required to be done by appraisers. First and foremost, the appraiser is an independent, third party. Many times, the appraiser is the only one in the transaction that does not have a vested interest in the outcome. This is the reason for the creation of the appraisal industry in the 1930's.

Another important difference between a broker's valuation and that performed by an appraiser is that a licensed appraiser is bound by USPAP, whereas a broker is not.

What are the differences between an informal appraisal and a formal one?

Those outside the appraisal profession have different interpretations of formal and informal reports. When a client simply wants "a number" and not a long document, he/she will often call it an informal appraisal. Those outside the appraisal field often refer to the old "letter of opinion" report as an informal report, although terms such as "update appraisal", "recertification of value" and "evaluation of real property collateral" have also been used. When USPAP became effective in the late 1980's, appraisers no longer used this terminology because a letter of opinion and the derivatives above became a violation of multiple USPAP regulations. Now known as the restricted report format, appraisers are required to do substantially more work to issue this type of report.

For "formal" reports, USPAP dictates that appraisers can issue three types of reports.


In this report option, the appraiser provides all of his/her data and rationale that was used in the development of the appraisal. All conclusions and data sources are fully disclosed and discussed. Two practical tests can be used to determine if a report is a self-contained document:

1. The content of the report fully describes the data, reasoning and each conclusion to such a degree that there is no need to consult other data sources or to inquire how the appraiser reached a conclusion.

2. Information sources cited within the report are included in the document, within reason. Citing a book does not require the inclusion of the book in the addenda, but market studies or other material articles cited in a report should be included, especially if the appraiser relied upon them for supporting important conclusions. This is the type of report most often needed for commercial property lending.


In the summary report, the appraiser summarizes his/her findings rather than fully describing them. This is a much shorter report than a self contained and many lenders accept this reporting type. Most residential appraisals are done on forms that are summary reports along with non-complex commercial assignments. The appraiser may summarize the data and his/her conclusions without explaining the full reasoning behind them.

Restricted Report:

This is the shortest type of report. A restricted report only states the conclusions of the appraiser with no explanation on how they were derived. Restricted reports are generally used internally or when a value must be reported quickly. Many clients order restricted reports when time is of the essence and then have them upgraded to a summary or self contained in the future.

An important caveat is that USPAP does not allow a restricted report to be used by anyone other than the client or someone intimately familiar with the property, so if the appraisal will be viewed by other third parties, a summary or self-contained report must be prepared. Appraisers cannot "recertify" this type of report to any other lender.

What is the difference between a valuation and an appraisal?

The words valuation and appraisal are used interchangeably. There is no difference between them. The confusion began when lenders started using the term "evaluations" in the early 1990's, implying that they were not appraisals. Soon, the "e" in evaluations was omitted. This issue has been addressed at length by the appraisal community and the Appraisal Foundation (the creators of USPAP) and an evaluation was found to be an appraisal. As discussed earlier, there are six possible combinations of appraisal and report; evaluations are not among them.

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