Team effort garners best results in RE appraisals.

A comprehensive, accurate appraisal is a cornerstone of the due diligence process when it comes to commercial real estate deals.

It is important to remember, however, that the appraiser has no vested interest in whether the purchase is made. Rather, it is the broker, buyer, or seller who want the deal to go through, and it is those parties who can add significant value to the appraisal process when they work together as a team.

While each team member has a role to play, and perhaps some cost, it generally is the broker who gathers the information from the other parties and presents it to the appraiser.

Descriptive Information

Much of the documentation required by the appraiser is similar to that of the lender. However, where the documentation that is accessible to the appraiser is not public record, it needs to be supplied by the relevant team member. Items requested by the appraiser might include the following:

* Blueprints, site plans, surveys, aerial photographs and drawings.

* Information about surface, subsurface, aerial easements.

* Data about wetlands.

* Analysis of environmental issues, such as asbestos, groundwater contamination, heavy metals, and landfills.

* A market analysis, including rent and occupancy trends and the area's capacity to absorb new developments.

* Comparable sale or lease data.

* Risk analysis.

* Lease summaries of existing tenants.

* A minimum of three-years' income and expense records, preferably those prepared by a certified public accountant.

* A list of "proposed" improvements if the property is to be appraised "as complete."

* For new construction: approval documents, cost information, building and site plans, and timing.

* For renovations: description and cost of proposed reconstruction.

Brokers Know the Lay of the Land

Many commercial brokers specialize in particular areas, such as shopping centers, office space, or industrial buildings. This gives them knowledge and insight that can be an invaluable part of the appraisal.

A lot of what the broker knows may be going on "beneath the radar." Some examples of this are:

* Details about recent sales, new listings, properties under contract, and comparable rents. The appraiser can have a hard time getting information that is not yet part of the public records he or she typically examines, which can paint a picture of the overall trends for real estate in the area.

* Information about existing and previous owners that can have implications on the price of the property. For instance, if the current owner of a sixteen-unit rental building is selling because he or she is under financial duress, the selling price might be lower than it other wise might have been.

* Facts about existing tenants. The buyer's cash flow can be affected if existing tenants do not pay their rent on time, or if they are paying below-market rent. Such information can be important to the appraiser.

* Awareness of what is going on in the municipality. Are there plans to widen the road in front of a retail establishment that could cut off customer access for a period of time? Are there any lawsuits pending against the town that could impact on the property's value or cause a tax increase? These scenarios, which can affect property value, may not be apparent to the appraiser.

Conclusion

When buyers, sellers, and brokers cooperate in getting the necessary information to the appraiser, the depth and accuracy of the appraisal itself is enhanced. In addition, the process can move along at a more rapid pace. This cooperation and the resultant in-depth information benefits everyone involved in myriad ways--including a more accurate and timely appraisal.