Texas Commercial Appraisals Blog #1
Residential and commercial appraisals are similar in some ways and different in some ways.
Similarities Between Residential & Commercial Appraisals
Both solve a value problem – usually “What is it worth?”
Both apply the appraisal process:
Identify the appraisal assignment – the valuation problem
Determine the solution – research market data, etc.
Apply the solution to solve the problem – analyze and adjust the market data to the property being appraised
Differences Between Residential & Commercial Appraisals
Residential is usually a form report compared to Commercial, which is usually a narrative report
Residential can be prepared in less time than Commercial, which results in faster completion & delivery to the client than commercial reports
Residential fees are less than Commercial, because Residential involves less work (less appraiser’s time)
For residential homestead assignments, the buyers are the homeowner(s) who will occupy the house, and are interested in the neighborhood, possibly the school district, the house size, layout (# of bedrooms, etc.), amenities, and appeal of the house.Commercial buyers include investors and developers, who are more interested in the income stream, the “value add” of the project – how can the income stream and profits be increased, and what is the exit strategy – how long do they have to hold or own the property before they sell it, and how does that holding period compare to the projected forecast of the economic cycle and local market conditions.Type your paragraph here.