3 Things to Know About Property Evaluations
harkins / July 10, 2018
There are three things that every commercial property owner should know about property evaluations. The first is that they are not always correct. The second is that they are usually correct. The third and most important thing to know about property evaluations is that the bank and the investors are going to listen to them more than they listen to you.
Property evaluators are a group of diverse professionals. This means that their commitment to craftsmanship and doing a good job in their field is very strong, but their commitment to a particular property that they are being asked to evaluate is not. They have no particular interest in the property, only specific expertise that they are being asked to apply. This means that they will tend to make broad judgments based on surface conditions. They will leap to conclusions about a property based entirely on what they see before them. They cannot spend months or years getting to know a place. They will walk in, evaluate according to their expertise, and deliver that information in a professional format. It is very easy for them to be slightly deceived by the particular conditions at the commercial property on the day that they investigate it. For example, a roofing inspector will be much more likely to find leaks in a roof if they visit while it is raining. By the same token, they are more likely to miss the leak if it does not happen to be raining on the days that they make their evaluation. This is neither right nor wrong, but simply the nature of commercial property investment.
Property managers and investors are well aware of this weakness in the system and have amply compensated for it in other ways. For example, property evaluators know to look for problems that persist even when the particular irritant is not in effect. For example, they may not be there to see the rain leak through the roof. But they certainly know to look for the tell-tale sagging in the walls that reveals water undermining the foundation. They are professionals, and generally extremely well-schooled in their craft. If they say that a small problem is a sign of a greater problem, they will usually turn out right.
Investors and banks will give their opinion tremendous weight. Although they know that the evaluator is not thoroughly familiar with the property in question, they know that the evaluator is not emotionally invested in it either. They will give an honest evaluation and a praise it according to the same economic standards that the bank and the investors value it for. Their judgment in structural and maintenance manners is generally trustworthy, and can be expressed in the amount of money required to fix a certain issue or to maintain a property with that issue extant. This is precisely the information that investors want, and they will always give it tremendous creedence. Take heed prepare the property for the property evaluators, as their opinion carries great weight.
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