I recently did a commercial real estate appraisal in Orlando on a piece of property owned by a nice lady who unfortunately had just lost her husband.
Her adult son flew in from out of town to help her settle the estate.
The son needed a commercial real estate appraiser, and he hired me for the job.
He was confident that the property was worth around $750,000, based on a certain popular free online website service that you've likely heard of (hint: it rhymes with willow and starts with a Z!) This free service is infamous for being a so-called reliable source for estimating what I call "quick and dirty" real estate values.
When I met with him, he had the documentation for his web-derived predetermined value in hand, and he was overly confident that I would be onboard.
I went back to my office and immediately ran out the legal description for the property on my Deed Plotter software.
It turned out that the property had significantly less land area than this free estimating service said the property had.
After even further investigation, it turned out that the free online estimating service used the same unit value and land area found in the county property appraiser's records.
I did my sales search and found three similar sales within two miles of the subject property, which had closed within the past few months.
These sales reflected a relatively tight range, and to the disappointment of the owner and her son, the value was about 35% below the $750,000 value they hoped it would be.
Reality Check Number 1 - The assessed value estimated by the county property appraiser can be a really poor indicator of market value and Reality Check Number 2 - the estimated value estimated by free online valuation services can also be a really poor indicator of market value I've never used this free online value estimating service, because quite frankly, I can't imagine that much research goes into these value estimates.
However, I do check the assessments estimated by the county property appraiser on every one of my commercial appraisals, and very rarely do I find that their assessments are in-line with the market values.
The valuation for a particular property is always individualized, and is usually derived from sales or rental data in an ever-changing market.
For this reason alone, estimating market value should be left to the commercial appraisers who consider all of the detailed analysis required in each appraisal assignment.
Her adult son flew in from out of town to help her settle the estate.
The son needed a commercial real estate appraiser, and he hired me for the job.
He was confident that the property was worth around $750,000, based on a certain popular free online website service that you've likely heard of (hint: it rhymes with willow and starts with a Z!) This free service is infamous for being a so-called reliable source for estimating what I call "quick and dirty" real estate values.
When I met with him, he had the documentation for his web-derived predetermined value in hand, and he was overly confident that I would be onboard.
I went back to my office and immediately ran out the legal description for the property on my Deed Plotter software.
It turned out that the property had significantly less land area than this free estimating service said the property had.
After even further investigation, it turned out that the free online estimating service used the same unit value and land area found in the county property appraiser's records.
I did my sales search and found three similar sales within two miles of the subject property, which had closed within the past few months.
These sales reflected a relatively tight range, and to the disappointment of the owner and her son, the value was about 35% below the $750,000 value they hoped it would be.
Reality Check Number 1 - The assessed value estimated by the county property appraiser can be a really poor indicator of market value and Reality Check Number 2 - the estimated value estimated by free online valuation services can also be a really poor indicator of market value I've never used this free online value estimating service, because quite frankly, I can't imagine that much research goes into these value estimates.
However, I do check the assessments estimated by the county property appraiser on every one of my commercial appraisals, and very rarely do I find that their assessments are in-line with the market values.
The valuation for a particular property is always individualized, and is usually derived from sales or rental data in an ever-changing market.
For this reason alone, estimating market value should be left to the commercial appraisers who consider all of the detailed analysis required in each appraisal assignment.