Ideally, a commercial real estate appraisal and the sale price of a subject property will be similar, which avoids the need for any further negotiation. However, sometimes appraisals come in above or below the agreed sale price. What should you do when your appraisal isn’t what you expected?
When Your Appraisal is Lower Than You Expected
If the appraisal comes in lower than you expected, the first thing to do is stay calm! Just because a commercial real estate appraisal comes in low doesn’t mean the sale won’t happen. In most cases, this will be a great opportunity to negotiate with a potential buyer.
Negotiate Sale Price
The most efficient way to address a low appraisal is to reduce the asking price of the property to the appraisal price. This ensures you’ll still close on the deal in a timely matter, even though it may mean potentially leaving money on the table.
Split the Difference
Even if the appraisal comes in low, in many cases the buyer will be interested in moving forward with the deal. In that case, you may be able to negotiate, meeting in the middle by lowering your asking price or asking the buyer to increase their down payment if that’s an option. This offer is a good way to recuperate some of the lost revenue from lowering the sale price to the appraisal price.
When Your Appraisal is Higher Than You Expected
If your commercial real estate appraisal comes in high, you may be tempted to adjust the asking price or ask the buyer to pay the additional value of the property. However, another strategy is asking the buyer to pay a greater percentage of the closing. Some buyers will be happy to pay a higher percentage since they are able to pay under market value for the property.
Partner with Willowbrook Valuation & Advisory Services for Your Commercial Real Estate Appraisal
At Willowbrook Valuation & Advisory Services, we are a leader in trusted insight, cutting-edge innovation and customer service. We offer exceptional CRE appraisal services and remain dedicated to offering every client the individual valuation service they expect with the capabilities and expertise of a larger firm. To learn more about our valuation and advisory services, please contact us at (202) 919-3888.