KO Appraisal
Guide

What a commercial appraisal costs

Commercial appraisal fees are quoted per assignment, not from a rate card, because the work varies enormously with property type and purpose. Here is what actually drives the number, so you can tell whether a quote is reasonable.

What drives the fee

Six factors account for nearly all the variation between assignments:

  • Property type and complexity. A single-tenant building with one lease is a fraction of the work of a multi-tenant centre with twenty leases, percentage rent, and rollover risk.
  • Intended use. A litigation or IRS assignment demands a level of documentation that a preliminary internal valuation does not, because it has to survive challenge.
  • Scope of work. A full narrative appraisal with all three approaches costs more than a restricted report for internal use, and a restricted report cannot be relied on by third parties.
  • Effective date. Retrospective assignments require reconstructing market conditions as of a past date, which takes more research than valuing as of today.
  • Data availability. Thin comparable markets and special-use property require far more search effort than an active submarket.
  • Timeline. Rush work carries a premium because it displaces other scheduled assignments.

What should make you suspicious

Be wary of any appraiser who quotes a fee contingent on the value reached, or who asks what number you need. Both compromise independence, and under USPAP an appraiser may not accept an assignment where compensation is contingent on reporting a predetermined value. A report produced that way is worth little precisely when you need it most. Under examination or in front of a board.

Be equally wary of a quote given without any discussion of intended use. An appraiser who has not asked what the report is for cannot yet know what the assignment requires.

How quoting works here

Every engagement is quoted at a fixed fee before any work begins, after a short conversation about the property, the purpose, and the deadline. Fixed rather than hourly, so the cost is known upfront, and never contingent on the conclusion.

Common questions

Why will nobody publish a price list?
Because the work is not standardised. Quoting a flat number before knowing the property type, intended use, and effective date would mean either overcharging simple assignments or underquoting complex ones and then revising.
Is a cheaper appraisal a false economy?
It depends on what the report has to survive. For an internal decision, a lighter scope may be entirely appropriate. For an IRS filing, a court, or an appeals board, an under-supported report can cost far more than the fee saved.
Who pays for a commercial appraisal?
Whoever engages the appraiser. In lending, that is normally the borrower via the lender, and federal rules require the lender, not the borrower, to control the engagement so the appraiser stays independent of the loan decision. In litigation and estate work the retaining party pays directly.
Who wrote this Kevin O'Brien, MAI, SRA. California Certified General Real Estate Appraiser #3005065, issued by the California Bureau of Real Estate Appraisers (BREA). Practicing in San Diego. This page reflects how these assignments are actually handled, not a summary of other people's summaries.
Where this applies Appraiser licensing is state-specific, there is no national appraisal licence, so appraisal engagements here are California properties, primarily San Diego County. The valuation methodology and the federal tax rules described above apply anywhere in the United States; if your property is in another state, you need an appraiser credentialed there, and this page should still tell you what to ask them for.

Related reading

Next step

Tell me about the property.

Most assignments start with a short call, property type, the purpose of the appraisal, and the deadline you are working against. You get a fixed quote before any engagement, never contingent on the value reached.

Typical commercial fees range $2,000–$4,000. Residential and simpler assignments quote lower. Every engagement is quoted in advance, so the figure is known before work begins.

Call (619) 704-7070commercial Request a quote