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Although this page is labeled for “Individuals,” its intended target audience is the first-time user of commercial-property appraisal services or a first-time applicant for a commercial property loan. While most adults do possess some knowledge or exposure to residential property appraisals, they are generally unaware of several important distinctions between residential and commercial appraising. These differences include:

A real property appraiser working in the State of Arizona must be a “Certified General Appraiser” in order to value non-residential properties or residential properties with more than four dwelling-units. Obtaining a “Certified General Appraiser” classification requires an applicant to take additional educational classes, possess more appraisal experience and pass a more rigorous state examination; when compared with a residential-level appraiser

Virtually all residential appraisals are reported to the client using a standardized form report, typically the 1004 Form “Uniform Residential Appraisal Report.” In contrast, the vast majority of commercial property appraisals are conveyed to the client using a narrative report; with two available options of reporting detail: a) Appraisal Report, either or “comprehensive or summarized;” and c) Restricted Appraisal or “brief statements of facts and opinions.” Appraisal fees vary significantly between the two reporting options; with higher fees associated with the more comprehensive levels of reporting and lower fees for the Restricted Appraisal type reports.

Residential appraisers typically rely on a single valuation technique, the Sales Comparison Approach, in developing their opinions of market value. The other two valuation techniques, Cost Approach and Income Capitalization Approach, are usually relegated to “providing additional support” when they are employed by residential appraisers. This emphasis on the Sales Comparison Approach by residential appraisers is appropriate and reflects the actions of buyers and sellers of residential properties.

Comparatively, commercial property appraisers will typically employ at least two of the three valuation approaches or techniques (Cost, Sales and Income) while completing their appraisal assignments; with many assignments requiring application of all three approaches in order to achieve compliance with required appraisal standards. Moreover, most users of commercial appraisal reports also require the commercial appraiser to include some level of Market Analysis within his or her appraisal with the complexity of this supply and demand analysis dependent on current market conditions and the property being appraised.

All licensed or certified appraisers must meet the Competency Provision of the Uniform Standards of Professional Appraisal Practice when completing an appraisal assignment. However, residential licensed or certified appraisers are restricted by law to the valuation of vacant residential land and residential building improvements with no more than four dwelling units. Thus, most property differences encountered by residential appraisers result from locational or build-quality factors.

In contrast, commercial property appraisers typically maintain competencies across a variety of property types and geographical areas. Nevertheless, it is difficult at best for a commercial appraiser to maintain competency in all of the various non-residential property types. Therefore, it is important when hiring a commercial appraiser to ensure that he or she is competent to value your particular type of property (or intends on taking the necessary steps to meet the competency provision of USPAP).

The end result of these distinctions between residential and commercial property appraising is three-fold:


Commercial property appraisers typically charge fees that are significantly higher when compared with the fees charged for appraisals of single-family residences;


Appraisals of commercial properties require much more time to complete when compared with a residential form report; an experienced residential appraisal may complete one or two appraisals in a single day, while a commercial appraiser may spend one-to-three weeks on a single appraisal assignment; and


The commercial property appraiser will typically require a larger amount of property information from the property owner or their representatives during the completion of the appraisal process. These items may include rent rolls, copies of leases, income and expense statements for the past several years, copies of prior environmental risk assessments, and detailed lists of property expenditures made over the past five years.

Our staff of appraisers routinely field similar types of questions from borrowers and individual clients regarding their commercial property appraisals. In response, we have developed our own “NWC’s Appraisal Guide for Property Owners”which contains detailed answers to the most commonly asked questions. Although our “guide” is directed towards property owners having their properties valued for bank lending purposes, it is also quite useful for those individuals that are seeking professional valuation services for commercial properties where the intended use of the appraisal is not for bank lending purposes.

Our “guide” includes sections on the following items:

Frequently Asked Questions (FAQ’s)

How to Best Communicate with the Appraiser

Getting Ready for the Appraiser

Steps on Contesting an Appraisal

The Appraisal Process


We will email you a free copy of “NWC’s Appraisal Guide for Property Owners” simply for the asking by sending us a request at NWC will not use your email for marketing purposes, or provide it to others. Please refer to our “Privacy Policy” which can be found at the bottom of this web site’s home page for more information.

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