The Difference between what value you might see on an Assessors site and what real value is for a commercial property.

From The CRE Professor:

I woke up this morning to read an article in our local paper on a real cool building for sale.?The author kept referring to most recent assessed value as what the property is worth.?I talk with potential buyers all the time who look up a property on their assessor’s website and think the value listed is reality.

When it comes to determining the value of commercial real property, relying solely on assessment sites can be a risky proposition. While these sites may provide some basic information about a property's assessed value, they are not always reliable indicators of its true market value. Here's why:

Firstly, it is essential to understand the difference between an appraisal and an assessment value. An appraisal is an independent and unbiased estimate of the fair market value of a property, conducted by a licensed appraiser. Appraisals take into account various factors that can impact a property's value, such as location, size, condition, renovations and recent sales data of comparable properties. On the other hand, an assessment value is the value that the local government assigns to a property for tax purposes. Assessment values are often determined using computer models, and they may not reflect the current market value of the property accurately.

Assessors' sites typically rely on assessment values to provide estimated property values. While these sites can be helpful as a starting point, they may not take into account crucial factors that can affect a property's true value. Additionally, the algorithms used by these sites may not be able to account for unique characteristics of a property, such as the potential for future development or its proximity to high-traffic areas.

This is where an experienced commercial real estate advisor or licensed appraiser comes in. These professionals have the expertise and knowledge to assess all the factors that can impact a property's value, such as market trends, property features, and comparable sales data, to provide an accurate estimate of a property's worth. They can also provide insights into potential investment opportunities, zoning laws, and other factors that can impact the property's value over time.

In summary, relying on assessment sites alone to determine commercial real property values can be a risky approach. To get a true understanding of a property's worth, it's best to work with an appraiser trained in commercial properties or an experienced commercial real estate advisor who can provide a thorough analysis of the property's potential value. Doing so will ensure that you make informed decisions and avoid costly mistakes when it comes to investing in commercial real estate.

Shawn Massey is an adjunct professor at The University of Memphis where he teaches a graduate class in real estate development and undergraduate/graduate in real estate investment.?When he is not teaching, he is a full-time retail real estate advisor, partner and EVP with TSCG.?He holds the following designations CCIM, ALC through the National Association of Realtors and CRRP, CLS, SCLS designations through ICSC.??