The first question is what the report is for
On commercial work this comes before anything else. It is also why these assignments are quoted rather than priced from a list.
USPAP requires the intended use and the intended users to be identified before the scope of work is set. That is not paperwork.
A value opinion for an owner weighing whether to sell is a different assignment from one a court, a lender or a taxing authority will examine. Same building, same date, different depth of support, different cost.
So the conversation starts there. An appraiser who quotes a commercial job without asking what it is for is guessing, and the guess goes wrong in one direction or the other.
Income leads, and the assumptions get shown
For most commercial property the income approach carries the conclusion.
Sales comparison supports it. The cost approach matters mainly for special-purpose or newly built assets.
What counts is that the inputs are visible. The rent roll as it stands, against what the space would re-let for. Vacancy and collection loss, with a basis.
Operating expenses reconciled against actual statements rather than a rule of thumb.
And the capitalisation rate extracted from comparable sales where the data supports it, or built up with the components stated where it does not.
A cap rate that simply appears in a report is the first thing a competent reviewer will challenge. They should.
Where the New Jersey market is awkward right now
Industrial along the Turnpike and Route 78 corridors has repriced sharply with warehouse demand.
Older sales cannot simply be trended forward. In some submarkets the market they came from no longer exists.
Office has the opposite problem. Vacancy and concession patterns have moved enough in several New Jersey submarkets that a stated rent roll can overstate what the space would re-let for today.
Contract rent and market rent have to be treated as separate questions.
Brownfield history is common in the older industrial corridors. An appraisal is not an environmental assessment, and an appraiser is not qualified to determine the extent of contamination or the cost of remediation.
Where it is suspected, the report either proceeds on a clearly labelled hypothetical condition that the property is clean, or waits for a Phase I. Which one is appropriate depends entirely on what the report is for.
Restricted reports
A restricted appraisal report is a legitimate way to reduce cost — where you are the only intended user and you already know the property well.
The trade-off is real and has to be stated in the report: nobody else can rely on it. That rules it out for litigation, for lending, and for a tax appeal.
What is not on offer is a full report at a restricted price. The difference is in the work, not the formatting.
Tax appeals over $1,000,000
Property assessed above $1,000,000 can be appealed directly to the New Jersey Tax Court rather than the county board.
That raises the level of support the report needs, and usually means counsel is involved from the start.
The tax appeal page covers the Chapter 123 mechanics, which apply to commercial property exactly as they apply to a house.
What it costs
Quoted individually, in writing, before anything starts.
The variables are property type, size, tenancy, the intended use, and whether a full narrative or a restricted report is appropriate.
The flat residential fee does not apply here. An appraiser who offers you one for a commercial building has not understood the assignment.
New Jersey specifics
- New Jersey industrial along the Turnpike and Route 78 corridors has repriced sharply with warehouse demand. Sales more than a year or two old need to be treated with caution rather than trended forward.
- Office is the opposite problem. Vacancy and concession patterns have shifted enough in several New Jersey submarkets that a stated rent roll can overstate what the space would actually re-let for.
- Brownfield history is common in the older industrial corridors. An appraisal is not an environmental assessment, so where contamination is suspected the report either proceeds on an explicit hypothetical condition or waits for a Phase I.
- Property assessed over $1,000,000 may be appealed directly to the New Jersey Tax Court rather than the county board, which raises the level of support the report needs.
What you receive
- Narrative report developing the approaches to value the assignment requires, with a reconciliation rather than an averaging
- Income approach with the rent roll, vacancy, expense and capitalisation assumptions each stated and supported
- Identification of the intended use and intended users, and the scope of work performed
- Disclosure of any extraordinary assumptions and hypothetical conditions
- Signed USPAP certification
What we need from you
- What the report is for and who will rely on it — this determines the scope, not the other way round
- Rent roll and current leases, including any abatements, escalations or options
- Two to three years of operating statements where they exist
- Site plan, survey and any environmental reports
- Zoning correspondence or variances, if the current use is non-conforming