How to Read a Commercial Real Estate Appraisal

Course details

Explore a key piece of the commercial real estate value chain from the perspective of a credit analyst with this course on commercial real estate appraisals. Learn why appraisals are an integral part of the real estate due diligence process and understand the key sections of a commercial real estate appraisal document. Deep dive into the nuances of completing a commercial real estate appraisal and gain a practical demonstration of how to complete a real estate appraisal checklist from the perspective of a credit analyst. This course is ideal for aspiring credit analysts, banking and real estate professionals, and finance students seeking practical skills in appraisal interpretation and real estate credit evaluation.

Concepts

Introduction

Course introduction
Terms and definitions, part one
Terms and definitions, part two

Appraisal Background

Appraisal as a tool
Estimated market value
Property-specific risks
Who should conduct the appraisal
Real estate appraisal format

Transmittal, Summary, and Terms of Reference

Letter of transmittal
Intended user and purpose
Completion date vs. effective date
Expiration
Executive summary
Terms of reference

Property Description

Property description
Land use, controls, and zoning
Key description and analysis
Sale ownership and history
Highest and best use
Midway check-in

Property Valuation

Appraisal methodology
Valuation approach #1 - Cost approach
Valuation approach #2 - Income approach
Valuation approach #2 - Direct capitalization
Valuation approach #2 - Discounted cash flow
Valuation approach #3 - Direct comparison approach
Comparable properties
Reconciliation and signed certificate

Addenda and Conclusions

Assumptions and limiting conditions
Supporting documents and conclusion

Conclusion

Section 1 - Introduction
Section 2 - Terms of reference
Section 3 - Property description
Section 4 - Property valuation, conclusion, and appendices
Summary