Why Two Commercial Appraisals Can Have Different Values

A common question commercial property owners ask is:
“Why did two appraisers give different values for the same property?”

This is not an error. Commercial real estate valuation is a professional opinion of value based on market data, risk, and property-specific factors—not a fixed formula or automated estimate.

Commercial appraisal involves judgment. Two qualified appraisers may analyze the same property and apply different, reasonable assumptions. What matters is whether the conclusions are credible, well-supported, and defensible.

Differences often result from assumptions about income and expenses, such as market rent versus in-place rent, vacancy, operating costs, reserves, and lease rollover risk. Risk perception also varies, including tenant credit, lease stability, market volatility, and property condition. Higher perceived risk typically results in higher capitalization or discount rates, reducing value.

Appraisers may also differ in selecting and adjusting comparable sales or in opinions on highest and best use, redevelopment potential, or alternative uses. Market conditions as of the effective date and the intended use of the appraisal can also influence value.

Different values do not mean one appraisal is “wrong.” Sound data, logical reasoning, and transparency matter most.

Learn how commercial value is determined and why differences occur:
👉 https://cfacappraisal.com


                                                     

 

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