From Asking Price to Appraised Value: A Conversation Between Appraisers and Brokers

Why may a broker’s recommendation and an appraiser’s conclusion differ, even when both professionals understand the property and the market?  What information does each professional needs from the other to understand the property and explain their conclusion?

This seminar is a case-based discussion about how a property moves from asking price to contract price to appraised value, with the audience weighing in along the way. 

Three highlighted cases:

1. The leased property with “huge upside.”

The seller markets the property based on market rents, but existing leases are below market and some tenants have renewal options. Ask attendees what a buyer can actually achieve, how quickly, and at what cost. This lets you discuss leased fee interests, contractual restrictions, turnover, concessions, and the danger of capitalizing future income as though it is available immediately.

2. The building being sold for its redevelopment potential.

The existing use produces modest income, but the location suggests a more valuable use. The broker sees a compelling development opportunity; the appraiser must evaluate the probability, timing, costs, and feasibility behind it. Your land and highest-and-best-use assignments would provide good material here.

3. The owner-user who will pay more.

An adjoining owner or business operator offers a strong price because the property solves a particular problem. Explore whether other buyers share that motivation and what the transaction tells us about the broader market. This could work with a small commercial building, rural tract, or specialized facility.