Always first analyse the asset and the methodology used to value this asset. Many times using incorrect methodologies cause difference in values. If methodologies are same, check for the both market based assumptions and capital stack risk assumptions. Many a times appraisers indicate a range and depending on where their assumptions lay in this range the values differ. After all these checks, it is important to understand the purpose, client instructions and local market deviations in the methodologies as per local laws. This will provide clear insights to the appraisers approach.

PURPOSE defines the valuation and is the starting point of any appraisal exercise. A property may have 4 to 5 different values each more suitable for a particular purpose. Purpose defines the approach and methodology to be adopted. If 2 reports issued by professional have different valuation numbers, then first look for Purpose of the Valuation. BASIS of valuation and PREMISE of valuation, becomes important after purpose to understand the rationale of the appraisal who has applied his/her mind. Purpose can be - Sale, Purchase, Insurance, Mortgage, Highest and Best Use, Property Tax calculation etc.

1. Compare a two Think of the appraisals like two kids guessing how many candies are in a jar. Look at both guesses and see why they might be so different. 2. Double check the facts Make sure they are using the right info about your property (size, features, location). If one of them used bad info, it might explain the difference. 3. Ask for explanation Go back to the appraisers and ask, “Why do you think this is the right number?” See if their answers make sense or if one feels more realistic. 4. Bring a referee If you still can’t decide, get another appraiser (like a judge) to settle the score. 5. Find a middle ground If one appraisal says $100,000 and the other says $120,000, maybe the real value is around $110,000.

Conflicting appraisals can be a challenge, but they’re also an opportunity to dig deeper into the property’s true value. I start by analyzing the methods used—were both appraisers accounting for the same comps, income approach, or market trends? Often, discrepancies arise from differing assumptions. Next, I compare both appraisals with recent market data, especially sales of comparable properties. In one deal, this step revealed an outdated comp that skewed an appraisal. If clarity is still needed, I bring in a third appraiser to provide another perspective or bridge the gap. Ultimately, it’s about uncovering the story behind the numbers and ensuring the valuation aligns with the property’s potential in the current market.

When I have encountered this problem, I refocus on what is unique about my subject property versus the comparables used in the appraisals. Moreover, the age of the comparable data can be VERY important. If the data is from slightly different time periods, I will tend to lean more towards the latest data received, all other variables being somewhat equal. And, I try to remember, appraising property is an estimate of value- we are not talking about tools with a 1% margin of error.

To verify and reconcile conflicting property appraisals, start by reviewing the methodologies and assumptions used in each appraisal. Analyze key factors like comparable properties, market conditions, and adjustments to identify discrepancies. Consult a third-party appraiser for an independent evaluation if necessary. Cross-reference the appraisals with recent market data and property records to ensure accuracy. Engage in open communication with the appraisers to clarify any inconsistencies. Use the reconciled findings to establish a fair market value, ensuring decisions are well-informed and defensible. This methodical approach ensures credibility and accuracy in the appraisal process.

Conflicting property appraisals require a methodical approach to resolve. Begin by analyzing the methodologies used in each appraisal—evaluate factors like market trends, property condition, and comparable rentals. Cross-check these with current market data and consult third-party experts if needed. Engage directly with both appraisers to clarify discrepancies and understand their rationale. Consider obtaining a third appraisal for an unbiased perspective. Transparency and due diligence are crucial in leasing to ensure valuations are accurate and aligned with market realities. Reconciling appraisals effectively builds trust and ensures informed decision-making in property negotiations.

Each appraisal method offers benefits and negatives to the Actual best valuation. Depending on the market and other variables, one type verses the other may offer greatly skewed results. Comparative Market Analysis is good for ballpark or initial estimates. The Cost approach to actual value plus or minus other factors. The Income approach for commercial and when other consideration can be calculated (word limit 😉 welcome). In every case there remains many variables; However, each method can and should compliment each other providing greater accuracy. Math noted, one should also consider human agency, a knowledgeable proffesional's experience, understanding and ability to consider ALL relevant factors cannot be substituted by just comps.

To reconcile conflicting commercial property appraisals, start by reviewing the appraisal reports, focusing on methodologies (income, sales comparison, cost) and assumptions like zoning, market trends, and property condition. Identify discrepancies in data, adjustments, or methods, and verify market data through reliable sources like CoStar or local MLS. Weigh each approach based on the property type and market conditions, make justified adjustments, and document your findings with clear reasoning. Engage stakeholders to discuss the reconciled value and align expectations, ensuring transparency and a defensible conclusion.

Not all appraisers are competent or created equal I’ve disputed many appraisals. First - verify comps, in order to do this you have to have the platforms and be a professional yourself, Costar, CREXi, and know how to analyze title company data. Second - Look at their methodology does it make sense? What type of market cap are they using if it’s an investment property or what type of zoning are they using for land? I’ve seen some incompetent lazy appraisers use residential zoned land for an industrial zoned valuation. Third - be competent yourself, how many appraisal classes have you taken for continuing education or otherwise? If you do commercial real estate being an expert, study, take classes and read.