The value of a site visit
In our world, there are two types of appraisals - site visit (or “in-person” or “inspection”) and desktop (or “remote”).
And, in our world, the question we are overwhelmingly asked the most is, “Can you do a desktop appraisal?” As you can imagine, clients almost instinctively ask for a desktop appraisal because they think they will get the same appraisal for a much lower fee compared with an in-person one.
With this in mind, we think it’s helpful and worthwhile to provide a brief overview of each type of appraisal and then share the pros and cons of each. In this post, we’ll focus on site visit appraisals - and, more specifically, the situations where conducting a site visit will likely result in better outcomes for the client which more than justify the difference in fees.
First, a quick and basic definition: A site visit appraisal is an appraisal with inspection or an assignment where the appraiser physically sees the assets to gather and / or confirm information about them. For some assignments, a site visit may simply be a walkthrough which allows the appraiser to verify the physical existence of assets; for others, it may involve minutely detailed descriptions and photographs of each asset.
Next, and perhaps most importantly, let’s look at the key benefits of a site visit appraisal. While many view the primary difference between site visit and desktop appraisals as the price, the truth is that site visit appraisals offer clients a number of important benefits, including:
Speed: While it may seem like a site visit inspection would take more time than its desktop counterpart, the opposite is almost always the case. That’s because a desktop appraisal requires a significant amount of effort and attention from the business owner who always has many more pressing priorities on a daily basis, which leads to delays. Instead, a site visit inspection requires little time and effort from the business owner.
Independence: The person providing information for a desktop appraisal is an interested party to the appraisal results. They can – consciously or subconsciously – affect the results in their favor. Conversely, a site visit ensures the asset information is observed and recorded objectively by an objective third party.
Confidentiality: This may seem counterintuitive, but an outside appraiser can be more discreet than a business owner in their own facility. They can complete a site visit quickly and quietly, after hours or on a weekend if needed. The business owner may not be able to complete the inventory quickly enough to avoid notice.
Increased valuations: Expert appraisers gather all the information they need to feel confident about the asset list. This gives the appraiser more confidence in situations like audit review, court testimony, etc.
Attention to detail: Business owners often don’t know which of their assets are important in terms of market value. Appraisers do, because this is what they do every day. They consider every item in a facility and know which items are the most marketable and valuable. They also know how to determine which items are included as M&E, which are real property improvements, and which are inventory. For a business owner, this is not always easy to determine.
As mentioned, clients always assume the desktop appraisal to be the easier and affordable option. Given all the benefits listed above, however, site visit appraisals are often the most efficient and cost-effective options.