Commercial properties

Commercial property valuations have three methods of appraisal: replacement, income, and comparative. When a buyer seeks a loan for a commercial property, the lender requires a commercial appraisal, which includes all three approaches.

When they are sold, the sales price on commercial properties may be artificially high or low, depending on many factors including the income and tax consequences they will generate for their new owners. Often, commercial properties have "lease-back" arrangements that don't fit the residential buy-sell model. Some buyers are willing to pay more for a commercial property than the income-generating potential would justify. They might be banking on appreciation. The same goes for custom homes.

Merely publishing a "sales price" on a commercial property, and taxing the property based on that price, is like comparing apples to oranges. It just doesn't fit.