The Value of Appraisal
When you’re selling an efficiency solution in the built environment, you might consider emphasizing the potential for increased appraised value as an important benefit. Unfortunately, most energy solutions providers don’t take the time to reframe their proposed improvement in this context. Today, we’ll discuss some strategies for framing this potential benefit properly.
Suppose your prospect tells you, "We're not selling the building anytime soon, so increases in appraised value aren't important." There are plenty of opportunities in which a higher appraised value can help, even if you’re not selling the building anytime soon. Let’s say your prospect is interested in refinancing the building. Higher valuation paves the way to a more attractive loan-to-value ratio and/or provides headroom for a larger loan amount.
In some cases, a prospect will not want to retrofit a building even if they are going to sell it soon. They might tell you, "We are selling the building soon, so upgrading it now doesn't make sense." What does "soon" mean? Is it already on the market? Will it be next month? Or perhaps two years from now? Think about it. Let’s say the building is slated to be sold two years from now. That would give you a year to do the audits and the improvements, and another year to book the higher net operating income, which could support a higher sale price if the appraiser uses the income approach to appraisal and the capitalization rate is stable. Bottom line: don’t accept “soon” as an answer without finding out what your prospect really means.
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