Appraisal Matters

Like my prior post on ceiling height, sprinkler adjustments should not be done by rote.  Here’s why:

• Most brokers I’ve met say that sprinklers do not matter.  Developers only put them in when they have to because they do not get extra rent for them; why incur the cost?
• Sprinklers are now generally required by code and older buildings that did not have them prior to current code are not required to retrofit.  The fact that so few have, shows that there is no additional rental premium for sprinklers, so no adjustment should be made.

An easy way to find out if sprinklers should be adjusted is just to ask the broker and especially the seller, buyer or tenant(s).  Was it a factor in their decision process?  Make up and save a table to keep track of each conversation and you’ll quickly have a supported database for making or not making an adjustment.

John Simpson, MAI