Time, efficiency and simplicity are necessary elements for a successful business – commercial property evaluation should be the same way. When the time comes for a business owner to have their commercial property appraised, Stellar Properties is ready to make the process as streamlined as possible. With over 15 years serving the community, we’ll answer your questions and work in your best interest.
Commercial appraisals differ from their residential counterparts in several key areas. For one, commercial appraisals involve research that extends beyond a building’s physical inspection. In fact, the physical inspection is one of the shortest parts and is followed by extensive research.
Commercial Property Evaluation
To clarify, commercial property evaluation is the process of assessing a commercial building’s value based on various factors including the building’s size, location, age and function. Surprisingly, the type of business ran within the building can also determine the type of appraisal method.
Beyond a building’s physical inspection, various other factors must be reviewed and verified such as zoning records, public ownership, demographic data and lifestyle information. Once this data is has been collected and verified, it should be complied with the data of similar building which have sold in the area.
Different Appraisal Methods
The three major appraisals used in commercial building evaluation are the following:
Replacement cost method
The name accurately describes this process where a building is valued by the estimated cost, or estimated replacement cost, of the building if it were to hypothetically be rebuilt. This estimation does however include depreciation and would best suite newer buildings less effected by depreciation and damages due to wear and tear. The reasoning behind this method is simple: if a buyer were two have to equivalent property, they’d select the less expensive property.
Sales comparison method
This method most closely resembles the appraisal process of residential homes. It works by comparing the price of equivalent, recently sold properties to determine the value of the property being appraised.
An appraiser would first research the local market for sales data and pending sales of similar properties and confirm that the data is accurate. They would then take all the similar properties and identify every relevant unit of comparison, such as price per square inch. With this data, and appraiser develops a comparative analysis to check data elements and make adjustments when necessary. Finally, the appraiser would compile the value indicators after adjustments and declare a value for the property.
Income capitalization method
The income capitalization method can be one of the most complex appraisal methods because requires a companies’ previous earnings to project future earnings. Beyond looking at past earnings, this method depends on enough market data to create such projections and is best suited for properties that generate income, such as investment firms.
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At Stellar Properties, our experienced and licensed property appraisers will work with you to answer all questions, and provide you with the most accurate appraisal offer for your commercial property. Call us today and speak to one of our professional staff.