Nowhere is the accurate valuation of properties more crucial than in commercial real estate. If you’re about to make a large investment in a property or if you are considering putting your property on the market, “know before you go” is crucial to achieving your financial goals.
We have 15 years of experience in valuating commercial properties based on industry-standard criteria that have been tried and tested since the beginning of human settlement. If you are a seller, we will also advise you on issues that you can correct (within reasonable expense) to obtain the maximum value for your property.
Tried-and-tested methods of valuation
In commercial real estate, we use three methods to assess the price of properties. We use all of these methods for the valuation of every property. Years of experience have thought us that these methods should all end up in a relatively narrow price range; this tells us that our valuation has been accurate.
The comparables method
With the comparables method, we find similar comparable properties and see what they have sold for recently. The tricky part of this method is using comparables that are truly comparable, and this is on what the accuracy of this method depends. We have over 10 years of experience in performing these valuations and are intimately familiar with what the true comparables are in commercial real estate.
The income method
An important feature that distinguishes commercial real estate from residential real estate is that the properties are meant to produce income. Income is a very important factor in pricing a commercial property. We carefully review all existing leases and put together a true picture of what the property can expect to raise in income over the next few years. Not just the “pro forma” income, which is the income that a property should theoretically command under ideal circumstances, but the actual income that can be reasonably expected in the foreseeable future in the geographical area where the property is located and under current market conditions.
The replacement value method
The third method we use to valuate commercial property is the replacement value method. Using this method, we calculate what it would cost to replace the asset with a comparable property that performs the same function.
The use of these methods will provide slightly different results (especially when the local market is overpriced), but they will all fall within a relatively narrow range of value. This is when one knows that the valuation has been performed acurately.
Full, detailed real estate valuation and broker’s price opinion for commercial property—$995
We will perform a comprehensive, detailed and complete analysis of your commercial property, including reading all current leases and calculating the current market value using the three methods described above.
We will also determine the “highest and best use” of the property, which is the use that would produce the highest value for a property, regardless of its actual current use. This includes checking zoning and county and city planning.
We will do a detailed, in-person inspection of the building and meet with the owner. We will also re-measure the property if this is needed. (Note: if repairs are needed, we may recommend an additional outside inspection by a construction professional at an additional cost, if we believe that making these repairs will substantially increase the value of the property at a reasonable cost.)
We will review the income statements and financial information of the property and devise accurate models and spreadsheets of the projected income that the property can reasonably expected to receive on a yearly basis.
As part of the valuation, we will let you know what you can correct/fix/repair to obtain the maximum value for your property.
We are experts in solving problems related to real estate, including financial problems. If needed, we can get you an investment loan to make improvements to your property.
We can also help you do a 1031 exchange, so that you can invest the funds of any property sale into a new property tax-free.
To schedule your consultation, please contact Alejandro Szita at 310-294-941