For many commercial real estate investors, the appraisal process is overwhelming but necessary. Whether you’re trying to determine the value of a property you have just inherited, tracking your portfolio of property investments, or applying for a new loan, seeking advice from an excellent Columbus commercial appraisal company can help you get a better idea of how much your property is worth. But, how exactly is valuation computed?
While there is no one-size-fits-all solution for property valuation, there are some tried and tested ways that you should know. There are three main types of commercial real estate appraisals, and they are as follows:
One of the most common ways real estate appraisers will value the property is based on its ability to earn. As most investors buy properties with the intent of making money from them, it makes sense to give potential buyers a glimpse into how much they can expect to earn.
Commercial real estate appraisers will divide the historical or projected net operations earnings by the property selling price to get the capitalization rate using the direct capitalization method. With this, future investors will be able to get a better idea of when they can expect to make their money back from purchasing your property and if it’s within a reasonable timeline.
If your property has no historical operation data or is difficult for you to estimate how much it can due to unforeseen circumstances, real estate appraisers can value it through a cost approach.
Through the coast approach, real estate appraisers estimate the cost of the land and the cost to construct the commercial property on top of it to get the perceived value. Depending on its use, they may also deduct the cost of demolition, physical issues, and perceived repairs. These are the costs that a buyer should expect to shoulder if they purchase your property and use it for commercial use.
Lastly, if your property is located in a primarily market-driven area, your real estate appraiser may recommend that you do a sales comparison method. Many seasoned commercial appraisers would have already experienced how much similar properties have been valued previously for the same intent.
Keep in mind that while property valuation uses these methods, experience tends to vary across the board. With this, these methods are only as effective as the competency of the person doing the appraising.
Columbus commercial appraisal companies have a proven track record valuing your particular property type and specific need. For example, if you are looking to appraise a hotel property as collateral for a loan, make sure to hire someone who understands what factors in the valuation will increase your chances of application success.
Finding a reliable commercial real estate appraiser is crucial – It’s best to see all of your options and not rush into a commitment right away. Talk to our Columbus commercial appraisal companies if you have any questions.
To place an order with Allstate Appraisal, fill out this online form, and we will get back to you regarding your commercial appraisal in Columbus as soon as possible. We strive to provide options to make the appraisal ordering process much more manageable. Contact us today for a quote.
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