Commercial Property Valuation
How is a commercial property valuation different from a standard home valuation ?
A commercial property can range from a strata office suite to a multi-storey building. When you’re purchasing commercial property, you are usually dealing in substantial sums of money, which is why it is important to do your research.
In these instances, independent and objective commercial property valuations are essential. They will save you time and resources in the long-run and give you a much better chance of a smooth transaction, especially when lending is involved.
Although a commercial valuation will be a requirement of your lending body, for the preparation of company accounts or a probate matter, it is also important to know what the commercial property is worth at the outset.
Especially, if you are the purchaser, as it would be disappointing to find out the bank was prepared to loan you considerably less than you needed to go ahead with the deal.
The estimated value of a commercial property is based on the amount of income it produces. Your agent will give you an estimate that is based on what similar properties in the area are making. And while the bank will be using a similar comparative market analysis, it will also be employing complex mathematical equations to come to a final figure.
To Find A Good Real Estate Agent in Your Area to Help With Your Property Valuation Click Here
Are there alternatives to a Commercial Property Valuation?
While a Commercial Property Valuation is essential, it won’t be cheap and there is something you can do in the meantime if you are at simply at the ‘what if’ stage. This is the time to get to know a few different agents in the area and see what information you can get from them for your own research.
Remember to ask for evidence of recent appraisals and sales figures. This way you will know you are dealing with the facts.
If your agent can’t come up with figures, but you’re getting more and more interested in the property, the next option available to you is a pre-purchase valuation.
A pre-purchase valuation costs relatively little in the scheme of things, but can save you money in the long-run and draw your attention to information that may not have been highlighted to you previously. For instance, perhaps there is a defect in construction, a legal clause or a council ruling that would impact your future plans. All good things to know before signing a contract.
What to expect from a Commercial Property Valuation
A Commercial Property Valuation requires answers to key financial questions. The criteria you will need include the following:
Location: address
Details: how many stories high, number of units, year it was built, size in square metres, any business for sale in the building
Financial: Annual Rent
Collection loss
Additional Income (from vending machines, storage etc)
Vacancy
Management fee
Annual expenses
These reports are based on market and economic statistics and may be given as a range. For example; low, medium and high.
It is suggested that 50% of all commercial properties will fall within the ‘low’ category and the rest will be even across medium and high. Many properties will have factors that mean they fall into the low range.
These determining factors include things such as low income/high expenses, location in an undesirable area or far from the CBD etc.
When selling or purchasing commercial property it is always wise to ask questions about the history of the property, seek a pre-sale valuation - and if you are not seeking finance - solicit a professional and independent commercial property valuation before signing a contract.
To Find A Good Real Estate Agent in Your Area to Help With Your Property Valuation Click Here