18 Dec How do I find the value of a commercial property?
Finding the value of a commercial property can be exceptionally trickier than that of a residential. The reason for this is because you’re usually provided with a long list of comparable residential properties that have already sold. So, when you’re in a subdivision, you may be in one house out of a hundred or even several hundred that can be sized up against the others. They’re generally built at the same time, at roughly the same size with the same bedroom/bath mix and features.
In most cases, you have sales within the last year or six months from the subdivision that you can use to find the average. To take it back to fifth-grade math, we’re figuring out the median value of the properties considering the similar characteristics and property values alike. Add up the value of each property and divide it by the number of units. Easy, right?
Well, commercial property is very different. You’ll not only have a lot of buildings that are next to each other, but each will vary in numerous ways. In terms of functionality, one warehouse ceiling height may be higher than the other; the size difference too profound, location, or visibility are all functional factors used when calculating commercial property value. While it is more troublesome when dealing with these properties, it can also be much more lucrative. Commercial appraisers and brokers earn a large chunk to take home with them when they appropriately price the property they’re looking to sell. The first step to this is merely to look at similar properties to yours around the area and compare it as is done with residential, even though it’s a bit trickier. To take all commercial sales similar to yours and compare is nothing short of an art, and although delicate, it helps exponentially to have an expert on your team that has thorough experience doing that exact work.