In today’s ever-evolving real estate market, it’s crucial to have a reliable and accurate valuation for your commercial property or portfolio. Many property owners believe they know what their assets are worth, but often, their estimations fall short of reality. The information you gather to determine your property’s value is paramount in making sound real estate decisions. In this blog post, we will delve into the key aspects of obtaining an accurate valuation for your commercial property.
The Reliability Issue
Many property owners tend to rely on opinions from friends, CPAs, wealth advisors, attorneys, or even brokers who approach them with quick valuations. While these estimates might sound enticing, they are often far from reliable. A hasty number provided without a thorough analysis is unlikely to reflect the true value of your property.
Collect the Right Information
To arrive at a dependable valuation, you must gather the necessary data to make informed real estate decisions. It’s essential to engage in a detailed discussion with someone who has visited your property or conducted a comprehensive analysis of your entire portfolio. Ask them to consider the past 180 days, as data from two years ago may no longer be relevant due to changes in the market, such as rising interest rates.
Key Data Points for Accurate Valuation
When discussing your property’s value, focus on three essential data points:
- Lease deals completed in the last 180 days.
- Sales that have taken place within the same period.
- The financing details of these transactions.
With these data points in hand, you can create a composite picture that more accurately reflects your property’s value.
Consider Different Perspectives
A reliable valuation also takes into account the perspectives of different parties, including potential buyers, appraisers, and lenders. Buyers can fall into various categories, such as investors, developers, users, or abutters. Each of these buyer profiles may value your property differently based on their specific needs and the market’s dynamics.
Appraisers and Lenders Matter
Understanding how appraisers and lenders assess property values is crucial. They play a significant role in determining the market’s overall perception of property values. Their reports and lending practices can significantly impact the final valuation of your commercial property.
Regular Valuation Updates
The best investors and successful companies often conduct valuation exercises at least once a year, and some even opt for quarterly reviews. Regular valuations help with critical decision-making processes, including capital expenditure plans, leasing strategies, financing options, and property acquisitions or disposals.
Seek Professional Guidance
If you’re unsure about the reliability of the information you’ve received or want professional advice on valuing your commercial property, consider scheduling a free 15-minute consultation with one of our experts. They can guide you through the valuation process and help you make more informed decisions regarding your property.
In conclusion, obtaining an accurate valuation for your commercial property is essential for making sound real estate decisions. By collecting the right data, considering various perspectives, and seeking professional guidance, you can ensure that you have a reliable estimate of your property’s worth. Regular valuation updates will keep you informed about market changes and help you make strategic decisions to optimize your commercial property portfolio.
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Frequently Asked Questions about Top Commercial Real Estate Companies
- What are your qualifications?I am a Certified Commercial Investment Member (CCIM). The certification is designated for those recognized as experts in the disciplines of commercial and investment real estate. With over 19 years of successful experience as a broker, I have brokered the sale of over 1,000 properties.
- How do you find a buyer?I utilize a variety of strategies to bring buyers to the deal. I have access to a strong and vast network of industry professionals. I have relationships with buyers and others who refer clients to me. Additionally, I use LoopNet, MLS and Costar and other online resources.
- Do I need to hire an attorney when selling my property?We are commercial property agents and do not provide legal advice. We do, however, work with skilled and experienced real estate attorneys and seek their counsel as necessary.
- What do commercial property brokers needs from their clients to expedite the process?Commercial property brokers need information from their clients. For example, a commercial broker will ask their clients to provide important details about the history of the property and other facts crucial to its sale. Open and responsive communication makes selling a commercial property much easier.
- How long does it take to sell my property?The length of time it takes to sell a property is dependent upon many factors, like the amount of due diligence required to get the property ready to sell. A sale typically averages 6-12 months in the bidding process.
- What is a 1031 exchange?A 1031 exchange is a swap of one investment property for another that allows capital gains taxes to be deferred.
- How are you determining the sale price for my property?Your broker will consider many factors such as the location of your property, the year it was built, the type of property, and the size of the property. Your broker should be taking a market approach, which means they are looking at recent sales of other properties that match many of the characteristics of your commercial property to determine the sale price.
- Does the grade of my office space matter?Properties are broken down into three classifications. Each property classification reflects a different risk and return because properties are graded according to a combination of geographical and physical characteristics. These letter grades are assigned to properties after considering factors such as age of the property, location of the property, tenant income levels, growth prospects, appreciation, amenities, and rental income. There is no precise formula that dictates which properties are placed into which class. Grade A space is the most expensive and presents the least amount of risk. Conversely, Grade C is the least expensive but has the most amount of risk. In most instances, it would be cost prohibitive to try and invest enough money into your property for the purpose of moving it up a grade.
- Why do I need a commercial property broker? I can sell it myself.There are important benefits to working with a commercial property broker. An experienced and astute broker will have strong relationships with other industry professionals to help locate buyers, will thoroughly understand market trends, and has tried and true marketing techniques and resources.
- How do commercial property agents get paid?Agents get paid by the property owners via commission. An agent’s commission does not affect the purchase price.
Links to greater Boston real estate market trends:
- Get the Most Reliable and Accurate Commercial Property Valuation
- Find out the top 5 questions to ask your commercial real estate broker
- Sales trends to watch in the Boston commercial real estate market