Pillow's Real Estate

Archive for December 26th, 2011

Commercial property valuation is a combination of art and science. The experts are knowledgeable about the property to collect and analyze data before they make decisions about the value of real estate. Appraisal profession has developed a number of established analytical techniques, cost approach, income approach and sales approach compared. The best approach depends on the characteristics of the property in question.
Cost approach is more relevant for the assessment of commercial real estate properties are relatively new and special properties. Income approach is considered best for investment or income properties. Evaluator to collect data on actual revenues and expenditures compared to the subject property to rent, a comparison of data, costs, cost to industry data, market occupancy and rental market trends. The commercial real estate appraisers estimate the potential gross income, other income, effective gross income, operating expenses and operating margin. Operating margin is called indicators of market value by the capitalization rate conversion factor. The income approach can also be calculated via discounted cash flow analysis. Commercial real appraisers to estimate the revenue compared to the market approach to value. Sales comparison approach is often more than comparable to home ownership. After obtaining data regarding similar properties that recently sold, makes adjustments reviewer indication of the property’s market value to produce.
After examining each of the three approaches to the evaluation and prepare analytical approaches that are considered relevant to the review of the data value equal to the final conclusion.