Tips For Properly Outlining a Commercial Property Appraisal

A commercial appraisal is a form of property valuation, to establish the real value that a property has on the market. Appraisals are required in sales, taxation, mortgages etc. and are made by specialists called “appraisers”.  Get help with the process using a thorough commercial appraisal report writing software tool.

Knowing how to outline a commercial property appraisal is important, because the value of a property is not always the same with the purchasing costs.  There are 3 methods:

• Using the cost approach method, to assume that the value of the property is equal to the construction or replacement costs. However, this is not a very good approach, considering that any future profit from that commercial property is not accounted in advance.
• The market data approach (the sales comparison method) involves comparing two properties with similar characteristics and from the same market area. This method is not very reliable either, because there is no requirement that the two properties are identical.
• The income capitalization method involves the current value of a property AND the expected profit it is going to provide, taking also into consideration the risks.

Outlining a commercial property appraisal can be done using a mix of these 3 methods, plus other important factors such as the geographical position.

 

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