Commercial Real Estate Appraisal

Commercial real estate appraisal is a combination of art and science. Knowledgeable appraisers gather and analyze data prior to making informed decisions about real estate value. The appraisal profession has developed a series of well-established analytical techniques; the cost approach, income approach and sales comparison approach. The most appropriate approaches depend upon the characteristics of the subject property.

The cost approach is considered most applicable for commercial real estate appraisals for relatively new properties and special-use properties. Commercial real estate appraisers are less likely to use the cost approach for older properties due to the difficulty of precisely calculating the amount of depreciation.

The income approach is considered most applicable for investment or income properties. Appraisers gather data regarding the actual income and expenses for the subject property, rental comparables, expense comparables, industry expense data, market occupancy, and rental market trends. The commercial real estate appraiser then estimates gross potential income, other income, effective gross income, operating expenses, and net operating income. Net operating income is converted into an indication of market value using a conversion factor termed the capitalization rate, using the following formula:

Market value = net operating income/capitalization rate. This process is termed direct capitalization.

The income approach can also be calculated using a discounted cash flow analysis. Revenue and expenses are estimated for a period of years and the resulting annual cash flows and gross proceeds from a projected sale of the property are discounted to a present value using a discount rate.

Commercial real estate appraisers also utilize the sales comparison approach to estimate market value. The sales comparison approach is often considered most comparable for owner-occupied properties. After obtaining data regarding similar properties that recently sold, the appraiser makes adjustments to generate an indication of market value for the subject property.

After considering each of the three approaches to appraisal and preparing an analysis for the approaches which are considered relevant, the appraiser reconciles the indications of value to a final value conclusion. The quality and quantity of data for each of the approaches is considered when reconciling to a final value conclusion.

O’Connor & Associates is the largest independent appraisal firm in the southwestern United States and has over 40 full-time staff members engaged full-time in valuation and market study assignments. Their expertise includes valuing commercial real estate, single-family, business personal property, business enterprise value, purchase price allocation for businesses, valuation for property tax assignments, partial interest valuation, estate tax valuation, expert witness testimony and valuation for condemnation. They have performed over 20,000 commercial real estate appraisals since 1988.

To obtain a quote or further information for a commercial real estate appraisal, contact either George Thomas or Craig Young at 713-686-9955 or fill out our online form.

The appraisal division of O’Connor & Associates is a national provider of investment real estate appraisal services including commercial real estate appraisals, comparable sales confirmation, comparable sales units of measure condemnation appraisals, due diligence, residential appraisals and investment hypotheses.

All commercial property types benefit from our appraisal services including nursing homes, discount stores, truck terminals, tennis clubs, supermarkets, country clubs, medical offices, mini-warehouses, restaurants, vacant lands, skating rinks, community shopping, centers, power centers, car wash facilities and service stations.

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things to know about real estate loans

Buying your own residential Florida Real Estate property when you plan to settle down or retire in the area can be easy, that is if you know how to and what comes along with it. To make things simple for you, you have to know all facts, requirements and the legalities of purchasing a home in Florida and this will make the process a lot easier for you.

First, you have to gain knowledge on the real status of the Florida real estate market. This will aid you in purchasing your home in the area especially when you are working on a tight budget. If truth be told, the real estate market in this state fluctuates and usually depends on the demand, residential properties available and the value of the United States dollar.

It is recommended that you buy the property you want when the real estate market is down. In fact, you may even get it in a much lower price, way below the original budget only if you know the virtue of patience – waiting when the moment of the “price is right” comes.

When purchasing a property, you need to know about some legalities. The most common legal documents that come with a purchase are the deed and the title. A title refers to the right of ownership, which can be partial or full, to the real estate property concerned. A deed, on the other hand, refers to that document that transfers the rights of a previous owner to the new one.

It is utterly important that you carefully read the deed or title the seller has before actually purchasing the property. Always look for a clean title. Read through it and be sure that the property is free from any mortgage loans, liens and burdens. This is in order to prevent any legal trouble later on.

The acquisition of a Florida real estate property can be a lot easier with the help of a real estate agent or representative. Sometimes, they are known and referred to as realtors. They know everything about the Florida real estate market and can give quality advice as well as services to their clients and customers. The agent can help a buyer look for the property that perfectly suits his chosen specifications in just a short period of time through their contacts and affiliates in the business. They also can gain access to the listing of the real estate properties in the different locations in Florida. Through this, you might be given more and greater choices to help you decide in your decision to purchase a home in that state. They can also help in the processing of the requirements and other requisites needed in the purchase of your chosen new home.

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