Commercial Real Estate Valuations

Commercial Real Estate Valuations

As an owner of a commercial real estate property or an investor looking to purchase commercial real estate, the bottom line in your decisions is critical in the return on the perceived profit or investment that a deal can bring to you. 

A Broker Price Opinion (BPO) estimates the value of a property and is performed by a real estate broker. A BPO is often ordered to estimate property value before a listing of property or a sale of the property, primarily on REO (bank owned properties) or properties owned by individuals. BPOs are typically not conducted by certified real estate appraisers due to appraiser licensing requirements. Walker Commercial Services, Inc. are not certified real estate appraisers. 

You should know the fair market value of a commercial property when agreeing to list the property for sale or when agreed to purchasing the property. You must remain dependent upon important commercial real estate valuation methods, whether you are an experienced professional or an aspiring investor. 

In conducting a BPO, broker uses a similar format to those of appraisers.

Sales Comparison Approach and the Income Approach: 

Sales Approach

This is a very popular valuation method adopted by commercial real estate brokers. It considers prices of comparable properties recently sold in the area to arrive at the value of the property.

Income Approach

This valuation method adopted by broker when finding the value of a commercial real estate. As an owner or investor, your goal is to find out whether the project would give profits on investment or not. This method calculates the net operating income (NOI) and the rate of return/capitalization rate (CAP Rate).