Rochester, New York
339 East Ave #400
Rochester, NY 14604
(585) 546-1290

3 Methods for Conducting Real Estate Appraisals July 16, 2019

Rochester, Monroe
3 Methods for Conducting Real Estate Appraisals, Rochester, New York

The value of commercial real estate depends on a variety of factors, ranging from its size and condition to local traffic patterns and the revenue history of the property. To balance these elements and determine the worth of a building, real estate appraisals employ a variety of methods, each of which focuses on a different aspect of the investment. Understanding how appraisers reach their conclusions will help you get an accurate valuation before putting an office building on the market or investing in a retail location.

3 Commercial Real Estate Appraisal Techniques

1. The Cost Approach

The cost approach simply assumes that the value of the property is equal to the cost of purchasing land and building an equivalent structure, without factoring in future revenues and liabilities. In some areas, the value of the land may be more important than the cost of the structure being appraised.

2. The Sales Comparison Approach

real estate appraisalInstead of focusing on land value and construction costs, the sales comparison approach bases an appraisal on the current market price of similar properties. To calculate the value, real estate appraisers will examine records of recent sales of similar buildings in the same market. Because real estate prices can fluctuate dramatically, the results of a sales comparison appraisal can be highly variable.

3. The Income Capitalization Approach

Real estate investors often rely on the income capitalization approach, with factors in the long-term earning potential and the property’s current market value. Income capitalization real estate appraisals are calculated by dividing the property’s net income by its current price, based on comparable sales in the area. The resulting percentage can help determine whether a certain property will provide an acceptable return on the investment in the long term.


 

Whether you’re listing a commercial building for sale or looking for an investment opportunity, Galvin Realty Group, Inc. have the expertise you need and real estate appraisals you can trust. Their team of experts has been serving property owners and investors throughout New York’s Monroe County since 1987, offering comprehensive services informed by an in-depth understanding of the local market. To discuss your project and schedule an appointment, call (585) 546-1290.

Other Announcements, Events and Deals from Galvin Realty Group, Inc.
What to Look for When Investing In Commercial Real Estate, Rochester, New York
When you purchase commercial real estate, you need to scout out property that will earn you money. Therefore, it’s important to have a list of criteria before diving into any agreeme...read more
3 Ways to Retain Reliable Tenants, Rochester, New York
A condo rental can be a lucrative investment when you have reliable tenants. They can remove a lot of stress that comes with rental property management. To ensure they have ...read more
A Guide to Commercial Leases, Rochester, New York
No matter the size of your business, finding the right space for it is essential. Because the lease you sign is a commitment and is very different from renting a residential space, y...read more
A Brief Guide to Property Tax Assessments, Rochester, New York
Property tax assessments offer an estimate of the market value of a residential or commercial real estate property, which acts as the foundation for property tax bills. There is a pr...read more
What to Ask When Looking for Commercial Real Estate, Rochester, New York
While it’s an exciting challenge to look for commercial real estate for your business, there are many factors that you need to consider before settling on a property. Fortu...read more