Determining Value - The Seller's Point of View



Congratulations, you've made the decision to list your commercial property or that prized half-acre parcel, a cherished inheritance from your wife's family, now nestled in the heart of your bustling town's business district. Now, the million-dollar question looms large: What is the true worth of your property? It's tempting to give the cheeky response of, 'Well, it's worth what someone is willing to pay for it,' but in reality, determining the right asking price is a delicate balancing act. You want to attract potential buyers without deterring them, all while ensuring that you, the seller and owner, get the best and most accurate value for your property. 

The initial step in this process is to seek guidance from a seasoned professional in the world of real estate brokerage, specifically one who specializes in your local market and possesses an intimate understanding of its dynamics. An experienced commercial real estate broker, with their finger on the market's pulse, should be able to swiftly provide you with a valuation range using two time-tested methods.

One commonly used method is the market data approach. This approach involves scrutinizing the sale prices of comparable properties in the vicinity. While this method may seem straightforward, don't be too hasty in drawing conclusions. Even in bustling markets, each property is as unique as a fingerprint. A skilled commercial real estate broker can identify the distinctive qualities of your property, ensuring a more accurate valuation.

Another method, known as the income approach, is employed for income-generating properties. This technique is relatively straightforward – it involves calculating the total rental income minus operating expenses and applying a suitable capitalization rate. However, just like the market data approach, there are nuances to consider. Properties may have intricate income and expense structures, further underscoring the need for a professional's discerning eye.

These two valuation approaches will furnish you with a range of possible sale prices for your property. In over three decades of experience in the commercial real estate industry, I've yet to encounter an owner who wishes to set an asking price at the lower end of that value range. Naturally, we all aspire to secure the highest possible return on our property investments. Therefore, it falls to the commercial real estate broker to assist in setting a price that does not discourage potential buyers due to an exorbitant figure but still guarantees that you, as the seller, receive a fair and competitive offer.

In all, determining the right asking price for your commercial property or cherished piece of real estate is a pivotal decision that demands a delicate touch. The path to an accurate valuation begins with the guidance of a seasoned local real estate broker who can employ both the market data approach and the income approach to establish a range of potential sale prices. While the uniqueness of each property necessitates an expert's discernment, the ultimate goal is to strike a balance between attracting potential buyers and securing a competitive offer for the seller. With the guidance of an experienced professional, you can embark on this journey with confidence, ensuring that your property's worth is assessed with precision and fairness.

All The Best To You, 

Brad Neihouser 
765-427-5052
bneihouser@shook.com
Cut Through The Noise. Get Straightforward Advice. 


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