One of the common methods used to evaluate a commercial property is to compare its capitalization rate (also known as cap rate) to that of similar properties. This is calculated by dividing the property’s sale price by the net operating income.
How do you assess commercial property value?
To calculate the value of a commercial property using the Gross Rent Multiplier approach to valuation, simply multiply the Gross Rent Multiplier (GRM) by the gross rents of the property. To calculate the Gross Rent Multiplier, divide the selling price or value of a property by the subject’s property’s gross rents.
What kind of property is a commercial building?
A commercial property can be land, an apartment or office building, residential or retail rental space, an industrial complex or shopping center. Commercial property owners may decide to sell for various reasons, and it can take some time to sell the property.
What are the costs of selling a commercial property?
In an off-market sale to a cash buyer such expenses can be significantly reduced or completely eliminated. Setting the asking price for a commercial property can be a complex calculation. Typically, the seller hires a professional real estate appraiser to help with the process.
What do you need to sell a commercial building?
Once you settle on a price, the agreement should also specify the amount of the earnest money deposit, closing date and terms of financing. Inspect the building before putting it on the market. That way you have an opportunity to repair or correct any problems that could prevent a sale.
How to advertise a commercial property for sale?
Advertise the property in different media. Post a Commercial Property for Sale sign where it can attract attention, especially if the property is located along a well-traveled area. Design marketing materials to give buyers a general overview of the property.
