5 Reasons to Undergo a Commercial Property Valuation Before Buying
The thought of purchasing a commercial property can be daunting for business owners. The complexity doubles when you consider the necessity of commercial property valuation, seeing as people often think it to be more complicated than an appraisal for residential land.
The valuation of commercial properties can be complicated because it involves factors that may influence the yields of your investment. Some examples of these factors are zoning, transferable business assets, access to complimentary business, easements, foot traffic, and more.
Why is Commercial Property Valuation Important?
You don’t want your investment to go to waste. Therefore, hiring a reliable commercial property valuer is the ideal choice. These real estate professionals have the expertise to take the problem off your hands and ensure your transaction is sound. This includes implementing different valuation techniques—the cost approach, sales comparison approach, income capitalization approach, the value per gross rent multiplier, and value per door.
Here’s our case for commercial property valuation:
#1: It’s Helpful For Obtaining Finance
The correct valuation of your property will help you obtain finance for buyers in search of additional back-up from the bank. This is to support buying a new property, cover the cost of maintenance, raise capital, or even secure your loans.
#2: It Sheds Light On Necessary Repairs
You can easily determine any damages to the property by comparing the valuation at the start of the lease and at the end. Valuation is not only highly beneficial to those purchasing property, but also to businesses that do not own their own premises but pay for a lease.
Valuations make it easier for landlords to make a claim for repairs once the a expires. A commercial property valuation ensures that landlords cannot demand an amount beyond the decrease in property value. For instance, if the repair costs $10,000 but the value of the property has plummeted to $5,000, then landlords can only claim up to $5,000 for repairing liabilities.
#3: It Aids in Securing Loans
Any business that wants to secure funding from a bank has to undergo property inspection to ensure it’s secure and meets the standards. The process will only progress and increase a start-up’s chances of acquiring a loan by obtaining a property valuation. This is because a valuation provides lenders with a clear picture of the current market value, making it easier for businesses to obtain an appropriate amount.
#4: It Ensures Reliable Financial Figures
Unlike other assets, commercial buildings require a valuation to clue relevant parties in on the current market value. With that in mind, pushing for an up-to-date valuation can benefit your company’s account purposes by cutting back on time and money when dealing with clients.
#5: It Makes Calculating Capital Gains Easier
You need to acquire a formal written valuation when selling your premises if you want to move forward with the calculation for the Capital Gains Tax. A complete valuation of a property can fast-track and smoothen the process.
At its core, understanding the value of a commercial property is vital in reaching the most probable price an asset can sell in this open market. It also provides the baseline in which the lender determines the amount of debt it can cover, which can help you sign off better deals on mortgages.
Looking for a registered property valuer in NSW? We’re here to help! Get in touch with Valstar Valuations today to see what we can do for you!