Deciding to purchase a property for commercial or investment purposes is a big decision. Property valuation is a way to reduce the risk involved in purchasing a property. A property valuation uses many factors to predict the price the property would sell for on the market. You can use this information however you want whether it’s deciding to buy at that price, negotiate for a fairer price, or if the property is worth your investment at all.
Commercial property valuation is a step that will help you make a sensible decision backed up by tangible, expert opinion. It helps you feel safe and secure in your decision if you decide to go ahead with the deal. Making sure you work with a professional valuer using the correct valuation techniques will ensure your decision is accurate and well informed. Professional property surveyors and valuers will give you the right valuation based on market evidence, helping you determine whether you will make a return on your investment.
When might I need a property valuation?
In general, a commercial property valuation might be needed if a property is being sold, leased, developed, mortgaged, taxed or insured. Knowing the value of the building will help buyers, sellers and professionals determine what to do with the property. There are a number of specific situations in which you might request a valuation for the commercial property you’re interested in. Here are some of the most common reasons:
- You may want to know how much your property should be sold or leased to advertise the property fairly
- If you’re looking to rent a property, you may want to know if the price you’ve been given is accurate or if it’s up for negotiation
- If you’re obtaining a loan, mortgage lenders will want to ensure the amount they’re lending is correct
- Your business may be asked to provide the value of your assets including the commercial property you own or lease
- If you’re gaining property insurance you will need to know how much the property is worth to get a quote.
Benefits of a commercial property valuation
- Gain an independent opinion
When deciding to buy, sell or lease a property, it’s important to know you’re doing so for a fair price. You must understand the correct value of the property to make the right decision for yourself or your tenants. If you’re starting or ending a tenancy, for example, you may wish to carry out a valuation so you have an independent opinion of the property’s true value. This will help you negotiate with stakeholders confidently knowing that you’re getting a deal that’s accurate based on market value. Property valuers are there to provide you with a value based on the state of the property rather than any preconceived ideas or outdated purchase price.
- Have full visibility of your property
Depending on the reason for your commercial property valuation, you can gain a lot more information than just the price of the property. Quality property valuers will provide you with a valuation report which details information about the construction and condition of the property amongst other factors. You’ll gain a comprehensive understanding of the building including its location, accommodation, environmental considerations and planning.
- Save time and resources
Having an up to date valuation of your property can save you time and money when making business decisions and working with clients. If your business is asked to provide the value of its assets, for example during an audit, you’ll need to have a property valuation available. Assuming an incorrect price of your property can lead to complications when trying to obtain loans, insurance, if your company is bought out or if there is a change in shareholders.
Valuing commercial property
Calculating the value of a commercial property is a complex process that takes time and expertise to complete accurately. Commercial property valuations take into consideration many more factors than residential property valuations which tend to be based on the market price of similar properties in the neighbourhood. Commercial valuations can be based entirely on the cost of the property but this won’t typically help you understand the potential income of your property.
Sales comparison is how residential properties are valued but isn’t as accurate as other methods. It can overlook unique aspects of the property being valued and disregard its features that may increase or decrease the value. Value per door is relevant when valuing buildings with multiple units and helps you understand the value per unit rather than the building as a whole. Income looks at the potential value of the property calculated by the revenue of the businesses operating in it. This helps you understand the potential income and sales activity of similar properties.
How to get a commercial property valuation
Commercial property valuations are complicated and require a professional who can conduct an accurate valuation. You can contact a valuation provider who will take into consideration all aspects of the property and the information you require from the valuation itself. They will provide a comprehensive valuation report detailing the features of the building, location and environment that impacts the property.
London’s Surveyors & Valuers have a team of dedicated commercial surveyors who provide valuations for commercial lenders and private clients. We specialise in hospitality, retail, industrial, office premises and mixed-use properties. As your valuation report may be required for various reasons we discussed previously, we can draft them in a bespoke form to meet your needs. Contact us to discuss your commercial property valuation requirements.