If you are buying or selling a commercial property, there is a good chance that you’ll have to contact industrial real estate appraisers Montreal. In this blog, we will discuss four ways that are mostly used to determine the value of a property.

1.    Cost approach

This approach is mostly used these days due to its acceptance and accuracy. It helps in determining the actual value by calculating the overall cost incurred in the property.

It is obvious that a seller will look for a return on the investment so when overall cost is calculated, finalizing the deal becomes easier. Property tax assessment consultants ask for all the documents related to land, material, labor, insurance, fees, and others to fix the total cost incurred. 

The cost formula remains always the same no matter which property appraisers you contact for valuation. 

Land cost + labor cost material cost + all the fees paid to various agencies -accumulated depreciation= property value

The appraisers also assume many factors others like how they can calculate the value of time that a person invested when his /her building was made. The cost approach method works better in the case of new buildings as the older buildings come with so many files and cost considerations. The chances of discrepancies also increase in the old buildings. Let's say, material value increases due to inflation. 

2.    Income approach

The income approach is helpful where the buyer has an intention to rent out or use the property to earn income. This approach implies that a property surrounded by so many business opportunities will get a higher valuation. 

industrial real estate appraisers Toronto uses common investing calculations such as capitalization rate, and net operating rate to reach the final calculations of the income-generating ability of the property. The income approach formula is as follows.

Net operating income (NOI) / capitalization rate = Property value

This approach is regarded as the most accurate one as the net operating income listed on the pro forma for the property. If the data on pro forma is incorrect, the valuation will be inaccurate as well.

3.    Sales comparison approach

This is hardly used by industrial real estate appraisers as it is very useful in the residential real estate sector. Here comparable or the sale prices of comparable properties become a major focal point in the finalization of property value. 

As commercial appraisers do not have plenty of comparable, this method bio me obsolete for them. Some industrial appraisers try to use this approach by finding the comparable well outside the current market that is not that reliable. 

4.    Gross rent multiplier approach

Again, this method is good but the professional industrial real estate appraisers Montreal hardly uses this method. Some unprofessional or individual appraisers use it as it is called a back-of-the-envelope and quick-and-dirty method of property valuation.

Formulas for this method is as follows

Gross rent multiplier x annual income = Property valuation

Please note, the used values in the calculation should always be correct then the valuation will bring reliable results. 

Conclusions

Property assessment is quite a subjective thing and so many points come into consideration. The best industrial real estate appraisers bring out all those facts and provide an accurate valuation.

Entrust UCAS team with your appraisal directives for your property. We are reputed Real Estate Appraisal Company, providing Approved appraisal of residential, commercial, institutional, agricultural property, etc. Inquire now for a free consultation & quotation.

Visit at https://ucas.ca/ or call at +1-888-959-7691