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Valuation Methods for a Commercial Real Estate Appraisal

Woman walking into CRE property

Real estate appraisal is both an art and a science. Brokers, agents, owners, and investors use appraisals to determine a property’s market value. At the most basic level, the market value is a property’s selling price on the open market. But how do you determine the value of a piece of real estate? Below, we’ll look at a few basic concepts which relate to commercial property values. Then we’ll review three common real estate appraisal methods: sales comparison approach, income approach, and cost approach. Basic Terms and Concepts When speaking to various commercial real estate professionals, you might hear terms like value, cost, price, or market value. But what do these terms actually mean?  Before diving into valuation methods, let’s explore these basic concepts in relationship to commercial real estate. Value: The worth of a property’s benefits to the owner over a period of time. Cost: Actual expenditures like materials or labor. Price: The amount […]

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