Pre-purchase Valuations: How to Determine the Market Value of Commercial Property

Before investing in commercial real estate, understanding the market value of a property is essential. Pre-purchase valuations provide the buyer with a comprehensive assessment to make informed decisions and potentially paying more for a property. This article explores the importance of pre-purchase valuations and how a market valuation may help save you thousands of dollars.

The Importance of Pre-purchase Valuations

A pre-purchase valuation is not just about confirming if the asking price of a property is at market; its about helping put the buyer in a better negotiating position. A pre-purchase market valuation can also:

  • Risk Management: Identify any potential issues with the property that could affect its value in the future.
  • Negotiation Leverage: A thorough valuation can empower buyers during negotiations, providing them with credible data to discuss price adjustments.

Choosing the Right Valuer

Selecting a skilled and experienced valuer is crucial for conducting pre-purchase valuations. The valuer should be:

  • Qualified and experienced: Look for a valuer with a strong track record in commercial real estate. We only value commercial real estate.
  • Objective and independent: The valuer should have no connection to the property or the selling party to ensure an unbiased assessment.
  • Well informed about local market conditions: An understanding of local market trends is essential for accurate valuations. There are many micro markets in Melbourne, be sure to ask if the valuer has experience of valuing properties in the subject location.

Case Study

We were engaged recently to provide an independent market valuation of a food production facility by the current tenant wishing to buy from the landlord. A Contract of Sale was drawn up by the seller’s agent and presented to the buyer. Subsequently the assessed market value of the property was over $1m below the seller’s asking price. Our valuation was backed up by verifiable, recent comparable market evidence and thus provided the buyer with facts to negotiate a substantially lower purchase price all for the cost of a valuation report.

If you are planning to invest in commercial property and need a pre-purchase market valuation report, Power Commercial Valuations offers expert valuation services to guide you through your investment journey. Contact Power Commercial Valuations today to ensure your next commercial property investment is a sound and profitable investment.