A major factor that contributes to a successful Dallas office space is its location. An ideal business location can leverage a business; alternatively, a bad location could lead to its demise. It goes without saying that careful planning should be taken when selecting real estate for the physical location of a business. One crucial part to the selection process of real estate property that should not be overlooked is property valuation.
Property Valuation
Property valuation is performed to determine the actual market value of prospective real estate. It is crucial to find out whether the cost for leasing or purchasing a particular piece of real estate is justified by its business potential. Of course, any business would want to make sure that the cost for its investment would generate revenue in the long run.
A licensed appraiser normally conducts a property valuation. The result will then serve as a basis when deciding whether or a not certain Dallas office space is the best location for a business.
Although it’s the task of a licensed appraiser to do the property valuation, as a business owner it is also important to learn some of the approaches to property valuation. In addition, it is valuable to know some of the key terms that are often used when appraising in order to understand both the process and the results. Listed below are a few terms common to the property valuation process.
Commercial Comparable Sales
When it comes to determining the value of a particular piece of Dallas office space, there are three methods appraisers can use: sales, cost, and income comparisons. Of the three, the sales comparison is the most commonly used with particularly property valuation appraisals because it’s the easiest to report and explain to clients.
To do a sales comparison, one must first find a similar property to establish a baseline point of comparison. This is the most challenging phase in a sales comparison as properties closely similar to the one that is being considered aren’t that easy to locate. Thorough research should be done to find property that would favorably compare to the property under consideration in order to come up with an accurate analysis.
Matched Pair Analysis
After a comparable Dallas office space is located, necessary adjustments must be made to the figures to ensure an accurate analysis. The most common approach used by appraisers is matched pair analysis. This approach has three distinct parts: find, assess, and analyze.
- Find – To come up with an accurate matched pair analysis, the first step is to find similar sales of at least two to three sets identically similar but for one particular item. Since it can be extremely difficult to find such matches, in most cases additional adjustments have to be done before the matched pair analysis.
- Assess – The pair(s) of real estate property is then reviewed in comparison to each other. It can be examined in contrast based on either the gross sales cost or square footage sales cost.
- Analyze – Lastly, a thorough analysis of the indicated results should be done to ensure that the results appear logical before being presented by the appraiser to the client.
In order to find great office space, it is imperative that comparable sales within the chosen location be considered by the business that is purchasing or leasing such space. It really is not hard to do – don’t wind up paying too much for Dallas office space!