Steve Letson, CFE, MAI
Luke Mittner, MAI, CFE
Commercial properties primarily consist of retail, industrial, apartments, and office improvements, but also include a significant number of other uses such as hotels, banks, golf courses, gas stations, hospitals, auto dealerships, etc.
Three different valuation approaches may be used to appraise these properties.
- The income approach considers the property's revenue producing potential.
- The sales comparison approach evaluates the sale prices of similar properties.
- The cost approach identifies the estimated the cost to replace the property.
Given the number of commercial properties countywide, we rely on models to help us with the mass appraisal process. For example, the cost approach considers condition, quality, age, depreciation, and land value. For the sales comparison approach, we gather and verify market-oriented sales data for use in our sales comparison analyses. An income approach is developed by gathering confidential income and expense data we obtain yearly from property owners. Our income projections for market rents, operating expenses, and capitalization rates are obtained from confidential survey submissions and also from information we collect from industry reports.