appraisal of commercial premises

Appraisal of commercial premises 

A premises appraisal  falls into the category of commercial appraisals, which are intended to know the fair and real value of a property, based on various internal and external characteristics of the property in question, such as the area where it is located, the services it has, the conditions in which it is located at the time of the study, among other characteristics of the property. 

An appraisal of a commercial premises is very useful for various purposes, because when you want to rent, sell or get insurance for your real estate, this study will be necessary. 

What is a business appraisal used for?

In general, a commercial property appraisal is an unbiased evaluation for the purpose of determining the value of a commercial property, of the most common reasons why one would need a valuation of this type are:

  • Help the sellers of these commercial properties to conclude fair and accurate sales prices.
  • Certify list prices to commercial buyers and determine fair bid prices for them.
  • Establish and support lease negotiations.
  • Transfer this type of ownership
  • Guarantee the amount of a loan to lenders (because a lender cannot provide a loan of an amount greater than the value of the property)
  • Owners may establish real value for mortgage loan purposes
  • Help with the study to achieve corporate mergers, issuance of shares or revision of the book value.
  • Put everything in order for business solutions.
  • Assist with legal aspects, such as contractual disagreements, environmental effects, etc.
  • determine the real value of a property for tax purposes, such as a reassessment process, inheritance, gifts and taxes on these gifts.
  • Calculate the liquidation value of the necessary sale procedures 
  • Business investors will be able to make informed decisions (a business appraisal can help investors decide on the purchase of securities, determine budgets and deadlines for future renewals.
  • Allowing a commercial broker to advise a client on commercial real estate investment matters, such as objectives, alternatives, resources, restrictions, and timing.

In the case of a commercial premises, any of the above applies, since what is usually sought is to know the amount in which it can be rented or sold.

Difference between commercial premises and commercial establishment

These two concepts can be confusing between them since a commercial premises refers to the physical place where a merchant carries out commercial activity, where he shows his products to offer, sells them or provides a service, there consumers are received and it is a point for sale to the public.

On the contrary, a commercial establishment refers to a set of goods or factors and elements that make possible the development of a business or a commercial activity, an example is inventories, brands, trade names and furniture. 

This may be an online business where you do not have a face-to-face deal with consumers.

It is possible that the commercial premises and the commercial establishment belong to the same natural or legal person or, on the contrary, belong to different persons and make an agreement or lease, there may be a commercial premises without the need for a commercial establishment but a commercial establishment if you need to have a commercial premises. 

It is important to differentiate them since before the commercial code they are the means and the result to define it in some way. 

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What documents are needed to make a commercial appraisal?

In the specific case of a commercial appraisal, it is necessary to have the following documentation:

  1. Application to carry out the appraisal
  2. The plans of the property to which the appraisal will be made
  3. Proof that utility payments are up to date 
  4. Current payment of the predial 
  5. scriptures 

Approaches to conducting a business appraisal

Physical or DirectCalculate the value of the replacement of facilities and construction materials to know the value of these today. 
Market comparisonIt is calculated in comparison with the market offer of similar properties within the same area or an area with similarities.
income capitalization It is compared with properties that are similar in the same area or a similar area that are for rent to determine and calculate the possible value of all future rentals of the property in question. 

Who can do this type of appraisal?

To do a commercial appraisal it is necessary to request the valuation from a expert appraiser with a certificate that certifies that he is a professional on the subject, he will advise you according to the needs as a client and will be responsible for going to the property to evaluate all the interior and exterior characteristics in order to determine a value, this process is known as survey . 

Remember that it is necessary for a professional to be in charge of carrying it out, otherwise it will not be an official document. 

An appraisal is valid from 6 months to 1 year as long as no significant modification is made to the property, so you can use it for all this time. 

At ANEPSA we are professional experts in this type of appraisals, contact to one of our advisors to provide you with the necessary information and you can know the value of your business premises as soon as possible. 

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