Article Categories
» Arts & Entertainment
» Automotive
» Business
» Careers & Jobs
» Education & Reference
» Finance
» Food & Drink
» Health & Fitness
» Home & Family
» Internet & Online Businesses
» Miscellaneous
» Self Improvement
» Shopping
» Society & News
» Sports & Recreation
» Technology
» Travel & Leisure
» Writing & Speaking

  Listed Article

  Category: Articles » Finance » Real Estate » Article
 

Comparable Sales and Your Investment: Determine the True Market Value of Your Property!




By Tony Seruga, Yolanda Seruga and Yolanda Bishop of Maverick Real

It is often difficult to price a property that you are going to sell, or evaluate the value of a property that you are going to purchase. Comparable sales, or comps, are the best tools that commercial real estate brokers, agents and investors have to determine the true market value of any property.

Comparable sales are properties that have actually sold, not just listed, that have the same zoning, acreage, intended use and other similar characteristics in relation to the subject property. These properties that have sold indicate what the market is willing to pay for such properties, and are the best to base the value of the property going to sale, or to be purchased.

Comparable sales may not always be the most accurate for your specific property. They could be from many years ago, may not be of similar use, many not have the same characteristics such as the availability of utilities, or may not have a comparable amount of road frontage, or could be a considerable distance from the subject property.

In order to get around this problem, you must use the closest properties that you can. You simply adjust the price according to the changes in the market or property characteristics.

For example, if a comparable sale was from 2001, and the current year is 2006, then you can adjust the price according to the appreciation that the overall commercial market has experienced in a specific area.

Or, if the subject property has a total road frontage of 200 feet, and the comparable sale property has frontage of 1000 feet, you can adjust the price or value appropriately.

As you can see, finding the true current market value of a property can take some investigation and adjustment in relation to the properties that have sold in the past. The more recent and similar the comparable sale is, the easier and more accurately you can assess the true value of the property.

It is a good idea to collect as many comparable sales as possible and take inventory of each. What are the characteristics? What are the uses? Assess each one individually and then group them together to determine an overall consensus. You should be able to determine the current market value at this point. The more properties you have to pool from, the more accurate a number you will have.

Very often brokers or agents supply you with comps from the area of interest as part of the service of selling the subject property. If you are not familiar with the area, you must be leery of the comps that they send you.

I have received comps of properties in the most affluent areas for a subject property that was positioned in a lower to medium class area which completely misrepresented the true market value of the property. Unless I had investigated further and asked many questions, I could have easily taken this property as a true comparable sale, and would have expected a far greater return than what I really would have experienced.

Unfortunately, as much as you want to trust the information that you are given by a source, you must always perform your very own investigation because brokers and agents are there to sell their properties. Many of them are honest and will do the best they can to give you the most accurate information. However, there are those who will dupe a buyer in order to sell the property and receive their commission. It is important to look out for these tactics. Although we don't like to admit that they happen, they most certainly do.

Using comparable sales can be tricky in an area where sales are not abundant. If necessary, use a similar city and find properties that may be more appropriate for the subject property. A broker or agent familiar with the area, one that does not have an interest in the subject property, may be a good source to analyze and critique the validity of the comps at hand, as well as applying them to the subject property.
 
 
About the Author
Tony Seruga, Yolanda Seruga and Yolanda Bishop of http://www.maverickrei.com specialize in commercial and investment real estate. As of May, 2006, they and their partners are managing over $600 million dollars worth of new projects.


Article Source: http://www.simplysearch4it.com/article/31099.html
 
If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/31099.html" as shown above and make it hyperlinked.



  Some other articles by Tony Seruga, Yolanda Seruga and Yolanda Bishop of Maverick Real
Why MAI Appraisals Will Get You Your Property
In the world of commercial real estate, not all appraisers are considered equal. It takes a certain expertise and knowledge to correctly appraise commercial property, and not just anybody ...

Where to Locate Potential Commercial Real Estate Deals
Locating potential commercial real estate deals can be the most important aspect of commercial real estate investing. In fact, without solid deals, you do not have any property in which to invest. It is really ...

Learn How to Construct a Letter of Intent
A letter of intent is a common way to express your intentions to purchase a property without having to write a formal, legal binding contract. The letter of intent is presented to a seller in the very ...

How to Identify Distressed Properties
Distressed properties can be located in basically every city. They are available to those investors who have a clear vision and an eye ...

Use Seller Financing to Purchase Your Property
A large part of success in commercial real estate is being creative in your ventures. This also includes how you purchase property. The more options you have to purchase property the better. After all, every ...

Top Reasons Why You Should Do Commercial Real Estate
Getting involved with commercial real estate could be the best decision you have ever made. Whether you are currently working within the real estate industry, or are new to the business, commercial ...

  
  Recent Articles
Effective Real Estate Strategies for Slow Markets
by Craig Higdon

Real Estate Management
by Ismael D. Tabije

Why A Buyer Should Protect Himself With Title Insurance
by Nef Cortez

Letting agents for fast letting services
by Rick Martin

Letting agents directory – making your search easier
by Rick Martin

Hot Commercial Properties in Gurgaon
by Anand Kumar

Home Sellers - "Right" Pricing Your Home
by Nef Cortez

5 Mistakes to Avoid When Selling Your Home
by Nef Cortez

Property Management
by Ismael D. Tabije

California Renters Squeezed by Lack of Affordable Rentals
by Nef Cortez

To FSBO or not to FSBO?
by Nef Cortez

Personal Insurance For Property Investors
by Luke Andersen

Can't connect to database