How to Determine the Sales Price

How to Determine the Sales Price

Commercial buildings are priced based on 3 criteria:
replacement value with a deduction for depreciation (also called obsolescence), which is usually based on the age of the building the cost per square foot of sales of similar buildings a value of the cash flow and its return, which is called the cap rate.

Depending on the type of building, one or all three criteria are measured. This is a complicated area, so it is useful to have a certified appraiser or get a broker’s opinion of value. To get some idea of what a building is worth, I suggest going in person to the city assessor’s department. I realize you can go online and search buildings that have sold, but the person working for the city has a lot of information about what is going on in the city, or they may even keep an actual list of buildings that sold recently, which can save you hours of searching through records.

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