Commercial Property value

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AdamWrent

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I'm sorry if this is in the wrong section-
I am looking at setting up a new business and have decided to buy the premises I'm interested in rather than rent (there are specific reasons for this, mainly tax); however I am having difficulty in working out a true value on the property. There are a few similar units in the area available but this one is my preferred. It is brand new. As far as I know it has been on the market well over a year. I originally got in touch with the estate agent as it was for rent, but I expressed an interest in buying. The owner is one of the larger builders in the country.
I'm hoping for some advice on placing a bid for the property, the estate agent has told me what the December 2008 independent :)rolleyes:) valuation was, and he seemed to be using that as our reference.
All advice is much appreciated,
AW
 
Golden Rule No.1. Don't take the valuation of an Estate Agent as the market price. Even since last December the commercial market has dropped significantly. A bank will not lend on a property based on the price you are paying. They will be based on the value that they obtain from their valuer only. The value they obtain will be used as a guide and will be heavily discounted for lending purposes.
 
Why not ask another EA to value the property? If Bank will lend to you it will be on the basis of their valuers value so why not ask the bank for a list of their valuers? You can offer then what you think is fair value or even a much lower value. The vendor can choose to do business with you or not.

After that, remember that you don't as a prospective purchaser always get to decide the price. The Vendor may be willing to negotiate on price. Or not. Not everyone needs to sell.
People tend to forget that.

mf
 
Take at least 30% off the December price and use that as a guide -- if you yourself are happy with that price. It is an open market and a buyers market at the moment. (likely to be that way for at least another 18 months). And don't be put off that its owned by one of the largest builders in the country. The bigger they are the easier they are falling at the moment.
 
The best way to find out the value is to compare it to others like it in the area that have sold recently.If there hasn't been a sale in the past six months you could be in for a bargain.Don't be afraid to offer way below the asking price as this large builder could be in a very distressed way financially and a motivated seller.
 
Thanks for the replies so far guys. I think it would be a good idea getting the banks valuer in. I know sales in the area are very poor latey and there are a few vacant spots. I'd love to know how desperate the builder is for a sale.
 
I know that you want to buy rather than rent but the rock bottom rental figure they will accept should give a very good indication of the price they will accept for the purchase.
They used to use a multiplier of between 15 and 20 times the annual rent.
In the current market in your shoes I would use 15 times the rock bottom rent they will take and then discount it.
Its a buyers market big time-you could also go to the bank and if it is local enough the manager will have a very good idea of the value.Ultimately the bank will call the shots anyway.
 
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