All Topics / Finance / Cost of Property Valuation

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  • Profile photo of raviravi
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    @ravi
    Join Date: 2006
    Post Count: 8
    January 27, 2015 - 10:10 pm

    Hi,
    Just need some guidance. I am looking at a commercial rental property which is not on the market but the owner is happy to negotiate a price close to valuation.

    Spoke to Bank of Melbourne to see who they use for their valuation and got a quote from their recommended valuer, who has quoted almost $1700 to conduct the valuation!

    Does that sounds normal for a property worth about $320k according to council rates? If I was applying for a loan who usually pays for the valuation?

    Thanks,

    Profile photo of superAndrewsuperAndrew
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    @superandrew
    Join Date: 2014
    Post Count: 188
    January 27, 2015 - 10:51 pm

    Council rates are usually based on the land value of the property not the property as a whole including the dwelling.

    Commercial property is valued using the Income approach or DCF so the valuation is a bit more complicated than the valuation of a residential property.

    Do you what the net income over last 5 yeas was?

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    Profile photo of raviravi
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    @ravi
    Join Date: 2006
    Post Count: 8
    January 27, 2015 - 11:07 pm

    The council rate value that I was referring to was the improved capital value.
    The net income over 5 years was property around 120k, however there is no security of lease

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099
    January 31, 2015 - 12:50 pm

    Commercial bank valuations will depend on a lot of factors ( you really need to neg and shop around too)
    – Lender
    – Type of commercial ( Specialized/ one shop/ multiple shops/ office/ retail/ warehouse etc..)
    – Cost of the transaction/purchase
    – Location
    – Construction or existing property

    Generally bank commercial valuation can range from $800-$4000+

    P.s Generally you pay…

    • This reply was modified 11 years ago by Profile photo of Mick C Mick C.

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    Profile photo of Albert WaldronAlbert Waldron
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    @albertusw
    Join Date: 2014
    Post Count: 1
    January 31, 2015 - 4:57 pm

    Hi Ravi,

    Commercial valuations run out to around 30 pages taking into account various things like economic factors for the industry the current tenant is in, the type of security (specialised or a simple factory unit for example) and the location.

    We have seen a valuation for a hotel/motel in a small country town which end up valued at just under $500,000 where the cheapest quote was $3,600
    By contrast for a typical Metropolitan factory unit this would have been around $1,250

    It does depend on the lender though some absorb some of the cost into the loan with a higher interest rate others simple ask you to pay the valuer directly.

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