How is commercial property appraised?
When appraising commercial real estate the Assessor generally applies the three generally recognized approaches to value. This leads to three separate indications of value. These values are then reconciled to arrive at a final value conclusion. Under the cost approach the value of the land is estimated first. To that the replacement cost of the buildings or improvements are added. Accrued depreciation is subtracted and the result is added to the land value to represent the value of the entire property. Under the market approach, sales of similar properties are analyzed to derive units of comparison such as price paid per square foot, or price per rental unit, or price per $1,000 of gross income. These are then applied to the subject property to arrive at an indicated value. The third approach to value is the income approach. This approach to value is based on the concept that the value of income producing property, is directly related to the level of income which they can be expected t
