Commercial Property Valuation

[BlueEyes]

I have a commercial property in Perth which was purchased in 2000. At the time being self employed etc I had to use our PPR as security to secure the funds to purchase. This worked out great as the property as gone up by more than 400% to date. I recently spoke to the bank to have that security removed so they need to have a valuation done on the commercial property. They told me if it was residential they would only charge around $200 for this but will need to get back to me in regards to the price to do the commercial valuation. I cannot believe they have came back with a quote of $990.00 for this. Having been in business it would seem that almost all costs of running a business are a lot more than personal ie: the prices are inflated for business. The problem is that you do not appear to get any substantial service or gain with it being for business just that they think they can charge more as you are a business therefore can afford more. Is there any truth in this from others experience and what do you think of that valuation quote.

Regards

Steve

PS: And to the naysayers please dont respond at all if all you have to say is "you shouldnt be in business or you shouldnt be this or that etc" its not why I come to this forum.

 

[Ridin-High]

I've heard roughly the same and higher for comm property blueeyes,

sucks eh

 

[BlueEyes]

At least I have managed to get the bank to get other quotes, we will see what they come up with. Should be a law against charging more just because its for "business purposes". They are performing the same bloody tasks ie:square metreage rate in the area.

 

[boods99]

At least I have managed to get the bank to get other quotes, we will see what they come up with. Should be a law against charging more just because its for "business purposes". They are performing the same bloody tasks ie:square metreage rate in the area.

$900 is dirt cheap...just as a matter of interest, what sort of comm property are we talking about? retail, offices, sheds?

Last full valuation we had done cost just shy of $14,000. Big building though.

Boods

 

[grossreal]

hi all
ball park is .15% of the value of the property is the cost of the val
so 16.5mil is about 24k that rule of thumb
thats a full val.
and just had a look at a couple of vals and the numbers about right within 1k anyway
comm is easier then resi as well but it just that they can stick it to you and they know it.
have fun

 

[TheShuffler]

Having been a commercial valuer for a number of years in a past life, I would have to disagree with grossreal - commercial is harder than resi and when it is for mortgage purposes, there is a lot more work to be done i.e. banks generally require a full report, the valuer has to do legal searches and read leases etc etc whilst with resi, there is the standard API approved 'tick-and-flick' pro-forma.

The fee of $990 seems cheap to me but good luck with the other quotes.

Cheers

 

[BlueEyes]

It appears $990 is "cheap" compared to the other quotes. It was I guess my lack of education in this regard. I always for some reason had it in my mind that to remove the security it may cost me around $500-$600 in total but it will be $990 + bank fees of around $500 which kinda sucks. Yeah the building has gone up significantly but you just hate higher than expected prices. In response to boods99 it is a factory/warehouse of 370 sq metres so not huge.

 

[grossreal]

hi TheShuffler
well I was on the phone when I read this post and asked one of my guys if this is correct.
and his answer was pig ar-e
yes they do need to get a new valuation but alot of the information is not done from scratch
unless you are valuing in an area that you have never valued before
the realty is that you are valuing in the same street and in some cases the building next door
and if you arn't some one else has.
also its usually the same valuer that valued the building last time so you are up dating the information
and if its an up date does that mean a discount on the fee cost
no
its the same cost
for me I don't worry as its a cost
and I know that its this type of cost before I look at a property so thats fine
but its money for old rope alot of the time

 

[TheShuffler]

Hi grossreal. Well I'm not sure who you were on the phone to however I guess we'll not agree on this point. However I don't think it can be argued that banks require more info when it comes to a commercial / industrial / retail val than they do for a straight resi val (I'm talking about a single dwelling - not a development site obviously).
Cheers

 

[grossreal]

hi
yes they do require more info usually because the numbers are higher.
for me I pay the cost because I have the number in my head anyway
so thats fine as its a cost
the issue for me is that the cost is a bit of money for old rope
but we pay money for old rope all the time so its not a big issue for me
and you won't reduce that cost
I use lots of valuers and they all charge around the same so there is no getting out of it

hope this helps

 

[RightValue]

$900 for a commercial valuation is ridiculiously cheap.

If they have valued something like that recently then at best it will still take a full day to do the valuation.

The lease needs to be read, after phone calls to source it.

The property inspected and measured.

The title needs to be ordered and checked (this is a $25 cost alone), and planning maps checked and copied to go in the report.

The valuer needs to investigate recent leasings to determine the market rent.

Any new relevant sales need to be analysed ..

Getting the leasing and sales evidence involves several phone calls and phone tag with other valuers and REA's.

The property has to be valued using two different methodologies, and then these need to be reconciled to arrive at the figure ..

Plus the large parts of the report need to be dictated or typed ... not like a pro-forma residential property pro report.

In comparison I would do 6 to 8 ressidential valuations in a day; fees for my day would range from $1000 to $1500.

Oh yeah, the commercial valuer gets paid a lower percentage of the fee than the residential valuer as the support costs are much higher.

The valuers in question must be hurting for work...

There is a reason I refuse to do Commercial work these days ..

cheers

RightValue

BTW... why do trucks (commercial vehicles) cost more than cars .. ??

 

[capitalEyes]

[QUOTEThe property has to be valued using two different methodologies, and then these need to be reconciled to arrive at the figure ..
[/QUOTE]

and don't forget the contract of sale as an input... I paid $1450 for the banks val at settlement and it did result in a more thorough val than for res, but the val came in at exactly the purchase price....

Uncanny. I must be able to nail market on my offers.

Still though, vals are a necesary cog in the hoc, reval, hoc machine.

 

[Ausprop]

that's pretty good... I thought the banks had instructed all vals to be purchase price less 20%

 

[RightValue]

that's pretty good... I thought the banks had instructed all vals to be purchase price less 20%

tell me... are you joking or do you really believe that?