What is a warehouse appraisal valuation? How do you value a warehouse? What are the 3 appraisal methods? These are questions that many business owners have when it comes to appraising their warehouse.
In this blog post, we will be answering all of those questions and more. We will also be discussing the two types of data an appraiser gathers and the best approaches for appraising a warehouse.
So, if you are interested in learning more about warehouse appraisals, then keep reading!
What is a warehouse appraisal?
A warehouse appraisal is an estimate of the value of a warehouse “the market value”. The appraiser will take into account the size, location, and condition of the warehouse.
They will also look at comparables to determine the value of your warehouse. When appraising a warehouse has similarities to appraising non-commercial real estate.
For instance, the appraiser will look at the warehouse’s physical characteristics and how they compare to other warehouses in the area to come up with the market value.
Commercial vs Non-commercial appraisal
When evaluating the two types of real estate, there are some key differences that you should be aware of.
First, warehouse appraisals often place more emphasis on the functionality of the warehouse than on its aesthetics. This is because a warehouse is primarily used for storage and distribution, not for living in or office space.
Second, warehouse appraisals often use different methods to value the property than other kinds of real estate. We will discuss these methods in more detail below.
Third, warehouse appraisers will typically gather different kinds of data than other variations of appraisers. This is because a warehouse is a unique type of property and requires specialized knowledge to appraise correctly.
Now that we have answered the question “what is a warehouse appraisal,” let’s move on to the next question: how do you value a warehouse?
How do you value a warehouse?
As we mentioned before, there are three primary methods that warehouse appraisers use to value a property: the cost, the income, and the market approach.
The cost approach:
This is the most common method used to value a warehouse. The appraiser estimates the cost of rebuilding the warehouse from scratch. They will then adjust this number for any depreciation that has occurred. This method is often used when there is not enough information available to use the other methods.
The income approach:
This method is most commonly used when the warehouse is leased out to tenants. The appraiser estimates the net operating income that the warehouse will generate. They will then discount this number back to its present value. This method is often used when there is a lot of information available on comparable properties.
The market approach:
This method is used when there are recent sales of similar properties. The appraiser will look at these and use them to estimate the value of your warehouse. This method is often used when there is not enough information available to use the other two methods.
Now that we have answered the question “how do you value a warehouse,” let’s move on to the next question: what are the approaches for appraising a warehouse?
What are the best approaches for appraising a warehouse?
The answer to this question depends on the situation. If there are not enough facts available, then the appraiser will likely use the cost approach.
If there are a lot of statistics available, then the appraiser will likely use the income or the market approach.
Warehouse appraisal checklist:
- The size of the warehouse space: The appraiser will need to know the size of the warehouse in order to correctly value it.
- The location of the warehouse: The appraiser will need to know the location of the warehouse in order to correctly value it.
- The condition of the warehouse: The appraiser will need to know the condition of the warehouse in order to correctly value it.
- The age of the warehouse: The appraiser will need to know the age of the warehouse in order to correctly value it.
- Comparable sales: The appraiser will need to know of any comparable sales in order to correctly value the warehouse.
The two types of data an appraiser gathers
The first type is physical. This includes things like the size, location, and condition of the warehouse.
The second type is economic. This includes things like comparable sales and the current market conditions.
What is an asset appraisal?
An asset appraisal is an appraisal of a warehouse that takes into account both the physical and the economic data. The appraisal describes the process of estimating an asset’s value, based on factors such as its cost, the income it generates, and its fair market value (FMW) compared to that of similar real estate assets.
The appraiser will use both the physical and the economic data to come up with a value for the warehouse.
Types of commercial properties
There are four types of commercial properties: office buildings, retail stores, industrial buildings, and multifamily dwellings. Here is a list of examples:
- Office buildings: office towers, corporate campuses, government buildings, business towers
- Retail stores: shopping malls, strip malls, big-box stores
- Industrial buildings: factories, warehouses, storage units, storage facilities
- Multifamily dwellings: apartment complexes, condominiums, townhomes
Now you know everything you need to know about warehouse appraisal valuations. You know what they are and how they are valued. You also know the best approaches for appraising a warehouse. So, when it comes time to get your warehouse appraised, you will be prepared.