In determining the valuation of land real estate, key factors should be considered for appropriate analysis and market value. Everyone in the Charleston market is discussing real estate but few rely on the proper approaches toward value.
As sales transactions continue to be steadily climbing up at 8% since a year ago this quarter, it is pertinent that education in this area is timely. Understanding highest and best use of a site is first and foremost along with the specialized improvements needed including utilities. The cost approach is another method and what a potential purchaser would pay for a very similar property. The sales comparison approach is where recent prices paid in actual transactions are compared to the property under consideration. The income approach is the comparison of other income-producing properties with an anticipated NOI (net operating income); net operating income is most commonly used to gauge commercial sellers and buyers of an estimated valuation. These are considered standards in commercial real estate for market value but are also an opinion of aggregated data. There are additional metrics used in valuating property such as per unit size, per square footage, per acre price, and per square footage of frontage to a highway or school. The most appropriate approach overall is a combination of these standards and a solid relationship with a knowledgable real estate consultant in their area of expertise.