Category Archives: Commercial Appraisals
Palmdale Commercial Property Appraisal
I recently did a commercial real estate appraisal in Palmdale, CA on a property owned by a Palmdale commercial property owner who unfortunately had just lost his wife. His son had driven up from Brentwood (only 45 minutes away) to help him settle matters. Now, the son had phoned me and said that his lawyer advised him to call our firm, Valentine Appraisal & Associates because we are an experienced, certified and reasonable commercial real estate appraisal firm, and so I got hired for the job.
My Palmdale Commercial Property Appraisal Story
The son believed that his father’s Palmdale commercial property was worth around $2,950,000,based on a free online website service that you may have heard about (it rhymes with willow and begins with a Z). This free service has a reputation for being a somewhat reliable source for Palmdale commercial real estate appraisals. However, people involved in actually selling Palmdale real estate may not entirely agree with this assessment! In any case, this online service presented a real estate value that chimed a bell inside the son’s head. In fact, he told me that he believed the Palmdale commercial property’s value to be worth a cool 3 million dollars.
I met with him at the Palmdale commercial property to walk the grounds. The property was about 20 years old and located near the railroad tracks. Afterward,we sat at a coffee shop where he showed me some printed-out pages to substantiate his value. He seemed very confident that I would agree with … Read the rest
Commercial Property Appraisals in 2011 and 2012
Commercial Appraisals in Today’s Real Estate Market
If you’re working on a commercial real estate deal in Los Angeles, you may have seen an offer collapse because a buyer can’t get a commercial mortgage loan. As a result, some commercial real estate agents are suggesting that a seller offer some variation of seller financing. Structured carefully, seller financing not only can make a commercial real estate transaction possible, but can also help a commercial property to close escrow quickly and with fewer problems. After all, who knows the commercial property better than the owner of the commercial property?
Benefits of Seller Financing for Commercial Property
Sellers of commercial property can often negotiate a more favorable interest rate than would be available on the commercial real estate market. The seller will not charge “points” for the loan – even though many sellers who utiltize seller financing require that a buyer pay for a commercial property appraisal. (Apparently this helps a seller for tax purposes.) And as a result of the “no-fee-approach” to securing a commercial property loan, the seller might be able to get a higher selling price – or offer the buyer a better deal. As mentioned, there may be some tax benefits if the commercial seller structures the commercial loan as an installment sale based on how recognition of the capital gain is timed and/or how the loss is realized.
Drawbacks of Seller Financing for Commercial Property
The downside of a seller financing a commercial property is the potential for the buyer to default. The … Read the rest
Pipeline Easements
Pipeline Easements
Pipelines transport products from one point to another. Pipeline title is usually
acquired through an easement. According to Websters, an easement “is the right a property owner grants to another for the use of their property”.
Therefore, a pipeline easement is the right to construct, operate, and maintain a pipeline over the land of others within prescribed geographical limits.
How to Appraise a Pipeline involving a Pipeline Easement
There are two different ways to appraise a pipeline depending on if it is part of a transportation corridor or within a conforming parcel.
Reviewing published articles and books, interviewing buyers and sellers of property that is encumbered by pipelines, and sending out letters to property owners are all methods that can help when appraising pipeline.
No Acceptable Standard Width for a Pipeline Easement
There is no acceptable standard width for a pipeline easement. It is usually determined through negotiations. Initially, railroads arrived at the easement width by rounding up the diameter of the pipe to the nearest foot, then adding two feet on both sides as a buffer to ensure the pipeline’s integrity and security. But, railroads soon realized that pipeline users were getting free access onto their corridors to service and maintain pipelines, so they reasoned that since automobile lanes on public roads are typically 11 to 12-feet wide, and the width of a standard truck is 8 feet 2 ½ inches, a 10 to 12-foot width requirement to access pipelines seemed reasonable.
Pipeline Easements and Severance Damage
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Transportation Corridors
Transportation Corridors
A transportation corridor is a long, narrow strip of property that includes surface, subsurface, and air rights. It often connects two or more areas restricted to surface, subsurface, and air rights, for the deportation of goods and passengers.
Some examples of transportation corridors are: railroad and mass transit lines, public and private roads, pipelines, including oil, gas, water, and sewer lines, fiber optics, pedestrians pathways, aqueducts and canals, television cables, and electrical transmission lines.
How to Appraise a Transportation Corridor
There are different methods that can be used when appraising a transportation corridor, including Replacement Cost New Less Depreciation (RCNLD), Corridor Value (CV), Sales Comparison Approach, Across the Fence Value (ATF), Net Liquidation Value (NLV), and Going Concern Value (GCV). [1]
Replacement Cost New Less Depreciation (RCNLD) is based on the principle of substitution and is more commonly referred to as the “cost of assemblage.” It includes the cost of the part taken, appraisal costs, negations costs, title costs, grading costs, project management costs, and the acquisition and demolition of buildings. According to Dolman and Seymour, this cost can range from two to six times the Across the Fence (ATF) value. The Court of Appeals in People v. Southern Pacific Transportation Company (1978) held that “the cost of reproduction is an acceptable approach to a determination of just compensation.”
When several similar commensurate commodities, goods or services are available, the one with the lowest price attracts the greatest demand and the widest distribution. Corridor Value … Read the rest
Commercial Property
Income-producing property such as office buildings, retail buildings, hotels, banks, restaurants, service outlets, and owner-occupied properties that are capable of becoming income-producing should the owner so decide; usually zoned for businesses purposes.
(Dictionary of Real Estate Appraisal, 4th edition.)
