How to Decide the Value of a Commercial Price

The price of a commercial property is found out using some simple formula. Using the net operating profit from the property is calculated and this helps us in determining the exact value of the property. So, when you are judging a commercial property, profit and loss statement is what you need to ask your broker. Panache Realcon is one the few agents who provide this statement always to our clients. Like our new project, Emporis Tower in Noida, we will provide every document you will need.

Some brokers might call this profit and loss statement as income properly operating data. Once you have this data sheet, you should then compare these numbers with the numbers you have received from other sources. This comparison is the way to get the real numbers. The problem with commercial properties is that the seller or the agent or the owner tends to exaggerate the income from it. They will also try to minimise the operating income of the property. 

There is an obvious reason behind this. The value of any commercial property is decided based on the net operating profit the property generates each year. The rule of thumb says, for each rupee of increment in operating profit, the value of the property increase by ten rupees. This can be due to increased efficiency which reduces operating expenses or can be from extra rent received. The age of the property also plays a good role in deciding the price.

Once you realise this, that the owner or the seller or the unethical agents will try their best to inflate the profit to get a higher price, you will know why it is so important to research the market before investing in the real estate properties.  Once you have done a thorough market research about the rents in the vicinity or the operating expenses of a similar property in the locality, it will be very difficult for the agent to fool you into a trap.

We, at Panache Realcon, strongly advice you not to only read our documents thoroughly before investing but also guide you to market trends so you can get a realistic view of what to expect from your real estate.