Opinion of Value
Opinion of value is the estimated value of a property based on expert judgment and the characteristics of the property being considered.
1. Location Information - general information about the location of the property including address, site map, building type, size, and age, and ownership
2. Market Area - information about the market conditions of the trade area such as demographic summary, local economic conditions, competition, development activity, access, traffic counts, and real estate trends
3. Property Conditions - detailed description of the subject property as well as commentary on its condition
4. Pro Forma Analysis - develop a stabilized pro forma for the subject property showing gross income, expenses, and net operating income
5. Range of Market Values - summarizes pro forma data by providing an estimated range of values based on the income approach to value
Income approach to value is based on the idea that a property’s value is derived from the income it produces. Our method to value is a combination of the direct capitalization method and discounted cash flow valuation method.
Direct capitalization converts stabilized net operating income into a market value using a cap rate. The rate is determined based on recently sold comparable properties or it is constructed using the band of investment method.
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