Property Valuation Services
What’s Your Property Worth?
We Offer Free Valuation Services To Enable You To Maximize Your Property’s Sale Price in The Marketplace.
The value of a building ultimately comes down to the price the buyer is willing to pay and the seller is willing to accept. However, this ultimate market valuation, based on your initial pricing and determined only after your property has been on the market, might still leave you at a disadvantage due to a sub-optimum initial asking price.
We offer free property valuations because we stay in tune with market conditions and the ever-changing rules and regulations that impact property values. If our valuation number is greater than your initial expectation, you get the maximum value for your property by selling it at a higher price. On the other hand, if the valuation aligns with your expectations, or even in some cases, is lower than expected, this is also critical to know, as it enables you to optimize your decision-making and maximize the sale price of your property.
For example, a lower-than-expected valuation might suggest that owners should wait a little until that retail vacancy is filled, the property is refinanced at better interest rates, or some other market condition has been met before going to the market.
Regardless of the results, having clarity on the value of your asset or portfolio is the starting point for making optimal decisions and maximizing returns on your real asset investments.
Our building valuation approach is three-pronged: (a) the replacement cost approach, (b) the income approach, and (c) the sales comparisons approach.
Replacement Cost Approach
The replacement cost approach to valuation is based on the idea that a rational buyer would not pay more for a property than he or she would pay to build a similar one from scratch. The base formula here is:
Property Value = Replacement Cost – Accumulated Depreciation + Land Value
Replacement Cost
To estimate the replacement cost, we can either use the replacement method (which calculates the cost to construct a comparable building today) or the reproduction method (which estimates the cost to recreate an exact replica using the original materials and techniques and their costs).
Depreciation
Depreciation is the allowable accounting charge for loss in value over time due to wear and tear or aging of the structure. Currently, this is 27.5 years for multifamily properties and 39 years for commercial assets (tax class 4 in New York City).
Land Value
The land’s value is determined separately, typically through the direct comparison method, which relies on the sale prices of similar, recently sold land parcels to arrive at a current market value.
Income Approach / Cap Rate Approach
The income or “cap rate” approach determines a property’s value by dividing its net operating income (NOI) by an appropriate capitalization rate, expressed by the following formula:
Property Value = Net Operating Income (NOI) ÷ Capitalization Rate
NOI is the property’s gross rental income less all operating expenses. Cap rates are directly correlated to mortgage interest rates, so cap rates in 2025 are much more elevated than they were in 2021 when interest rates were lower, for example. Typically, the cap rate is selected based on those used in recent sales of similar properties.
Besides expecting higher cap rates when interest rates are high, buyers will also seek higher cap rates for properties that have more issues and may come with higher degrees of risk. Understanding the right cap rate to apply based on neighborhood, property, and opportunity profiles is key, and a primary reason for engaging experts in this process.
Although the formula itself may seem straightforward, the income approach to valuation requires careful analysis to not only accurately calculate the current-day NOI but also to determine its future growth trajectory.
For projections to be valid, they must be grounded in market evidence regarding future rent values and expense growth, occupancy/vacancy rates, market trends, expense inflation, expected maintenance, and any anticipated regulatory changes. As these are projections into the future, it underscores the extent to which valuations are as much an art as a science.
Sales Comparison “Comps” Approach
The sales comparison approach benchmarks your property against a group of comparable properties (“comp peer set”), and then adjusts value up or down based on qualitative and quantitative differences between your property and the peer set.
When investors, neighbors, or peers use the below terms, they are inherently using the sales comparison approach
- Gross Rent Multiple (GRM)
- Price per Foot
- Price Per Unit
- Cap Rates
For instance, let’s say that four properties on the same city block as your property each sold for $7.0m on average. We would evaluate whether there are similar valuation drivers that may support the use of the sales comparison approach to maximize your property’s sale price.
Similar valuation factors might include the following:
- Each property is located in a neighborhood with similar demographics.
- Each property, including yours, has roughly the same number of apartments.
- Each property has comparable percentages of rent-stabilized units.
- Each property has a gas boiler.
Distinct valuation factors that disfavor the usage of the sales comparison approach:
- Some of the properties are 100% rent-stabilized, while others are just 40% to 60% rent-regulated.
- Some properties have tax abatements (J-51, 421-a) in place, while others do not.
- Some of the properties have pending litigation in place and lots of violations, while others that have been better administered and managed are free of any such infractions.
- Some of the properties have significant wear and tear and require major capital expenditures from the outset, while others benefit from newer plumbing and electrical systems, boilers, and so forth.
Based on the net advantage (similarities) /disadvantage (differences), we may elect to discard this sales comparison approach. However, if we do choose to use it, we must closely examine each transaction to try to triangulate the full value of your building, based on its overlap and differences compared to similar properties, such as those in the comp peer set.