Property Valuation Query
Discussion
Pal of mine is selling his practice, ground floor consulting rooms and first floor self contaned flat, a converted semi-d in a residential area.
Estate agent reckons property value is £575,000, the valuer for the purchaser says it's worth £375,000 because it's a commercial property.
Can anybody throw some light onto this, or he's £200K out of pocket!!!
He's drawn a blank so far....
Rgds
Mel
Estate agent reckons property value is £575,000, the valuer for the purchaser says it's worth £375,000 because it's a commercial property.
Can anybody throw some light onto this, or he's £200K out of pocket!!!
He's drawn a blank so far....
Rgds
Mel
In my experience, properties like this are valued on a cumulative basis i.e the ground floor in commercial use is worth X, the upper parts in residential are worth Y. X + Y = value.
What are the planning uses, do the individual parts have the necessary consents, and is the flat vacant or sold off?
What are the planning uses, do the individual parts have the necessary consents, and is the flat vacant or sold off?
Make sure he gets to see a copy of the valuation report. I have known of cases (in my time as an estate agent) for buyers to say the property had been down valued by the surveyor to further negotiate a price reduction.
Also check it is not a valuation for insurance purposes - these are usually a lot lower as they don't include the value of the land.
Also check it is not a valuation for insurance purposes - these are usually a lot lower as they don't include the value of the land.
It may be worth him checking the permitted uses for his property.
Is he selling it as part residential and part business, or as a potential home?
If the most valuable is residential, has he considered trying to get PP for the whole as residential?
May be worth an informal chat with the local planning officer.
Is he selling it as part residential and part business, or as a potential home?
If the most valuable is residential, has he considered trying to get PP for the whole as residential?
May be worth an informal chat with the local planning officer.
Sounds like the purchaser is taking the p155. Was obviously interested at the 575 asking price, so knows its worth around that much!
As has been alluded to, check that the valuation isn't for insurance purposes, as the insurance company only wants to know the cost to rebuild, not the cost to re-purchase!
Definately worth checking that a change of use from commercial to residential is allowed, but as its being sold as commercial + residential flat, that would be the buyer's concern, not the vendor's.
As the end of the day, the vendor can tell the potential buyer to get lost. There's nothing that can be used to force him to sell at a given price (unless he's in dire financial straits and needs to sell quickly
)
As has been alluded to, check that the valuation isn't for insurance purposes, as the insurance company only wants to know the cost to rebuild, not the cost to re-purchase!
Definately worth checking that a change of use from commercial to residential is allowed, but as its being sold as commercial + residential flat, that would be the buyer's concern, not the vendor's.
As the end of the day, the vendor can tell the potential buyer to get lost. There's nothing that can be used to force him to sell at a given price (unless he's in dire financial straits and needs to sell quickly
)
Totally agree - tell him that the price is the asking price, or very near to it.
If he wants it, he'll buy it. If not then ignore his offer and look for a genuine buyer.
A valuation is subjective. The property is worth what someone will pay for it.
Maybe it's a try on and the guy simply cannot afford the asking price.
If he wants it, he'll buy it. If not then ignore his offer and look for a genuine buyer.
A valuation is subjective. The property is worth what someone will pay for it.
Maybe it's a try on and the guy simply cannot afford the asking price.
Melv said:
Pal of mine is selling his practice, ground floor consulting rooms and first floor self contaned flat, a converted semi-d in a residential area.
Estate agent reckons property value is £575,000, the valuer for the purchaser says it's worth £375,000 because it's a commercial property.
Can anybody throw some light onto this, or he's £200K out of pocket!!!
He's drawn a blank so far....
Rgds
Mel
The reason for this is simple. The valuer has valued the property on an existing use basis. In a residential area this will often give a lower valuation.
Had the Valuer been asked for an open market valuation then he could have taken into account the possibility of residential conversion and valued it at a higher figure.
It would not have been as high as residential valuation becuase of the need to do the conversion.
It depends on what your friends plans actually are as to whether the proposed figures are acceptable.
If your friend is selling the Practice as a going concern they are presumably selling their client list, goodwill etc, and therefore the total figure is much greater than the information above. In which case it is up to them to decide if the additional goodwill etc offsets the drop in the value of the property.
If they are selling the building the Practice is in, and relocating the Practice itself, then they would want residential development value.
Potentially they could sell the goodwill and client list as one package, and the property as another.
However it is perfectly feasible for a commercial property valuation to be less than one used for resiential.
What your friend wants to be sure is that the person they have sold to immediately converts the property to residential. By the way if selling the Practice, they could keep the property, renting it to the purchaser of the business.
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