Why Valuation Mistakes Are Costing Investors Millions

Valuation errors are one of the most common—and costly—mistakes in commercial real estate. Overestimating value leads to bad investments, while underestimating can result in lost profit.

1. Relying on Outdated Comparables

Many use old sales data or irrelevant comps to determine value. This ignores market dynamics and zoning nuances.

Here’s what you need to know about commercial property valuation.

2. Ignoring Hidden Liabilities

Environmental risks, pending litigation, or deferred maintenance can severely devalue a property post-purchase.

3. Forgetting the Income Factor

Unlike residential, CRE value hinges heavily on projected income and tenant reliability—not just location.

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FAQs

Q: Who should do my property valuation?
Always use certified appraisers or advisors with local commercial experience.

Q: Can I renegotiate a deal if valuation comes in lower?
Yes—many contracts include contingencies that allow for price adjustments.