When you are buying, selling or renting commercial real estate you will need to determine what is Gross Book Value. This is often used in Real Estate appraisals. The difference between a Real Estate Appraiser and a Realtor is that an Appraiser will take into consideration what is Gross Book Value, whereas a Realtor only takes into account what the land and any improvements on it are worth. So when you are shopping for Commercial Real Estate, you will want to make sure that you get a quote that includes what is Gross Book Value.
When you are talking about what is Gross Book Value you are basically looking at the market value of the property. If the business is doing well then it might be worth more than what the business is actually worth in the eyes of the business owner. But if the book value is what it is based on then the owner might not get as much as they would if the business is not doing so well. One thing that you must understand is that there are many factors that can change what is Gross Book Value and one of the biggest factors will be the condition of the building. If it has been sitting for a long time then it may not be worth what it is currently priced at.
Now some of you might be thinking that this information is going to confuse you. That’s okay; let me give you some examples that will help you understand what is gross book value. Lets say that you have a business that is leasing the property and you are in the process of negotiating the lease with the lessee. The lessee wants to build a pool house on the property and is willing to pay you a reasonable rent.
The value of the building that the tenant is building is what is being compared. If the building is a few years old then its value might have dropped because of what is called wear and tear. It might have sunk a bit during the recession but there are some exceptions. In these cases it is the lessee that might be getting a bad deal.
Another example of a building that might be losing money is a shopping center. Many malls went under during the last decade and while there was some loss of customers the majority of them got brand new malls. What they built in those buildings are usually what is being compared. These are retail centers and they have the same average income as the older mall. The newer buildings might be a little less in value but it could be because it is new and because of what the owner can charge for rent.
The final factor that will affect what is gross book value is what is going on in the city that the building is in. Some areas have lost value and others have gained. If you are in an area where homes are taking more damage than usual, then you might have a bigger problem. If you are in an area where there are more houses for sale, then you might have a better solution.
There are some things to consider when figuring out what is gross book value. One thing to remember is that the book value of a property is not what it would actually sell for. The figure is what it will probably sell for and it is what the buyer will pay for it. Some people get nervous when this happens because they think they might not get what they want and they end up getting less than what they really should. Keep in mind that if you only have a small amount to invest in you might be able to figure out what is gross book value and still be reasonably happy.
If you are thinking about purchasing a home then make sure that you figure out what is gross book value. It will save you a lot of time and grief in the long run. The reason why is because you will know what the house will worth when you go to sell it. If you do not know what is gross book value then you will probably have to hire an appraiser and he or she will have to take a look at the property to give you an estimate. You need to have this number somewhere in case your real estate agent ever asks you how much the house is worth.