Commercial Real Estate Price versus Value

For commercial real estate price and value are sometimes interchanged in discussions, however they are two totally different terms. It is very important to keep price and value separate when discussing commercial real estate purchases. Let’s define both

Price of commercial real estate: This is of course the amount that is stated in dollars and cents that a buyer agrees to pay and a seller agrees to accept for a commercial real estate property, goods or services under the terms and conditions of the transaction. It is also the amount of money that is paid for the specific transaction or the cost for which something is purchased or acquired.

Value of commercial real estate : The worth of property not to an individual but to the mass population. The value of an object that satisfies directly or indirectly the needs and desires of people.  It is different than price because value is subjective. For example, you may put a higher value on your car than I would however if your car was at a dealership the price would be same to both of us.  More simply stated in a nutshell, the price is what someone pays for something while value is what it is worth.  Owners can confuse price with value thinking that the price paid for their commercial property constitutes value, and at times value is in use in the transaction.  Value should be  generally thought of as what the commercial real estate is valued at to the masses.

Shire Commercial Real Estate provides buyer and tenant representation and specializes in Officeand Warehouse space negotiations for their clients in Austin, Texas.

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