How do you set a price on a property where there has not been a tenant since the late 1980s?

A customer approached me to sell property of his that lies across from his house, but has not had a tenant since the 1980s. It is a small cinder block building on a 1/2 acre of commercially zoned land. With no tenant in thirty or more years what is the best way to arrive at a value here? A price that reflects highest and best use of the land? Valuing the building?
In Selling Property - Asked by Peter M. - Dec 24, 2015
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lee p.
Manassas, VA

the best way i have found to do this is to compare doller for doller the square feet of the property,( taking in consideratioin the frontage feet), to nearby properties that have sold. then figure how much it would cost to build a simular size building , deducting for repairs and condition. add on if zoning is for better use lee

Dec 24, 2015
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Michael A.
Washington, DC

The default always lies with Uncle Sam. Thus first check with your county / state registry of deeds to gain historical sales, recordation and/or deed of trust data. Then query the property's local tax assessment office and use that figure as your baseline.

Dec 26, 2015
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John W.
Williamsburg, VA

One Approach.....determine the income that could be realized if an investor purchased the property and leased it ...then back out your value by the return the property would realize if leased. Also, as i am assuming there are no comparable sales: 2) the other approach would be to determine the value of the land on it's own, and then determine the replacement value (construction costs, minus depreciation for age and condition) of the improvement on the land (unless the improvement has no value and should be raised) blend the two values together and come up with a total value of the property.....hope that helps...

Dec 27, 2015
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Dennis G.
Pasco, WA

My approach would be to inspect the condition of the building, do a rental survey for potential income, determine the cap rate used in your area for this type of property and do the math to determine value less the cost of repairs for condition, fire and other municipal code upgrades, etc. You can use the assessors tax records as a guide but in my area they do not generally reflect the actual condition of the building.
hope this helps.

Dec 27, 2015
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WC Equity G.
Tampa, FL

Valuating market conditions can be tricky with vacant properties. The most conservative approach would be to analyze from an income-approach valuation model. Review the capitalization rate based on today's current estimated/pro forma rent rates and derive a cap rate from that customary for the market.
Best of luck.

Dec 28, 2015
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