Appraisal Matters

So we’ve explored unique aspects of appraising automobile dealerships and delved into the three approaches to value.  It’s time we went “outside the box” and discussed a topic that real estate appraisers are generally uncomfortable with:  alternative valuation techniques and business value.
Why Nontraditional Valuation Techniques?
A typical purchaser of an automobile dealership typically buys the real estate, [...]

[Read more →]

The income approach can be the most perplexing and difficult approach to value when appraising automobile dealerships.  Prior blogs in this series have cited the large dollar amount and percentage of total business enterprise value that the business value encompasses.  It is impossible to ignore, yet separating business from real estate value is an ongoing [...]

[Read more →]

When appraising automobile dealerships, I’d venture to say that the Sales Comparison approach is one of the most used and abuse approaches to value.  Before we explore why, let’s discuss what comprises a comparable automobile dealership sale.
Making Sure Comparables are Comparable
As stated in an earlier post in this series, older dealerships are frequently required by [...]

[Read more →]

It’s time to get into some of the nuances of the three approaches to value as they apply to appraising automobile dealerships.  Since the Cost Approach is frequently cited as the best method for appraising most types of special purpose properties, let’s start with it.
The Cost Approach - Land Valuation

The Cost Approach starts with a [...]

[Read more →]

When appraising automobile dealerships, the appraiser must recognize that this is a special purpose property.  This simple conclusion has a great bearing on the appraisal process and the appraiser’s conclusions, as I shall illustrate.
Unique Aspects of Dealership Valuations

The number and type of alternate uses are limited and therefore the number of potential purchasers or users [...]

[Read more →]

So why talk about dealership operations in a blog series about appraising automobile dealerships?  Isn’t that a business value topic?  Well, yes and no.  Here’s why:

Dealerships don’t just get appraised when they have gone “dark”.  Most of the time, an operating business sells with the real estate; in fact, the business and the franchise agreement [...]

[Read more →]

Automobile dealerships are special purpose properties with their own nuances, quirks and uniqueness.  Similarly, appraising automobile dealerships requires a different set of rules and understanding.  Let’s explore two of the most unique aspects of this property type and how they affect automobile dealership appraisals.
The Factory/Dealer Relationship
Like many factor/distributor relationships, both parties are linked to each [...]

[Read more →]