How are commercial properties assessed compared to residential properties?

Commercial properties are assessed primarily based on their income potential and comparable sales. This approach takes into account the property’s ability to generate revenue, which is a critical factor for investors and businesses. The income potential can be evaluated through methodologies such as the income approach, where the projected revenue is analyzed against expenses to determine value. Additionally, comparable sales data from similar commercial transactions are crucial in establishing a fair market value, as they provide insights on what buyers are willing to pay for similar properties in the market.

The assessment process differs significantly from residential properties, which typically rely more on sales data of comparable homes and other factors like overall condition and market trends, without a strong emphasis on the income-generating capacity. This distinction is key in understanding how different types of properties are valued in the real estate market.