Valuing Automobile Dealerships Brings Challenges: The Appraisal Journal
September 22, 2015 08:00 AM
CHICAGO (Sept. 22, 2015) – Appraisers tasked with valuing automobile dealerships are met with unique challenges for generating an opinion of value on this specialized property type, according to an article published this week in The Appraisal Journal.
The Appraisal Journal is the quarterly technical and academic publication of the Appraisal Institute, the nation’s largest professional association of real estate appraisers. The materials presented in the publication represent the opinions and views of the authors and not necessarily those of the Appraisal Institute.
“An Introduction to Automobile Dealerships,” by Bradley R. Carter, MAI, assists appraisers who are experienced in general commercial real estate valuation and wish to explore issues unique to automobile dealerships. To develop a credible opinion of value, the appraiser must not only understand the intricacies of this specialized property type, but also have some familiarity with the automotive industry and trends that affect the properties where vehicles are sold.
The author provides definitions of terms related to automobile dealerships, as well as an explanation of how dealership franchises work and a profile of a typical dealer. The article also examines the function and profit center components of a dealership and compares the benefits of properties selling single or multiple brands of automobiles.
Bradley R. Carter, MAI, is principal of Greystone Valuation Services, Inc., an Atlanta-based real estate appraisal and counseling firm. He has provided appraisal and/or counseling services in 48 states, including assignments related to some of the largest and/or highest volume automobile dealerships in the Southeast. Carter has authored numerous articles and studies on automobile dealership valuation, as well as a newly published book, A Guide to Appraising Automobile Dealerships.
Read “An Introduction to Automobile Dealerships” in the Summer issue of The Appraisal Journal.
Also in The Appraisal Journal’s Summer 2015 issue:
“Asset Allocations: Are You Reconciling?” by Franz H. Ross and James K. Tellatin, MAI, proposes an enhanced total excess earnings model that facilitates reconciliation of asset values by testing lease coverage ratios, imputed management fees, estimated real estate rents and other metrics against each other.
“Adding Value to Valuation with Confidence” by Gale L. Pooley, Ph.D., MAI, SRA, reviews a traditional statistical technique of estimating confidence levels from a normal distribution and proposes a method for appraisers to measure and report confidence levels for values.
“What’s So Special About Special-Purpose Property?” by Ron Throupe, Ph.D., MAI, Kay Zhang and Xue Mao clarifies what constitutes a special-purpose property and outlines a process to identify special-purpose property for valuation by focusing on the property itself, not the use or user.
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The Appraisal Institute is a global professional association of real estate appraisers, with nearly 21,000 professionals in almost 60 countries throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Individuals of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA, SRA, AI-GRS and AI-RRS designations. Learn more at www.appraisalinstitute.org.