Real estate agent valuations

At Lotus Amity we provide real estate agent valuations. We provide those valuations in disputes and transactions and for tax purposes.

Like professional practices, real estate agents often have little or no productive tangible asset base. What they do often have however is a rent roll. This intangible asset can be potentially valued in its own right and this can be a key area of dispute, see Nettler and Nettler (2007).

Another potentially contentious component of value is the market salary for the owner operator; see court cases Corbon & Klousner (2015) and Scott & Scott (2006). The valuation also needs to consider whether commissions paid to the owner are at market rates or consistent with practices of the agency.

Key valuation components include the schedule of properties sold and commissions earnt, commission rates paid to staff and owners, location and terms of the leased premises, dependency on sales agents and local markets, the outlook for the local residential and or commercial property market (see the Queensland Market Monitor), the economic outlook (RBS Statement on Monetary Policy), and if the real estate agent holds a franchise agreement, assessing the terms of the agreement including length, termination details and service fees.

A sample of twelve rent rolls advertised for sale infers an advertised price to income ratio range of between 2.1 and 3.3 with an average of 2.9..

Examples of real estate agent valuation engagements include the valuation of a 50% interest in a real estate group providing buying, selling, renting and holiday leasing services, the valuation was required for matrimonial purposes and the valuation of a real estate business to assist in the exit of shareholders.

Why choose Lotus Amity for real estate valuations?

Granular and comprehensive approach. We provide a granular and comprehensive approach to valuation. This includes modelling cash flows and discount rates and providing fully referenced appendices.

Detailed analysis. Each valuation has a story. We carefully research, analyse and explain each valuation story and how the numbers (the cash flows and discount rate) relate to that story.

Compliance. Our reports comply with the Australian accounting, ethical and valuation standards, the International Valuation Standards and the relevant expert witness requirements.

Quality Control. Each valuation report and model is reviewed for accuracy, completeness and transparency by an external firm of Chartered Accountants and business valuation specialists