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20 sats \ 2 replies \ @siggy47 OP 22 Mar \ parent \ on: When Money Dies In The 21st Century econ
Yes, because they are doing a replacement cost valuation. Market value is a whole different animal-the price a real live buyer will take it off your hands for.
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76 sats \ 1 reply \ @Bell_curve 24 Mar
Is market price usually lower than replacement cost?
I guess it depends on the market
Your tone suggests yes
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10 sats \ 0 replies \ @siggy47 OP 24 Mar
For commercia real estate, market price is set by cap rate, which is really the percent return you can get for a given market based on the rents you are receiving. It usually ranges from 4-10 percent per year return, assuming you have no mortgage. Replacement cost, obviously, is the construction cost to build the building as it stands today. So, it varies depending on the market.
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