Valuation Model and an Acquisition Model
When acquiring an office building say, do you run a valuation model as well as an acquisition model?
When acquiring an office building say, do you run a valuation model as well as an acquisition model?
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Probably not. If you are trying to sell a property, then you will do a valuation model to justify the asking price and if you are trying to buy a property, then you would do an acquisition model to see if it meets your return criteria. I don't see the point in doing both.
They are really the same thing. An acquisition model does value a property. The only different between an ‘acquisition’ and a ‘valuation’ is that in an acquisition, you enter a purchase price and it spits out the discount rate (IRR). While in a ‘valuation’ you enter a discount rate (IRR target) and it spits out the proper purchase price based on your return needs (discount rate).
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