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Commercial Litigation Landlord Tenant Law

COVID-19’s Impact on Real Estate Valuations

Valuation of real estate during contemporary times is challenged and will continue to be so for several years. In a forced sale, a court should only consider pre-COVID-19 data whether it be comparable sales from 2018-2019, or financial data from the same period.

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COVID-19 has significantly impacted real estate valuations. For example, under the comparable sales approach to valuation, valuators look at sales prices of similar properties in recent transactions, making adjustments for differences between those properties and the subject property. As stated by Lisa Loychik of Cohen & Co. in a paper dated Aug. 20, 2020, “It’s debatable whether pre-COVID-19 sales can be considered comparable with post-pandemic sales, though. Valuators are looking beyond comparable sales and considering individual circumstances on a more granular level. This approach acknowledges that generalities are of limited value when COVID-19 may have different effects on different properties in the same neighborhood.”

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