WHAT IS A BROKER OPINION OF VALUE?

In Commercial Real Estate when one needs to come up with an estimate

of value for a commercial property, typically the "go to" resources are

experienced Commercial Real Estate Brokers. These estimates are also

know as a "BOV".

Pictures below are of a 30,000 square foot building my team and I evaluated for a

large credit union. Source: Nathan Bragg

A well trained Commercial Real Estate Broker

should have the tools, training and experience as

well as access to key market statistics through

various commercial only research databases.

Depending on the size of a commercial building,

type and scope of the valuation analysis, a typical commercial appraisal

on a smaller property can start at over $2,000 and go up rapidly. An

experienced broker can provide the same core data that an appraiser

would use but without the cost.

It is important to understand that a "BOV" is not a

substitute for a professionally prepared commercial

real estate appraisal

Sometimes a BOV is referred to as a "Best Guess", which it is, albeit a

"best guess" based on market data and analysis. An appraiser takes many

more steps and their data must conform to strict guidelines while a BOV

is more of a streamlined field assessment of value. I always let my

clients know the difference and encourage them to use a commercial

MAI certified appraiser for a more precise valuation.

Learn more about MAI Appraiser Designations Here

Who Typically Request a BOV ?

Banks, lenders, CPAs, Estate Attorneys and Property Owners often turn

to experienced Commercial Real Estate Brokers to provide an opinion of

value to save time and money. My team typically works with owners

looking to sell their property who are seeking professional guidance to

help them with their decision.

Depending on the broker and extent of the analysis required, the opinion

can be as simple as three pages and get as detailed as a small book

depending on the purpose, property and requirements of the client. Some

brokers will charge a fee depending on the individual situation.

The Process

Our team's process is we will make a site to evaluate the physical

condition of the property, we collect data that has an impact on the value

i.e., income and expenses, tax information, zoning and environmental

data the owner may have.

We do a detailed analysis on the property and data collected and we will

compare it to the market. The market analysis will depend on the type of

property, for example an Industrial building is not as sensitive to

population density, traffic counts, household income and walk scores as

a retail center etc., so each market analysis varies.

A detailed BOV can contain a capitalized income analysis, replacement

cost analysis comparable sales analysis, market lease and cap rate

analysis, land costs comparisons , complete portfolio analysis, market

trends, vacancy rate comparisons and more.

It is very important in my opinion to use a Commercial Broker for these

reports with at least 5 years of experience in the industry or have

equivalent experience along with the required Commercial Real Estate

research data.

Nathan Bragg is the Director of the

Commercial Division at the RE/MAX TIME

office in Southern California.

He primarily services the Eastern Los Angeles County

Market as well as parts of Riverside and San Bernardino Counties

(Ontario, Rancho Cucamonga, Fontana, Riverside and More)

specializing in Industrial and Commercial Investment Real Estate

contact Nathan at nathanbragg@remax.net

Each RE/MAX office is individually owned and operated