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Thinking of selling? First, find out the value of your property…


By Gardner Williams, SIOR

Before you make a decision to list your property for sale, you will most likely want to know its value.   You might seek the help of an appraiser, but what about asking for a broker’s opinion of the value?

What exactly is the difference between an appraisal and a broker’s opinion of value (BOV)?

Well, to start, the big difference is the cost. An appraisal is completed by an individual or company that is duly licensed in the state to perform — in this case real estate appraisals vs. say equipment appraisals. The product is typically much more detailed than a BOV due to the added research and requirement to add a lot of information that does not really relate to the property itself such as: Scope of work, definitions, regional and city data, demographics, assumptions and limiting conditions, cost approach, competency disclosure, and improvement details among other items.

The BOV is normally a much shorter document which outlines the income approach to value and the comparative sales approach to value. Typically in a BOV you will see comparative sales and lease rates going back no more than one year. To contrast that the income approach using market rents and cap rates is a good comparison to confirm what the market will bear. There are always extenuating circumstances that will affect the valuation such as location, quality of the construction, the age of the improvements, current vacancy rates, and credit of an existing tenant and length of lease if applicable. Typically a BOV will not get into details pertaining to replacement cost.

Real estate brokers typically will produce a BOV at no cost with the hopes of obtaining the listing on the property from either the owner or most recently the lender who has taken the property back.  The appraiser on the other hand does not have that opportunity so must charge typically between $2,200 and $2,800 for a standard office, industrial, or retail appraisal.  I have found in some instances the holder of an REO property will accept a BOV, whereas in the case of a bank making a loan on a property, they will most always require an MAI appraisal due to federal banking regulations. The MAI designation is held by individuals who are experienced in the valuation and evaluation of commercial, industrial, residential and other types of properties, and who advise clients on real estate investment decisions.

If you ever want a snapshot of what your property is worth without having to pay a hefty fee, find a competent commercial broker and ask them if they would conduct a BOV. They typically will do so at no cost, and you can count on it being quite accurate.

 Gardner Williams, SIOR is a partner and principal broker with Compass Commercial Real Estate Services.