Broker Opinion of Value (BOV) in Commercial Real Estate

Definition

A broker opinion of value is a licensed broker's written estimate of the price a property would achieve in the current market, supported by comparable sales, the property's own income, and the assumptions used to reach the number.

What a BOV Is For

A BOV answers one question — what would this sell for today — for someone who needs a defensible number without commissioning an appraisal. In practice it is produced for three moments:

• Winning or pricing a listing. An owner is deciding whether to sell and at what price, and several brokers are competing to tell them.
• Marking a position. An owner, fund or lender needs a current value for a property they already hold, for reporting or for an internal decision.
• Screening an acquisition. A buyer wants a priced view of an asset before committing to full diligence.

What unites them is that the number has to be arguable, not merely produced. A BOV that states a value without showing the comparables, the income, and the assumptions behind it cannot be defended in the meeting it was written for.

What Belongs In a BOV

There is no mandated format, which is exactly why the good ones converge. A complete BOV moves from the property, through the market, to the number, and then exposes what the number depends on:

Not every BOV needs every section — a two-page pricing opinion and a thirty-page marketing document are both BOVs. But the order matters more than the length. A reader who reaches the value conclusion should already have seen the rent roll and the comparables it rests on.

The Sections That Do the Most Work

Comparable sales. The single most scrutinised part of the document, because it is where the value came from. Each comp needs its date, its price, its price per unit or per square foot, and its distance from the subject. A comp whose distance is asserted rather than measured is the first thing a sceptical reader will test.

Rent roll analysis. The income the value is capitalised from. Unit mix, occupancy, in-place versus asking rents, lease expirations. This is also where a below-market rent roll becomes visible as upside rather than hiding inside a single revenue line.

Key assumptions. The most commonly thin section and the most load-bearing. Exit cap, growth, vacancy, and the going-in cap the value was derived at. A BOV that shows its value but not its assumptions is asking to be taken on trust.

Sensitivity analysis. What the value does when the cap rate moves 25 basis points. A single number implies a precision nobody has; a grid is honest about the range.

Where a BOV Stops

A BOV is not an appraisal, and treating one as the other is the most consequential mistake made with the instrument.

An appraisal is prepared by a state-licensed or certified appraiser and, in the United States, is governed by the Uniform Standards of Professional Appraisal Practice published by The Appraisal Foundation. A BOV is prepared by a broker, carries no such standard, and is generally not usable as the valuation of record where an appraisal is legally required.

Whether a broker's opinion may be used in place of an appraisal is governed by state law and, for federally related transactions, by federal rules — and it varies. The practical rule for anyone commissioning one: a BOV is for a decision you are making, an appraisal is for a decision someone else requires. See BOV vs appraisal for the full comparison.

Common Mistakes

• A value with no assumptions. The number cannot be checked, so it cannot be defended.
• Comps chosen to support the number. If the comparable set was assembled after the value was decided, the document is an argument wearing the clothes of an analysis.
• Asserted distances. "0.4 miles away" is a measurement or it is a guess, and a reader cannot tell which from the page.
• A stale rent roll with no as-of date. Every lease analytic in the document is measured from that date. Without it, the reader does not know what period the income describes.
• One number, no range. Value is a range with a point estimate inside it. A sensitivity grid says so; a single figure pretends otherwise.
• Silence about what is missing. A BOV that quietly omits a section reads as complete. One that says the property has no researched comparables is more useful and more credible.

What a Generated BOV Looks Like

In Crevanta a BOV is produced from the property's own record rather than assembled by hand, which means the unit mix, the operating summary, the pro forma, the returns and the comparable tables all describe the same property and cannot quietly disagree with one another — the failure mode of a document stitched together from four spreadsheets on a deadline.

Sections are chosen per document, so a two-page pricing opinion and a full marketing package come from the same record. Where a supporting input does not exist — no comparables assembled, no location analysis — the section is omitted rather than filled with a placeholder, because a section that looks complete and is not is worse than one that is absent.

Sources

• The Appraisal Foundation — Uniform Standards of Professional Appraisal Practice: the standards governing appraisal practice in the United States.
• Appraisal Institute: professional body for appraisers, and a reference for valuation methodology.
• CCIM Institute: commercial real estate education and the standard analytical framework for income-property valuation.