A broker opinion of value, or BOV, is a broker's reasoned estimate of what a commercial property would sell for. Owners ask for one before deciding to sell, refinance or hold, and brokers prepare one to win and support a listing.
What a BOV contains
- The property. Location, size, age, condition, tenancy and the income it produces.
- The market. Rents, vacancy and recent trends for the submarket.
- Comparable sales and rent comparables. Transactions and leases for similar properties, with the adjustments the broker made.
- The valuation. An income approach (NOI and a cap rate), a sales comparison, and a stated range with the reasoning.
- Assumptions and limits. What was assumed, what was not verified, and what could change the number.
How it differs from an appraisal
An appraisal is prepared by a licensed appraiser to a defined standard and is what lenders generally rely on for a loan. A BOV is an opinion from a broker, not a certified valuation: faster, cheaper and informal, and not accepted where an appraisal is required.
What makes a BOV defensible
A BOV is as useful as its trail. The comps should be real transactions with dates, prices and sources; the NOI should be traceable to a rent roll and operating statement; the cap rate should be tied to the comparable sales, not asserted. A range with the assumptions that move it is more honest than a single figure.