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What Is A Commercial Real Estate Broker Opinion Of Value (bov)?
4 Jan

What Is A Commercial Real Estate Broker Opinion Of Value (bov)?

If you are thinking of investing in or divesting a commercial property, you will be familiar with the term ‘broker’s opinion of value’, or BOV. But what is a BOV and why is it important in the world of commercial real estate?

A BOV is a report that contains the opinion of a licensed real estate broker regarding the value of a business property. It is based on the broker’s experience of the local market and comparable sales of similar properties on the market. A BOV is not an appraisal, an appraisal is a more comprehensive evaluation of a property’s worth that a licensed appraiser prepares.

A BOV can be valuable as an analytical tool in the commercial real estate world for many different things. For instance, if you are a buyer who wants to buy a commercial property a BOV will assist you in ascertaining the current market price of the property and whether the asking price is fair. If you are a seller, a BOV will assist you in setting the right price for your property and give you an indication of what to expect as your returns.

A BOV may also contain other useful information such as information about the strengths and weaknesses of a property, information about the market in which the property is located, and information about the risks or problems that may be associated with the property. An example of how this information can be classified is by using a SWOT analysis matrix, Strengths, Weaknesses, Opportunities, and Threats.  A SWOT analysis can assist buyers and sellers in making the right decision about a property by assessing the opportunities and risks of the property by evaluating the property’s strengths and weaknesses and the opportunities and threats of the property.

Well, how do brokers arrive at their opinions of value? There are a few key factors that they consider when preparing a BOV:

Comparable sales: Another critical component that defines the value of a property is the selling price of similar properties in that area. Comparing the characteristics of a subject property with those of properties that have been sold recently will help brokers get an idea of what the market is willing to pay.

Location: The location of a property also has a deep influence on the value of a property. Houses in areas with high demand have a higher value than those in areas of little demand.

Condition: The state of a property also has a propensity to affect the value of the property. An up-to-date property is most probably going to be more costly than a property that requires some major touch-ups.

Size and layout: The size and the design of a property also determine its value since some designs are preferable to others. For instance, a relatively spacious house that can easily fit the needs of the inhabitants would be considered more worthwhile than a similar one that has a substandard design regarding spatial design.

Zoning and zoning potential: Coastal setback requirements can affect property value by restricting or increasing the ability of a particular piece of property to accommodate a given type of use. Property in an area with good zoning laws may be more valuable than a similar property in an area with unfavorable zoning laws.

But it’s very important not to forget that a BOV is only an indication of value and is not an indication of what will be realized in the marketplace. Accordingly, the actual sale price of the property may be higher or lower than the BOV because of the carrying capacity of the local real estate market, demand for the property, and bargaining capacity of the buyers and sellers.

 

Even though a BOV can be beneficial for buyers and sellers, creating it may be a long and intricate process. That is the point where hiring a commercial real estate marketing agency can prove to be useful. A marketing agency can assist you in developing a professional and accurate BOV, brand it, and present it in a way that will appeal to the buyers or sellers.

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