How to Read a CRE Broker's Opinion of Value (BOV)

Introduction: How to Read a Commercial Real Estate Broker's Opinion of Value (BOV)

Your broker just emailed a glossy PDF claiming your warehouse could trade between $18–$22 million. Tempting, but can you trust it? Are those "recent" comps really apples to apples? And how much would a small tweak in NOI or cap rate move the needle?

A Broker's Opinion of Value (BOV) is the commercial real estate world's quick, usually free (or low‑cost) gut‑check on value. BOVs are incredibly useful for shaping strategy, but they are marketing documents first, valuation tools second. With a quick, 10 minute read you can separate out actual analysis from optimistic sales pitch. This is an overview guide of what you will find in a typical BOV, and how to understand it.

Series Note: This article is part of our How to Read series (Loan Docs, Pro Forma, Offering Memorandum, Purchase & Sale Agreement, and now BOV). Use the cross‑links throughout if you want to go deeper on any of the underlying concepts.

TL;DR: Quick Takeaways

• BOV ≠ Appraisal. A BOV is a broker's marketing oriented value range; an appraisal is a USPAP regulated valuation you can rely on legally and for most lending or reporting purposes.
• Start with NOI. Confirm what income stream the broker used (trailing actuals, forward/stabilized, or broker‑pro forma) and apply your own market cap rate.
• Scrutinize the comps. Dates, size, location, tenancy, and adjustments must make sense. One bad comp can skew the range.
• Stress‑test the math. Move NOI ±5% and cap rate ±50 bps to see how fragile the conclusion is.
• Use it for strategy, not compliance. Great for pricing, partner dialogue, hold/sell calls, or early loan sizing; However, you will need to get an appraisal for lending, tax, or financial reporting.

What Is a Broker's Opinion of Value?

A Broker's Opinion of Value is a licensed commercial broker's estimate of probable market value. It is almost always presented as a range, and is prepared to support pricing and marketing strategy. Depending on region and asset class you may also hear Broker Price Opinion (BPO) or Comparative Market Analysis (CMA) (common in residential). The basic idea is that an experienced market participant looks at your property, pulls what data they can assemble quickly, applies judgment, and tells you what buyers are likely to pay if the asset were properly exposed to the market today.

Most BOVs are produced as part of a listing pitch and are therefore subsidized by the brokerage; many are free to the owner. Because they are marketing oriented, they typically do not comply with USPAP and do not come with reliance language that would allow a lender, auditor, or court to lean on the conclusion. Brokers rely on public record sales, subscription data services, in house databases, and their own deal experience. Liability is limited relative to a certified appraiser's work product, and the scope is lighter: no full inspection protocol, no rent roll audit unless provided, and little to no independent verification of operating history.

Still, a well done BOV can be enormously informative. It quickly frames value expectations, surfaces data gaps you must close, and helps you decide whether to sell, refinance, or hold.

BOV ≠ Appraisal
Appraisals follow USPAP (Uniform Standards of Professional Appraisal Practice), include defined scope of work, and carry professional liability (E&O) plus reliance letters. A BOV is an opinion meant to start a conversation, not necessarily end it.

When Should You Use (or Skip) a BOV?

Think of a BOV as an indication of a property's value. It should be used directionally for fast decisions when the stakes are moderate. Use one when you need to set expectations, float pricing, or triage a large portfolio.

Good / Appropriate Uses

• Pre‑listing pricing discussion and broker selection.
• Partner or shareholder buy‑out negotiations (as a starting point).
• Quick refinance viability screen (rough loan sizing before ordering appraisal).
• Internal hold/sell reviews and quarterly fund NAV marks (indicative only).
• Portfolio triage: which assets deserve deeper diligence or capital.

Not Enough For (Get an Appraisal instead)

• Loan underwriting above regulatory de‑minimis thresholds.
• IRS estate and gift tax valuations.
• GAAP/IFRS financial statements or audit support.
• Litigation, dispute resolution, or eminent domain.
• 1031 exchange basis and formal reporting.

BOV vs. Formal Appraisal

Both products estimate value, but they answer different questions under different standards.

An appraisal is a formal assignment governed (in the U.S.) by the Uniform Standards of Professional Appraisal Practice (USPAP) and, for federally regulated institutions, FIRREA guidelines. Scope is defined in writing; the appraiser inspects the property (often in person), verifies rent rolls and leases, analyzes market data, and reconciles multiple approaches (cost, sales comparison, income capitalization). Output is a supported single‑point (or sometimes reconciled range) conclusion with detailed backup, signed by a licensed appraiser, and typically accompanied by a reliance letter naming intended users (lenders, auditors, agencies).

A BOV is formatted according to the brokerage's norms, not outside regulation. Many are desk reviews; some include a brief site visit. The data in the BOV may be owner supplied and unverified. The output is usually a value range and a recommended list price designed to win the assignment.

Quick Comparison

Rule of Thumb: If institutional capital, audited financials, or regulated debt is in play, you should plan to commission a full appraisal.

Anatomy of a Typical BOV Package

BOVs vary in length and format, ranging from a five page emails to a 60 page slide decks, but most contain the same core elements. Use the roadmap below to skim fast and zero in on the assumptions that matter.

1. Cover Letter & Value Range

The opener sets the tone: "We believe the property would trade between $18M and $22M." Good BOVs explain why the range is that wide and what would have to be true to land at the high end (lease‑up, cosmetic refresh, broader marketing). Weak BOVs drop a number with no context.

Watch for: list price recommendation that sits above the high end with no justification.

2. Property Snapshot

A one or two page summary: address, product type, rentable square footage, year built/renovated, current occupancy, tenant roster, lease expirations, and basic operating history. This section contatins high level information about the property, that can be used to understand what you're looking at. Later on, things like the square footage and rent rolls will be compared against other properties in the market to estimate the value, so it is important to make sure that the information is accurate. Brokers will often use this section to highlight any unique features of the property that may be of interest to buyers.

Watch for: stale rent rolls, missing major expirations, or unverified gross vs. net rentable area.

3. Market Overview

The broker will frame the submarket: vacancy, absorption, rent growth, recent sales velocity, and cap‑rate trends. Data sources range from brokerage research to CoStar, Real Capital Analytics, or in‑house deal logs. This section gives you an understanding of where your property fits in the market, and how it compares to other properties in the area.

Watch for: data older than 6 months, cherry‑picked trend periods, or broad regional stats that mask submarket softness.

4. Comparable Sales Discussion

Instead of scanning dense grids, read the narrative first: which comps does the broker believe are most predictive and why? Then check the numbers. The important things to look for are the sale date, distance, property type, size/scale, tenancy, condition, and reported cap rate or price per unit. Adjustments (age, quality, location, lease term) should bridge raw price to adjusted indication for the subject.

The purpose of this section is to show you comparable properties that are used to justify the broker's opinion of value. You can think about this intuitively. For example, the price of an apartment building two streets over from yours can give you a reasonable idea of what your property is worth. The reason it's important to understand the narratives, is that they explain why the broker picked these comps, and how they are used to justify the value.

Watch for: comps >12 months old, >5 miles away in dissimilar markets, or highly stabilized assets used to price a vacant building without adjustment.

5. Income & Expense Summary

Here you learn which income stream drives the valuation. Is the broker using trailing 12 (T‑12) actual NOI, a stabilized forward NOI, or an aggressive pro forma that assumes lease‑up at market rents? Expenses may be replaced with "market" ratios if actuals look bloated.

Watch for: ignoring known near‑term capital items (roof, HVAC), smoothing expenses without explanation, or marking rents to market without accounting for downtime, TI/LC, and concessions.

6. Valuation Approaches Applied

Most BOVs show at least two: Sales Comparable and Direct Capitalization. Some teams add a quick DCF or a Development / Reposition scenario if value‑add is part of the story. The reconciliation paragraph should explain why one method carries more weight.

Watch for: large spreads between approaches with no reconciliation or logic like "we weighted the higher number because the market is hot."

7. Pricing & Marketing Strategy

Because BOVs are listing tools, you usually get a marketing plan. This could include pieces such as the recommended list price, target buyer pools (private 1031, regional funds, REITs, etc.), marketing period, call for offers date, and how tours/data rooms will be handled.

Watch for: timelines that ignore seasonal slowdowns, aggressive price guidance in a market with rising cap rates, or no strategy to address known physical issues.

8. Assumptions, Limiting Conditions & Disclaimers

Many BOVs will include assumptions about vacancy, lease up timelines, capital improvements, data reliability, and the broker's liability limits.

Watch for: sweeping language that the broker did not verify any data (common) and that value assumes clean title, no environmental problems, and full access—none of which may be true.

Core Valuation Methods (and How to Read Them)

The broker will combine all of the above information to come up with a value range. There are a couple of different valuation methodologies that a broker will use to come up with this range. Understanding the math lets you pressure test a BOV quickly. Below are the methods you will see most often, what inputs they require, and how to sanity check each.

Sales Comparable Approach

At its simplest the broker arrays recent sales and normalizes them to a common metric—most often price per square foot (industrial/office/retail) or price per unit/key/bed (multifamily, hotel, student). The subject's estimated value = Adjusted Metric × Subject Size. Adjustments compensate for differences in age, quality, tenancy, and location.

Example: Three adjusted warehouse comps average $246/SF. Subject = 80,000 SF. Indicated value ≈ $19.7M (246 × 80k).

Quick Checks

• Are the comps truly comparable in use and scale?
• How recent are they? Markets move.
• Do the adjustments explain most of the gap between raw and adjusted prices?

Direct Capitalization

Classic income approach for stabilized assets: Value = Stabilized NOI ÷ Market Cap Rate.

If broker shows Stabilized NOI = $1.05M and Cap Rate = 5.75%, indicated value ≈ $18.3M (1.05 ÷ 0.0575).

Quick Checks

• Confirm the NOI (T‑12 vs. forward).
• Is the cap rate supported by closed sales or just asking guidance?
• Are reserves for capital items included or excluded? Match apples to apples.

Simplified Discounted Cash Flow (DCF Lite)

Some BOVs include a light 5 to 10 year cash flow projection with a terminal sale. Cash flows are discounted at an investor yield (8–10%+ depending on risk), and an exit cap is applied to a stabilized Year X NOI. Because many inputs are opaque, treat DCF results as directional.

Sensitivity: A 25 bps increase in exit cap on a $20M deal can move value by roughly $1M. Small changes matter.

Development / Reposition Scenario

For under‑leased or older assets, brokers often include a "what if" value add path. This includes the cost to renovate or lease up, projected stabilized NOI, and an implied yield‑on‑cost (stabilized NOI ÷ total all‑in cost). Buyers can then back into their required spread to market cap rates to judge feasibility.

Other Flash Metrics

Gross Rent Multiplier (GRM), Price/Unit, Price/Key (hotel), Price/Bed (student), or Implied IRR may appear as quick reference. Use them as secondary context; they rarely drive the conclusion.

Reading the Assumptions That Move Value

The numbers that swing value most are usually straightforward:

• Income Normalization. Did the broker mark under‑market rents to current levels? If yes, did they deduct downtime, TI, and leasing commissions required to get there?
• Vacancy & Credit Loss. Is assumed vacancy at or below submarket norms? How are known move‑outs handled?
• Expense Load. Brokers sometimes swap messy actuals for a clean "market 30%" operating expense ratio. Compare to historicals and to similar assets you own.
• Capital Expenditures. Immediate roof, HVAC, deferred maintenance, or large TI packages can crush proceeds. Are these shown anywhere?
• Timing. Forward 12‑month vs. trailing 12‑month results can diverge sharply during lease‑up. Know which one feeds the NOI.
• Cap Rate Selection. Is the chosen rate backed by closed transactions or broker sentiment? Rising‑rate environments punish old data.
• Discount Rate & Exit Cap (DCF). Are the spreads realistic relative to current financing costs and investor return requirements?
• Growth & Inflation. Annual rent and expense growth assumptions should rhyme with current market reports.

Math Check: A $500,000 swing in NOI at a 5.5% cap changes value by roughly $9.1M (0.5 / 0.055). An example of a tiny assumption that can have a big impact.

Interpreting the Value Range

Brokers usually float two numbers: a recommended list price (often aspirational) and a probable trade price (where they expect the market to clear after marketing). The spread between them tells you how confident the broker is and how competitive they believe the buyer pool will be.

The upper range represtents a best case scenario. This typically represents the case where there are multiple buyers competing for the property, and the broker is able to get the highest price possible. The lower range represents a low case scenario, where there are few buyers and they are not willing to pay a high price. It is also important to note that sometimes there will be no buyers, and the property will not sell within the range at all.

The 15 Minute Sanity Check Field Guide

When a BOV hits your inbox, run this quick sequence before you internalize the number:

1. Grab the Broker's NOI. Identify whether it is T12 actual, stabilized forward, or blue sky pro forma.
2. Apply Your Cap Rate. Use evidence from closed deals in the past ~6 months (adjust for quality/location).
3. Cross check price per SF or Unit. Compare to median of truly comparable sales.
4. Run a Sensitivity Grid. NOI ±5% and Cap ±50 bps. How wide does value swing?
5. Review the Top 3 Comps in Detail. Are adjustments coherent? Would you have picked these comps?
6. Scan Key Assumptions. Are the assumptions for rent growth, lease up timing, capex, etc. all plausible?
7. Decide Next Step. Accept for planning, push back and request revisions, or order a full appraisal.

Working with your Broker

It's important to remember that brokers opinions of value (BOVs) are ultimately marketing documents, and are not necessarily based in reality. Most brokers are incentived to optimistically show a higher number to win the business, and then manage expectations once marketing validates (or disproves) the number. However, brokers also care about their reputation and want repeat business and so they are great people to work with to understand the value of a property.

Asking your broker questions about the assumptions they used to come up with the value range is a great way to understand the value of a property. It is also a great way to understand the market and the broker's opinion of value. A good broker can often help you come up with realistic expectations for a property, however it is important to remember that they are not always right. You should be ready to do your own analysis and due diligence to truly understand the value of a property.

Using a BOV in Real‑World Workflows

Hold / Sell Analysis

Drop the BOV range into your IRR model and test how an earlier or later exit shifts returns. Pair with sensitivity around rent growth and CapEx.

Refinancing Prep

Use the BOV's income and cap assumptions to rough‑size debt proceeds before paying for an appraisal. Helpful when screening multiple assets for refinance.

Equity Raise or Partner Buy‑Out

A BOV can frame the discussion and keep negotiations moving while a formal appraisal is ordered for closing.

Portfolio NAV Marks

Funds often need quarterly marks for internal reporting. A set of refreshed BOVs (properly qualified as indicative) can often work as a good proxy for a full appraisal.

Common Mistakes & Red Flags while reading a Broker's Opinion of Value

• Using asking rents instead of in‑place or true market rents (inflates NOI).
• Ignoring upcoming capital items (roofs, HVAC, major TI/LC).
• Applying generic expense ratios that ignore reality on the ground.
• Cherry‑picking comps from stronger submarkets without adjustment.
• Overlooking near‑term lease rollover and credit risk.
• Assuming cap‑rate compression when market evidence shows widening.
• Unexplained adjustments in the comp analysis ("trust me" math).
• Value range that collapses under minor sensitivity moves.

Tools to help you read a Broker's Opinion of Value

Excel Models: Even the simplest BOV should be pressure-tested with a basic Excel model as the next step in analysis. You don’t need a full-blown DCF, but running a sensitivity on cap rate and NOI can help you see how a small change in assumptions might swing the value range by millions. Excel is also helpful for comparing multiple BOVs side by side or layering in your own assumptions about lease up, rollover, or capital improvements.

Comps and Data Tools: Tools like CoStar and Reonomy let you verify sales and lease data independently. A second set of comps can be especially useful if the broker’s dataset is dated, cherry picked, or missing relevant properties just outside the trade area. Public data portals and local assessor sites can also fill gaps, especially in smaller or non-core markets.

Software Platforms: Purpose-built tools like Deco Base streamline the process even further. Instead of parsing BOVs manually, Deco Base can extract key assumptions and valuation inputs automatically, so you can analyze across deals without reinventing the wheel. It’s especially powerful for teams reviewing dozens of assets or trying to reconcile BOVs with internal underwriting and lender appraisals.

Glossary: Quick Reference

• BOV (Broker's Opinion of Value): Marketing oriented value range prepared by a brokerage.
• Appraisal: USPAP regulated valuation prepared by a licensed appraiser; typically a single point conclusion used for lending, tax, and reporting.
• NOI (Net Operating Income): Property revenue minus operating expenses (before debt service, capex reserves, and taxes unless stated).
• Cap Rate: NOI ÷ Price; shorthand for yield and market pricing.
• GRM (Gross Rent Multiplier): Price ÷ Gross Annual Rent; quick screen for multifamily and other rent driven assets.
• TI/LC (Tenant Improvements & Leasing Commissions): Leasing costs required to secure tenants.
• Exit Cap: Capitalization rate applied to terminal year NOI in a DCF model to estimate sale price.
• Discount Rate: Required investor yield used to calculate the present value of projected cash flows in a DCF.
• Mark‑to‑Market: Adjusting in place rents to current market levels (and accounting for the cost to get there).