A licensed broker in the commercial real estate market can make the process of selling a property easier for a commercial building owner. In Salem, Oregon and surrounding areas, licensed local brokers are the only ones who know what attracts buyers in the region. When a general contractor is also a licensed commercial real estate broker, their clients receive all the combined benefits of working with both, which includes a Broker Opinion of Value statement that provides the value of the property as it stands before any changes are made to it and the estimated cost of updating it.
Read on to learn more…
Most business owners, investors and sellers know that if they want an estimate of a property’s value, then they need an appraisal. The Broker Opinion of Value (BOV) is a similar estimate provided to the property owner by the real estate broker. Also known as a Broker’s Price Opinion (BPO), it isn’t an official appraisal, but it does provide similar benefits, especially valuable details about what they should expect in terms of fair market value.
Brokers use the BOV to attract new customers and extend existing client relationships. They know that it can help them earn the respect and trust of property sellers and prove their expertise with it. As a result, they don’t charge anything for this valuable service.
Anyone might request an appraisal from a licensed appraiser, including buyers, investors, lenders and insurers. The appraisal isn’t free. They must pay for this service. The appraiser must receive special training and follow specific guidelines that the broker doesn’t have to use when making their own assessment. The appraisal is a formal and official report used by everyone involved in a transaction, especially those involved with loans and mortgages.
A commercial real estate broker has more than enough knowledge and experience to complete the Broker Opinion of Value, which means that they don’t need special training or follow any official guidelines. Yet, they still have the ability to answer the question about how much they think the owner can receive when they sell. It’s a more informal report that isn’t given much weight by those who value an appraisal, but it usually provides the same information or more than the appraisal. For example, it contains at least the type, condition and estimated value of the property, the condition of the market and the prices that similar properties sold recently in the region.
Some owners wonder why they should even ask for a BOV if they can’t use it when they need it most during a transaction in any official way. The best reason? Both an appraiser and a commercial real estate broker use the same exact information to create their estimates. They use similar valuation methods based on cost, income or sales. For example, they compare the Net Operating Income of the property to similar properties in the region. They consider pricing based on square footage or units. They also compare marketed-based cap rates and prices of comparable sales. They even consider how assumptions about the market impact current and potential future value.
This information is also incredibly useful when the owner wants to improve the value of their commercial property before selling it or when negotiating the sale based on what they feel they’ll need to do to make the property work for them. They can use the informal estimate, which comes from a professional who has knowledge and experience in the region, to approach a sale with a solid understanding of their property’s worth.
Whether you’re a property owner preparing for a sale or an investor who needs help to make the most of your investment, we can offer you all of the benefits of working with a licensed real estate broker and a general commercial contractor. We can provide you with the best informal estimate of your property’s worth and assist with raising the value with improvements and renovations or regular maintenance.
For more information about this topic or our total brokerage and contracting services, speak with an experienced member of our team. We do more than serve commercial property owners in Salem. We are available for projects within 40 miles of the area. Call today for additional details.