Property Evaluations

Broker Opinion of Value

When it is important to know what your building is worth, you need the most accurate information possible, especially if you are thinking of selling or leasing a commercial property.

The evaluation provided by Dan Kruse is not a formal appraisal but is very close to one. Since most appraisers call commercial real estate agents asking for comparable market sale and leases, you can save a step and obtain the information directly from Dan Kruse without having to outlay thousands of dollars for a formal appraisal.

However, if a formal appraisal is warranted, Dan Kruse can refer to you an appropriate appraiser from a list of qualified appraisers.

Who might benefit?

A broker opinion of value can be completed for property owners for a variety of purposes. Examples include determining a listing price for selling or leasing a property, establishing the value of a building for an estate or other legal matters, and determining the current value of a property for insurance purposes. It can also be used as an estimate to help a potential Investor or Tenant know how much to purchase or lease a property.

Creating a Broker Opinion of Value, usually takes a few different approaches, inclusing:

Slaes Comparison: Looks at comparible properties to see how much they have sold for, in particular, those that have sold in the last 6-12 months. Properties which have more similarities to the property in question will usually be weighted more highly in the calculation. The sales comparison approach is excellent when a substantial amount of similar properties in the area have recently sold but may not be effective if the property is unique in its market.

Income Capitalization: Looks into how much income the property can make. To do this, using a method of Direct Capitalization is used that takes the net operating income and applying a Capitalization rate (cap rate) to determine a value.

Cost Analysis: Looks at how much it would cost to reproduce the property itself. To determine an accurate calculation, any accrued depreciation must be subtrated (functional obsolescence, physical deteoration, and external obsolescence). Functional obsolescence occurs when an older building can no longer accommodate the requirements of today's users. Physical deterioration refers to ordinary deterioration of building elements that occurs over time. External obsolescence occurs when a building loses functionality and value due to outside factors (changes in real estate markets, demographics, excess traffic).

However, a Broker Opinion of Value have their limitations; they often cannot be used to actually get financing for a property (though some lenders permit this) or for tax purposes, and to be clear a Broker Opinion of Value is not an official appraisal.