Broker's Opinion of Value

So how do we estimate today’s property values? 

This point was driven home at a luncheon recently. The presenter was a senior loan officer at a bank. His topic was what to expect in today’s market if you are seeking to originate a new a loan on commercial real estate. During his presentation the lender mentioned that he would order an appraisal of the property but the borrower should have his own understanding of a property’s value. When pressed, the lender admitted that his appraised value was certainly different than the actual value of the property today. He agreed that in today’s turbulent market the past is NOT an indicator of values.

Instead of looking at the past to predict the future, we ask well capitalized buyers what they would pay for the property today. This “price” is the true current value of the property in an arm’s length transaction.This “value” is what well informed professionals will pay given today’s market conditions.  This is a more reliable figure than an appraisal's value.

Appraisals may be biased towards bottom feeders as they may be the only current active trades in the market. Tight credit, low loan to value ratios, significant reserves for shortfalls and other economic factors are converging to put significant downward pressure on values. The Brokers Opinion of Value (BOV) is a fast, credible, reliable approach to getting to a property’s value. It is especially useful when a property’s value is in question.  It brings the businessperson’s approach to valuation into the discussion. 

Can Broker’s Opinions’ of Value be Relied Upon?According to Florida Statute (FS) 475.25(t) applied to FS 475.611a real Florida real estate broker or sales associate, who in the ordinary course of business, performs a comparative market analysis, gives a brokers price opinion or gives an opinion of value of real estate is exempt for the requirement of being a licensed real estate appraiser so long as the analysis is not referred to as an appraisal as defined in FS 475.611a. This statute allows for real licensed real estate professionals to help mark a property’s value. A BOV is an excellent tool for today’s real estate disputes between lenders, developers, investors, creditors and other stakeholders. It is a low cost, fast solution to the current problem of determining asset value in a rapidly changing marketplace. There have been situations when a BOV has been used to settle a dispute in the pre-foreclosure phase of a dispute. This keeps the property from being listed as a special asset. Today – such a classification significantly diminishes a property’s value in the market place. 

We have a nationwide network of experienced underwriters that can get this process completed in a timely and cost effective manner.