BPO/BOV: Broker Price Opinions in Commercial Real Estate

What is a BPO in Commercial Real Estate? 

A BPO, or broker price opinion, also known as a BOV, or broker opinion of value, is an estimate provided by a real estate broker to help a potential investor get a better idea of how much they should bid for a property. A BPO/BOV is not held to the same standard as an appraisal, but it is typically much faster and much less expensive. 

When creating a BPO/BOV, a broker will usually take a few different approaches, including: 

  • Sales Comparison: For this approach, a broker will look at comparable properties to see how much they have sold for-- in particular, those that have sold in the last 6-12 months. 
  • Income Capitalization: For this valuation approach, the broker will look into how much income the property can make. To do this, they can calculate income via two different methods: 
    • Direct Capitalization: Looks at net operating income (NOI) using a cap rate
    • Discounted Cash Flow Analysis: A method that looks at the time value of money by using projections of future cash flow and discounting them.
  • Cost Analysis: Looks at how much it would cost to reproduce the property itself. 

BPOs vs. Traditional Appraisals 

Appraisals for multifamily and commercial real estate can be pricey, often costing between $5,000 and $25,000, and time consuming (often taking between 3-6 weeks.) In comparison, a BOV can be more cost efficient, often costing between $250 and $2,500, and may only take a few days. So, no matter what type of property you're considering purchasing-- whether it's retail space, an office building, or even a hotel property, it can pay to get a BPO/BOV before making a bid. 


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