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At Mission Commercial Brokerage & Investment we offer brokerage service solutions designed for your success. Whether you are in need of a Broker Opinion of Value (BOV), 1031 Exchange guidance, or assitance with the purchasing and disposal of commercial property, we have you covered.
Broker Opinion Of Value (BOV)
Why Do You Need A Market Valuation Or Broker’s Opinion Of Value?
Market valuations are an important part of the real estate transaction process. A properly prepared BOV may assist with a number of avenues surrounding your property. It can be used to determine the value of a property for many different purposes.
Common reasons include:
- Valuation to buy or sell a property
- The protest of real estate taxes
- Determining value in order to buy a partner’s or investor’s interest in a property
- Determining property value for estate planning or inheritance tax purposes
- The valuation of a business (should the business own the property)
- Determining the amount of a new loan, or refinancing an existing loan
What Advantages Does A Broker’s Opinion Of Value Provide?
Most often, market valuations are prepared by a member of the Appraisal Institute (MAI), using an industry-determined process, in the form of a formal valuation, or “appraisal”. In order to determine value, appraisers use replacement cost data, market data, and sales comparable data. Typically, the appraiser obtains the market and sales data directly from the brokerage community.
Property owners requiring an opinion of value, but who do not require a formal appraisal, can achieve their goal by engaging an experienced professional broker at Mission Commercial Brokerage & Investments. The broker performs what is known in the industry as a Broker’s Opinion of Value (BOV). In today’s environment of distressed sales and limited sale and lease comparables, lenders will generally seek both a formal appraisal and a BOV in order to best determine and understand current value.
BOVs are generally preferred for sale valuations, but can be utilized to determine market lease rates as well.
How Do Our Brokers Determine An Opinion Of Value?
When performing a BOV, your Mission Commercial Brokerage & Investments broker visits the property, gathers information regarding its physical attributes and those of the surrounding area, and reviews the market for recent comparables. The broker will also review the market for currently available properties that are similar to the property being valued. If appropriate, the broker will review tenant leases and property expenses. Market trends are also factored in, as are any of the subject real estate’s other unique attributes.
What Information Is Included In A BOV?
A BOV offers an opinion of the property’s value based not only on the market data, but also on the broker’s experience both in that particular market and with the current overall market conditions. A BOV generally includes the following:
- The broker’s opinion of current market value
- Historical and current market data
- Property photographs
- Sales comparables
- Comparable properties for sale
- Market valuation
- Description of the neighborhood in which the property is situated
- Description of the property’s physical characteristics
Why Is A BOV From Mission Commercial Brokerage & Investments The Right Choice For You?
BOVs generally offer a much more cost-effective market valuation than formal appraisals. Owners rely on our brokers’ expertise since they are immersed in the market and generally have more real-time information than appraisers, who tend to rely solely on historical data.
The brokers at Mission Commercial Brokerage & Investments are all experienced in creating Broker’s Opinion of Value for new and long-standing clients. Mission Commercial Brokerage & Investments is the smart, cost-effective way to obtain a current and accurate valuation of your property – on a local, national or international level.
What Is A 1031 Exchange?
In simple terms, 1031 Exchange is an Internal Revenue Code (IRC) which allows an individual or business to defer the capital gains taxes on one property to another. With a properly structured 1031 exchange an investor can reinvest these proceeds into a new property, while deferring all the capital gain taxes on any exchange of a like-kind property. As an investor sells property A to purchase property B, the value on property B has not changed. Where the value is being held is the only thing to change.
IRC Section 1031 (a)(1) states:
"No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment."
To understand the powerful protection a 1031 exchange offers, consider the following example:
Typical Capital Gain
An investor has a $200,000 capital gain and incurs a tax liability of approximately $70,000 in combined taxes (depreciation recapture, federal and state capital gain taxes) when the property is sold. Only $130,000 remains to reinvest in another property.
Typical Investment Process
Assuming a 25% down payment and a 75% loan-to-value ratio, the seller would only be able to purchase a $520,000 new property.
Investing After A 1031 Exchange
If the same investor chose to exchange, however, he or she would be able to reinvest the entire $200,000 of equity in the purchase of $800,000 in real estate, assuming the same down payment and loan-to-value ratios.
As the above example demonstrates, exchanges protect investors from capital gain taxes as well as facilitating significant portfolio growth and increased return on investment. It is crucial to have a comprehensive knowledge of the exchange process and the IRC in order to access the full potential of these benefits. For instance, an accurate understanding of the key term like-kind - often mistakenly thought to mean the same exact types of property - can reveal possibilities that might have been dismissed or overlooked. Mission Commercial Brokerage & Investments is your resource to obtain accurate and thorough information about the entire exchange process.
Mission Commercial Brokerage & Investments would appreciate the opportunity to work with you on your next exchange regardless of how simple or complex.
Think There’s An Easier Way To Buy and Sell Commercial Real Estate?
There Is, It’s With Mission CBI.
At Mission Commercial Brokerage & Investments we understand buying commercial property is a huge investment. We also understand the process of selling your current real estate asset is an a huge undertaking. In order to ensure no legal complications arise down the road, all responsibilities and obligations will need to be met. Most importantly, you will want to ensure you receive what your property is worth. If you are looking to buy or sell a property, our team at Mission CBI is your answer to an enjoyable and efficient process. Our business is built on communication. With that being said, we value assessing your needs as a client first. This gives us a clear outline of where your goals are and how we can best serve you. Whether your goal is to buy or sell a commercial property, our professional team will conduct a thorough analysis of the property. If your desire is to buy, we will perform a thorough search of the region to find a number of properties. Our commitment is to present you with properties that will complement the functionality you are looking for as well as your budget. On the same token, if you are looking to sell, we will ensure maximum visibility of your property through a number of creative outlets such as specific directories, direct mail and email marketing, followed up with a friendly phone call.