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A broker's opinion of value is a listing agent's estimate of what your building would sell for, built to set a price, and California law says it is not an appraisal and may not be called one. An appraisal is an opinion of value from an appraiser the state licenses, held to a published standard of practice, and it is what a buyer's bank relies on and what a partition court orders. Which one you need depends on who will read the number.
- Business and Professions Code section 11302 keeps an agent's price opinion, given as part of licensed work, outside the legal definition of an appraisal.
- The Bureau of Real Estate Appraisers licenses and regulates appraisers, and USPAP is the minimum standard for their work.
- A bank loan, a probate inventory, a divorce and a partition case each have their own rule for who values the building, and as of when.
- An opinion of value is only as good as what it shows you: the rent roll, the expenses, the sales and the method.
What a broker's opinion of value is
Ask an agent what your building would sell for and the answer, written up, is a broker's opinion of value, or BOV. It is made for decisions about a sale: whether to sell now, what to ask, and how a buyer will push back on the price. Business and Professions Code section 11302, the definitions section of the state's appraiser law, carves it out. An opinion a real estate licensee gives in the ordinary course of business, in connection with work that needs a real estate license, is not an appraisal, and the statute forbids calling it one.
That carve-out keeps it outside the appraisal rules, so what goes into it is up to the agent. A careful one shows its work. A careless one is a number on letterhead, and from the outside the two look alike until you ask for the sales behind them.
What an appraisal is, and who may sign one
An appraisal comes from an appraiser the state licenses. California's Bureau of Real Estate Appraisers licenses, certifies and regulates appraisers, and Business and Professions Code section 11319 makes the Uniform Standards of Professional Appraisal Practice, known as USPAP, the minimum standard of conduct and performance for a licensee's work that those standards address. The appraiser answers to a regulator for the report. An agent's opinion of value sits outside that system entirely.
Licenses come in classes, and federal banking rules decide which one a loan needs. For the institutions the FDIC supervises, 12 CFR 323.3 requires an appraisal by a state certified or licensed appraiser on a real estate loan unless an exemption applies, reserves larger loans for a certified appraiser, and has the bank obtain an evaluation of the property for some exempt loans. BREA's own regulations point to that rule for which class of license may do which work. None of it involves the seller's agent. The buyer's lender works from its own appraisal, whatever the listing says.
Which one counts, case by case
The rule depends on who will rely on the number and for what.
| Situation | What values the building | Where the rule is |
|---|---|---|
| Deciding whether to sell, or setting a list price | A broker's opinion of value, built from the rent roll, the expenses and recent sales | Section 11302 keeps it separate from an appraisal |
| The buyer's loan | The lender's appraisal, by a state certified or licensed appraiser unless an exemption applies | 12 CFR 323.3, for banks the FDIC supervises |
| A death, and the heirs' basis | Fair market value on the date of death, or on the alternate valuation date if the executor elects it | Internal Revenue Code section 1014 and Treasury Regulation 20.2031-1 |
| A probate inventory | The probate referee, for everything the personal representative does not appraise, at fair market value at the date of death | Probate Code sections 8802 and 8902 |
| A court-confirmed probate sale | An offer of at least 90 percent of an appraisal made within one year before the hearing | Probate Code section 10309 |
| A divorce | The court values the community estate as near as practicable to trial, or at a date after separation for good cause | Family Code section 2552 |
| A partition case filed on or after January 1, 2023 | A disinterested, California-licensed appraiser the court appoints, unless all the co-owners agree on a value or a method, or the court finds an appraisal would cost more than it is worth as evidence | Code of Civil Procedure section 874.316 |
For the heirs' basis, the standard is market value on one past day, and the figure has to hold up if the IRS asks how it was reached. Where the estate must file an estate tax return, the value on that return also becomes a ceiling on the heirs' basis. Which valuation the return should rest on is a question for the estate's CPA, and Shaya is not a CPA.
In a probate, the personal representative appraises cash and items like it, and section 8902 sends everything else, a building included, to the probate referee the court designates. If the estate later sells with court confirmation, the appraisal has to be less than a year old at the hearing, so a sale that reaches court more than a year after the inventory needs a new one.
What a useful broker's opinion shows
You can check an opinion of value only as far as it shows its work. Ask for these, and read each against your own records:
- The rent roll it started from, unit by unit, with in-place rents and any vacant unit at an asking rent the agent can defend. An out-of-date rent roll puts every later step on the wrong income.
- A year of actual income and expenses, with the property tax replaced by the tax a buyer will pay at the proposed price.
- The comparable sales, each with its date, price and unit count, and the cap rate and gross rent multiplier measured on that sale's own NOI and rent.
- How each comparable's NOI was built, since a rate taken from a marketing package may rest on projected rents or on the seller's old tax bill.
- The method that turns those inputs into a range, with the income approach checked against the gross rent multiplier and price per unit.
- What would move the number, such as a vacant unit leased, a retrofit finished or a rent reset at turnover.
An opinion with a single number and no sales under it can still be right, but nothing in it lets you tell. Shaya builds an opinion of value from your rent roll and your last twelve months of expenses, and he puts each sale it rests on in front of you.
When you need both
An estate that sells a building can need both, for different readers. The appraisal or the referee's inventory value answers what the building was worth on the date of death. The opinion of value answers what to ask for it now, in the market the executor is selling into. The two can differ and both be correct, because they describe different days for different purposes.
A divorce runs the same way. The court's value follows the date Family Code section 2552 sets, as near to trial as practicable, while a sale, if the spouses agree to one, is priced on the day it lists.