A broker opinion of value (BOV) is a written estimate of a commercial property’s current market value prepared by a licensed commercial real estate broker. It is the evidence a commercial property owner uses to demonstrate that an assessor’s value is too high. BrokerOpinionOfValue.com today published a guide to using a BOV in a commercial property tax appeal, available at brokeropinionofvalue.com/bov-for-property-tax-appeal/.
The guide arrives during an assessment cycle in which many jurisdictions are still carrying values set before the commercial real estate repricing of the past several years worked through the transaction record. Mass appraisal systems value entire property classes at once, drawing on comparable sales that may be one to three years old. When market values fall faster than assessment rolls are updated, the gap between assessed value and market value is borne entirely by the owner, as a recurring annual expense, until it is challenged.
Office assets illustrate the exposure most plainly. Values in many markets have declined 20% to 40% from their 2022 peak, while assessments in those same markets have not fully reflected the decline. Retail with vacancies or below-market leases, industrial in oversupplied submarkets, and rent-regulated multifamily carry the same structural problem: the assessor’s model assumes a stabilized, fully functional asset that the owner does not actually own.
The Cap Rate Is the Single Largest Lever
The capitalization rate applied to a property’s income is the largest variable in an income-approach valuation, and it is where assessment error compounds fastest.
Worked example
$500,000 NOI capitalized at 5.0% = $10.0 million indicated value
$500,000 NOI capitalized at 6.0% = approximately $8.3 million indicated value
A single point of disagreement over the correct market cap rate moves the conclusion by roughly $1.7 million.
An assessor applying a cap rate 50 to 100 basis points below the market rate for a specific asset type can produce an assessed value 15% to 25% above actual market value.
At a 2% tax rate, an owner carrying a $5 million assessment who wins a 15% reduction saves $15,000 per year, every year, until the next reassessment. Because most states reassess on one- to four-year cycles, a single successful appeal compounds. In documented studies of appeal outcomes, commercial owners who challenged their assessments won a reduction approximately 62% of the time, with successful appeals typically reducing assessed value by 10% to 15%.
What a BOV Prepared for a Tax Appeal Contains
A broker opinion of value prepared for a property tax appeal typically includes four components:
1. Comparable sales analysis. Recent sales of similar properties in the submarket, adjusted for size, location, condition, and lease structure. This directly challenges the assessor’s comparable selection.
2. Income approach analysis. A market-appropriate cap rate applied to the property’s actual or normalized NOI to produce an income-approach indicated value.
3. Market commentary. Current conditions for the property type and submarket, including cap rate trends, vacancy trends, and recent transaction activity.
4. Written professional opinion. A signed value opinion from a licensed commercial real estate broker, submittable as evidence at an informal hearing, a board of equalization appeal, or a tax court proceeding.
The Six-Step Commercial Property Tax Appeal Process
1. Review the assessment notice. Compare the assessed value to what the property would sell for today, and check the assessor’s property record for factual errors: square footage, property class, improvements that do not exist, missing vacancy or expense data.
2. Request a broker opinion of value. Obtain the BOV before filing, to establish whether a case exists. If the BOV lands at or near the assessed value, an appeal may not be worth pursuing.
3. File within the deadline. Deadlines are strict and vary by state — April 1 in New Jersey, May 15 in Texas (or 30 days from the assessment notice), 25 days from the TRIM notice in Florida, and other state-specific dates. A missed deadline eliminates the right to appeal for that assessment year.
4. Informal hearing with the assessor. Often the fastest path to a reduction. Where the BOV and comparable sales clearly support a lower value, the assessor may agree without a formal hearing.
5. Formal board of equalization hearing. In many states the burden of proof rests on the owner, which is why documented comparable sales and a written value opinion are essential at this stage.
6. Tax court appeal, if needed. At this level, a USPAP-compliant certified appraisal from a licensed MAI appraiser is typically preferable. The BOV is the right instrument to evaluate and initiate an appeal; a certified appraisal becomes the right instrument if the matter proceeds to formal litigation.