Lexington · Commercial Real Estate
What Is Your Commercial Property Worth?
Value is not what you paid, what you hope, or what the county says. It is a method.
Commercial value is established three ways: the income approach capitalizes what the property earns; the sales comparison approach benchmarks against similar recent sales; the cost approach asks what rebuilding would cost, less depreciation. Which approach leads depends on the property type. A broker opinion of value applies these methods to your specific building using current Lexington data — and I prepare them for owners without charge.
How does the income approach work?
For property that produces rent, value flows from income. The method starts with the property’s realistic net operating income — collected rents minus operating expenses — and divides it by a capitalization rate, the return investors currently require for that asset type and location. Higher income or a lower required return means higher value. The inputs matter more than the arithmetic: an inflated rent roll or an optimistic cap rate produces a number that no buyer’s lender will honor. Current Lexington cap rate context belongs in dated research, not on an evergreen page — that is what The Corridor Report is for.
How does the sales comparison approach work?
The same logic as residential comps, applied to a thinner market. Recent sales of genuinely similar properties are adjusted for differences — size, condition, location, lease status — to indicate what the market pays. The challenge in Lexington is sample size: months can pass without a truly comparable sale for a specialized building, and commercial sale prices are not always publicly visible the way house sales are. That makes access to transaction data, and judgment about which comps actually compare, the real skill. It is the leading approach for owner-occupied buildings and land, where income math has less to say.
Value is not what you paid, what you hope, or what the county says. It is a method.
What is the cost approach, and when does it matter?
The cost approach values property as the sum of its parts: what the land is worth, plus what it would cost to construct the improvements today, minus depreciation for age and wear. It anchors value for newer buildings, special-purpose properties with few comparables — think churches, schools, or single-purpose facilities — and insurance conversations. For older buildings it gets less reliable, because estimating decades of depreciation is more art than measurement. Appraisers often run it as a sanity check on the other two approaches rather than as the headline number.
Why do the county assessment and your neighbor’s price mislead?
The Fayette County PVA assessment exists for property taxation, not for marketing — it is not re-underwritten every time the market moves, and it does not read your rent roll. The price a nearby owner is asking is just that: asking. Neither is evidence of what a qualified buyer will pay this quarter. Value also shifts with things owners undervalue: lease terms, deferred maintenance, and how the property would finance. If a sale or refinance is even a possibility this year, ground the decision in method before you anchor on a number you heard.
What is a broker opinion of value, and what does it include?
A broker opinion of value — BOV is the standard industry term for the deliverable — is a written analysis applying these approaches to your property: current market data, comparable activity, an income analysis where the property produces rent, and a supportable value range with the reasoning shown. It is not a certified appraisal, which is a licensed appraiser’s product your lender may separately require; it is the market-facing view you use to decide whether and how to sell. As an agent with Keller Williams Commonwealth, I prepare BOVs for Lexington owners without charge — request yours or text (859) 310-1209, and if selling follows, the seller’s guide shows what comes next.
Common Questions
Is a broker opinion of value the same as an appraisal?
No. An appraisal is a certified valuation by a licensed appraiser, typically ordered by a lender and paid for by you. A broker opinion of value is a market analysis prepared by a real estate professional to inform pricing and strategy decisions. Most sale decisions start with a BOV; the appraisal enters later, when a buyer’s financing requires it.
What does a complimentary opinion of value cost me, really?
A conversation and access to basic property information — rent roll if leased, recent expenses, and a walk-through. There is no fee and no obligation to list. Plainly: I prepare BOVs because some owners who see their number decide to sell, and some of those hire me. You keep the analysis either way, and the honest number is the product.
How often should I revalue my commercial property?
Whenever a decision depends on it — sale, refinance, buyout, estate planning — and otherwise roughly annually, because leases roll, expenses drift, and investor requirements move with interest rates. Owners tracking a possible 1031 exchange should value early, since the exchange clock starts at closing and pricing mistakes compress every deadline that follows.
When the number supports a move, read the seller’s guide — or if discretion matters, how off-market sales work.
Marcos Gil, REALTOR® · Keller Williams Commonwealth · Commercial real estate across Lexington and Central Kentucky · Also owner of Central Property Services and publisher of Invest in the Gorge — any recommendation involving my other businesses is disclosed in writing.
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