No. A formal appraisal is not required to sell an LA apartment building. The seller's side of the transaction does not need one. The buyer's lender will order their own appraisal as part of their loan underwriting, but that appraisal serves the lender's purpose, not the seller's. What most LA multifamily sellers actually want, before listing, is a broker's opinion of value — a pricing analysis based on recent closed comparable sales. Those are different documents with different purposes.
A BOV is a pricing analysis produced by a broker familiar with the specific submarket. It is built from recent closed comparable sales — actual transactions, not listings or estimates — adjusted for building-specific factors like size, age, condition, rent roll, and regulatory regime. A good BOV provides a pricing range, identifies the factors that move pricing within the range, highlights specific risks or strengths in the subject building, and surfaces any pre-listing preparation that would improve marketability. It is not a formal appraisal. It does not conform to the Uniform Standards of Professional Appraisal Practice. It is not used for lender underwriting. But for the purpose of deciding whether and how to sell a building, it is usually the more practical document — faster, less expensive, and produced by a market participant who transacts in the specific inventory regularly.
A formal appraisal is produced by a licensed appraiser using standardized methodology. It supports specific uses:
Lender underwriting (the buyer's lender orders this as part of loan processing). Estate and trust administration (determining fair market value for estate tax, inheritance, or partnership interest purposes). Litigation or partition proceedings (when value must be established for legal purposes). Property tax disputes (though these typically have specific requirements). Some institutional purposes where appraisal compliance is required. For sellers exclusively doing a straight market sale, none of these purposes typically apply. The buyer's lender will order one, but the seller is not the party paying for or using that appraisal.
Estate or inheritance context. If the sale is connected to an estate, probate, or trust administration, a formal date-of-death appraisal is typically needed for tax and legal purposes. This is separate from the sale process but often relevant.
Partnership or multi-owner disputes. If multiple owners disagree on value, a formal appraisal can provide an independent baseline.
Divorce, litigation, or legal proceedings. Court-mandated valuation typically requires formal appraisal.
Lender requirement for a refinance concurrent with the sale decision. If the seller is evaluating refinance versus sell, the refinance path will require an appraisal. For most straight-sale scenarios, a broker's opinion of value is the practical tool.
Some sellers, particularly first-time sellers, default to "get an appraisal" as a generic first step because appraisal is a familiar concept from single-family residential transactions. In multifamily, the pricing is more relationships-and-comparables-driven than appraisal-driven. The appraisal often confirms what a good BOV already established, at additional cost and time. In some cases, a formal appraisal can produce a number that is anchored to generic income-capitalization methodology rather than to the actual market — the actual market sometimes rewards specific building attributes more than the appraisal's model captures, or discounts attributes the appraisal overweights. For buildings where the market value and the appraisal value might diverge, the seller's best information source is often a broker who actively transacts in the specific submarket.
Identify a broker familiar with the specific submarket. Ask for a broker's opinion of value based on recent closed comparables. Review the comparables yourself to verify they make sense for the building. Use the BOV as the starting point for pricing strategy, not as the final answer. If the seller is in an estate, inheritance, or multi-owner context, order a formal appraisal in parallel for the specific legal purpose — but do not let the appraisal drive the sale pricing decision on its own.
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How accurate is a BOV compared to a formal appraisal?
For market-pricing purposes, a well-constructed BOV from a broker who actively transacts in the submarket is often more predictive of actual sale price than a formal appraisal. For legal and tax purposes, the appraisal's compliance structure is the required document.
What does a BOV cost?
A BOV from a broker you are considering engaging for the listing is typically complimentary. An independent BOV commissioned outside a listing engagement has variable cost.
Can I use an online valuation tool instead?
Online estimation tools for multifamily have limited predictive accuracy because multifamily pricing depends on building-specific factors (rent roll, regulatory regime, physical condition) that online tools cannot assess. They are not a substitute for a qualified broker's opinion.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap.
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