What is a broker's sales appraisal?
A sales appraisal is a broker's opinion of the price an agency, rent roll or book could achieve if it were offered to buyers now, usually with advice on how to present and market it. It can be a conversation, a letter or a short report.
It draws on what a good broker knows well: which buyers are active, what they have recently paid, which deal terms they ask for and how demand is moving. The Australian Government's guidance for sellers notes that business brokers help buy and sell businesses and can advise on profitability and market trends. When you are deciding whether to sell, an appraisal from a broker who works in your sector is valuable.
What is an independent valuation?
An independent valuation is a signed opinion of the value of a named asset, on a stated basis of value, at a stated date, for a stated purpose, by a valuer with no interest in the outcome. The ATO's guide to market valuation lists what it expects a report to cover, including the purpose, the asset, the information relied on, the standards followed, the valuation date, the definition of value, the methods with reasons and cross-checks, the valuer's identity and qualifications, and a declaration of independence.
The ATO also says a market value is better supported where the valuer's instructions established that any fee did not depend on the outcome of the report. Our fees are fixed in writing before work starts, and every report follows the guidelines of APES 225 Valuation Services.
How do they compare side by side?
Both documents are useful. They are built for different jobs.
| Broker's sales appraisal | Independent valuation | |
|---|---|---|
| Main job | Helping you decide whether, when and how to sell | Stating what a named asset is worth for a stated purpose |
| Question answered | What a campaign could achieve with today's buyers | What a willing but not anxious buyer and seller would agree at the valuation date, or the basis an agreement sets |
| Date | Forward-looking | One stated date, which can be in the past |
| Evidence | The broker's knowledge of buyers and deals, some of it confidential | The agency's records and dated market evidence, set out in the report |
| Fee | Set by the broker's own terms, which vary | Fixed in writing before work starts; does not depend on the value or a sale |
| Who relies on it | The seller | The client named in the engagement, and others agreed in writing |
Which one fits your situation?
Match the document to the job. On transfers to family, related entities or staff, section 116-30 of the Income Tax Assessment Act 1997 replaces the capital proceeds with market value where the parties did not deal at arm's length and the price differs from market value.
- ·Deciding whether and when to list: a broker's appraisal, from one broker or several
- ·Setting a walk-away price or testing an offer: either, with a valuation where you want a reference independent of the sale
- ·Co-owners agreeing a buy-out price: a valuation on the basis your agreement sets
- ·A CGT event, a related-party transfer or the 30 June 2027 change: a valuation may be useful, and your tax adviser decides what evidence you need
- ·Finance for a purchase: whatever the lender asks for in writing
- ·A dispute that may reach court: an expert report prepared for that purpose
Why can the two figures differ?
A broker's job is to find the buyer who will pay the most, and that may be one agency with spare staff capacity in the same suburbs, or a book that fills a gap in its own. Market value for tax purposes disregards value available to one specific purchaser, so a strong campaign can achieve a price above market value. That is a good result for a seller, not a flaw in the appraisal.
Hypothetical illustration, with invented figures: a broker expects a rent roll to sell for $1.2 million to a neighbouring agency that can absorb the managements without hiring. A valuation on market value, which leaves out that one buyer's savings, concludes $1.05 million. Both figures can be right, because they answer different questions.
The figures can also differ because one looks forward to a campaign and the other speaks to a fixed date, or because one is a headline price and the other allows for retention or earn-out terms.
Can you use both?
Often the sensible answer is both, in sequence. A valuation before listing gives the owners a reference point and shows which issues a buyer is likely to raise. The broker then finds buyers, creates competition and negotiates terms; we do none of that, because we value agencies and do not broker or sell them. Offers can be measured against the valuation on the same income base. After the sale, the price achieved in an arm's length campaign becomes strong evidence of value if tax later needs a figure at a particular date.
What do we need from you?
To prepare an independent valuation, we usually ask for:
- ·Three years of financial statements and year-to-date accounts
- ·Revenue by client, or a report from your book or trust accounting system
- ·The broker's appraisal, if you have one, so we can explain any difference
- ·The purpose of the valuation and who else will rely on it
What does an independent valuation cost?
Our fee is fixed in writing before work starts and does not depend on the value or on any sale. The band is set by the annual revenue, excluding GST, of what is valued: a rent roll's annual management income, an insurance or mortgage book's annual recurring income, or the agency's total annual turnover where the whole agency or shares or units in it are valued. Delivery time starts once payment and all required information have been received.
- ·Small Business Valuation: $1,495 + GST where the revenue of what is valued is under $2 million, delivered in 2 business days
- ·Medium Business Valuation: $2,495 + GST from $2 million to $3 million, delivered in 3 business days
- ·Large Business Valuation: $3,495 + GST above $3 million up to $10 million, delivered in 3 business days
- ·Above $10 million: quoted in writing before work starts, with the delivery date agreed before commencement
- ·Expert report for a dispute or court: $4,495 + GST, with the delivery date agreed before commencement
- ·Add-ons: +$495 per retrospective (past) valuation date and +$795 per additional entity