In Texas, commercial property is priced mainly by its income: net operating income divided by a market cap rate, tested against the rent roll and trailing 12-month financials. Because Texas is a non-disclosure state, sales comparisons depend on prices brokers verify from actual trades, and replacement cost sets a practical ceiling.
Texas does not require sale prices to be reported in public records (as noted on our Commercial Division page). An owner trying to answer "what is my building worth?" quickly finds that the obvious shortcut, looking up what the building next door sold for, is not available.
Timing adds a wrinkle. Pricing an income property means projecting its expenses, and Texas property taxes are often the largest. For tax years 2024 to 2026, a 20% annual limit on appraised-value increases has applied to non-homestead real property valued at about $5.32 million or less for 2026, and it expires December 31, 2026 unless the Legislature extends it (Texas Tax Code 23.231). A buyer underwriting a smaller building for 2027 may assume higher taxes than the seller pays today, which lowers projected income and, with it, price.
Why can't I just look up what similar buildings sold for?
Several common sources look like sale data but are not:
- Deed records show who bought and sold, not the price.
- Appraisal district values are tax estimates, set on a schedule and sometimes limited by the cap, not sale prices.
- Listing sites show asking prices, which can differ sharply from where a deal closed.
- Commercial data services rely partly on voluntary reports and modeled estimates, so coverage of smaller Texas trades is uneven.
- Entity and portfolio sales can transfer ownership with no clean, building-level price at all.
None of this makes online data useless. It makes it a starting point that needs to be checked.
How does the income approach work?
For most investment property (multifamily, retail, office, industrial), value follows income. The process:
- Review the rent roll. List every tenant, unit, rent, lease start and end date, deposit and concession.
- Read the T-12. The trailing 12-month operating statement shows what the property actually collected and spent.
- Normalize the numbers. Adjust for one-time items, below-market management fees, unbilled reimbursements and expected tax changes.
- Calculate net operating income. NOI is effective gross income minus operating expenses, before debt service and capital costs.
- Apply a market cap rate. Value equals NOI divided by the cap rate buyers are paying for comparable risk.
Small changes matter. A higher cap rate means a lower value for the same income, and a modest change in NOI moves value by many multiples of that change. Our post on typical cap rates for DFW rental properties covers how those rates are set.
What is the difference between a rent roll and a T-12?
The rent roll is a snapshot of who pays what today and when each lease ends. The T-12 is a history of what actually happened over the last year. A buyer reads them together: a strong rent roll with weak collections on the T-12 points to concessions, delinquency or recent lease-up that has not yet produced income.
Where does the sales comparison approach fall short?
Comparable sales still matter, especially for owner-user buildings and land. In a non-disclosure state, though, a comp is only as good as its verification. A reported price may exclude seller credits or assumed debt, bundle several properties together, or reflect a buyer with unusual motives. Properties also differ in lease terms, tenant credit and condition, so even a verified price needs careful adjustment.
When does replacement cost matter?
Replacement cost asks what it would take to buy the land and build the same improvements today. It tends to act as a ceiling: buyers rarely pay well above what a new, comparable building would cost. It is most useful for newer or special-purpose buildings, and as a check on whether income-based value has drifted far from physical reality.
What do brokers know that online data does not?
Brokers active in a submarket learn actual prices and terms through their own transactions, conversations with other brokers, and buyer feedback on recent offers. They also hear what sits behind a headline number: credits after inspection, a seller-financed note, a lease that rolls next year. Buyer motivation matters too. Exchange buyers, for example, have 45 days from their sale to identify replacement property and 180 days to close (Internal Revenue Service, Like-Kind Exchanges Under IRC Section 1031), which can shape both price and terms. Our multifamily investment overview shows how this plays out in one property type.
Is a broker opinion of value the same as an appraisal?
No. Each has a role:
- Broker opinion of value (BOV). Prepared by a commercial broker to estimate the price the market will likely pay, often to help an owner decide whether, when and how to sell. Typically faster and focused on current buyer behavior.
- Appraisal. Prepared by a state-licensed or certified appraiser under professional standards, usually required by lenders, courts and some estate or tax matters.
Many owners start with a BOV to make a decision and order an appraisal when a lender or legal process requires one. A CPA or attorney should advise on any tax or estate use of a valuation. The Agency Dallas Commercial Division prepares broker opinions of value on commercial property across Dallas-Fort Worth for owners weighing a sale, refinance or 1031 exchange.
How can our Commercial Division help?
To request a broker opinion of value, send us the property type, its location and its size, along with a current rent roll and T-12 if you have them. We will follow up within one business day. Start on our Commercial Division page or call (469) 839-6020. The Agency Dallas Commercial Division handles investment sales of multifamily, retail, office and industrial property throughout North Texas, and our commercial team can also help you plan the timing of a sale.
Frequently asked questions
Why are Texas commercial sale prices not public?
Texas does not require sale prices to be reported in public records. Deeds show the parties to a transfer but generally not the price paid. As a result, the actual price of most commercial sales is known only to the parties, their brokers, lenders and closing agents, which is why verified broker data carries so much weight in Texas pricing.
Is the appraisal district value what my property is worth?
Not necessarily. The appraisal district sets a value for property tax purposes on its own schedule and methods, and through 2026 some non-homestead property values are limited by the 20% cap. That number can sit above or below what a buyer would pay. Market value depends on income, lease terms, condition and current buyer demand.
What cap rate should I use for my property?
The right cap rate depends on property type, location, tenant credit, lease terms, building age and current interest rates. It comes from what buyers are actually paying for similar risk, which in Texas means prices verified through real transactions. A broker who tracks recent trades in your submarket can give you a supportable range rather than a single guess.
How long does a broker opinion of value take?
Timing depends on the property's complexity and how quickly financial records are available. A small property with a clean rent roll and T-12 moves faster than a multi-tenant center with many leases to review. Sending complete documents with your request is the easiest way to speed it up, and we follow up within one business day.
Do I need an appraisal if I already have a BOV?
It depends on your purpose. A BOV is well suited to deciding whether and how to sell. A lender, a court or certain estate and tax matters usually require a formal appraisal by a licensed appraiser. Ask your lender, attorney or CPA which they need before you order one, so you pay for the right report.
Sources
- Texas Tax Code Section 23.231, limitation on appraised value of certain non-homestead real property
- Internal Revenue Service, Like-Kind Exchanges Under IRC Section 1031
- The Agency Dallas Commercial Division page, Texas non-disclosure of sale prices
Verified October 2026.
