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The Power of the Opinion of Cost Report

The Power of the Opinion of Cost Report

When purchasing or managing a commercial property, understanding its physical condition is only half the battle. The other half? Knowing the financial implications of its condition. That’s where an Opinion of Cost Report comes into play.

What Is an Opinion of Cost Report?

An Opinion of Cost Report provides a detailed breakdown of estimated costs to repair, replace, or improve a building's components based on a commercial property inspection report. This report offers immediate cost projections to help buyers, investors, and property owners make informed decisions regarding budgeting, negotiations, and long-term maintenance planning.

An Opinion of Cost is also referred to as a “Cost to Cure Report” by industry leaders like CCPIA, or a “Capital Reserve Study” by certifying organizations, like Community Associations Institute.

These cost estimates, known as Construction Cost Estimates (CCEs), are compiled using reputable pricing sources that reflect current labor, materials, and equipment costs. Common sources include:

  • RS Means

  • Repair Pricer

  • Marshall & Swift

  • Local contractors and tradespeople

The Process: From Inspection to Cost Analysis

A commercial building inspection provides insight into a property’s condition, but adding an Opinion of Cost Report elevates that information by attaching financial figures to necessary repairs. This service typically follows these steps:

  1. Perform the commercial inspection – The inspector evaluates the condition of the property’s major systems and components.

  2. Write the inspection report – A detailed report outlines deficiencies, deferred maintenance, and areas of concern.

  3. Select issues for the Opinion of Cost Report – The most pressing repairs or replacements are compiled into the report.

  4. Research and compile cost estimates – Costs are gathered from verified sources, considering local labor, material costs, and seasonal fluctuations.

  5. Attach the Opinion of Cost Report to the inspection report – This final document provides clients with a clear financial picture of their investment.

While typically offered as an add-on to a commercial property inspection, an Opinion of Cost Report can also serve as a standalone service for repeat clients, property managers, or investors looking to create an annual maintenance budget.

How an Opinion of Cost Report Benefits Clients

A standard commercial property inspection determines what needs attention, but an Opinion of Cost Report takes it further by answering how much it will cost to address those issues. The financial insight gained from this report allows different types of clients to make informed decisions:

  • Buyers: Helps negotiate purchase price reductions, seller concessions, or pre-closing repairs.

  • Property owners: Aids in annual maintenance budgeting and evaluating capital expense reserves.

  • Investors: Provides a financial snapshot of a property's immediate needs and future expenses.

  • Sellers & Landlords: Helps price the property competitively and assess repair costs before listing.

For real estate professionals, an Opinion of Cost Report is valuable in risk assessment and asset planning. It provides financial clarity, allowing clients to move forward with confidence.

Breaking Down an Opinion of Cost Report

A well-structured Opinion of Cost Report is clear, organized, and easy to interpret. It typically includes:

  • Property address

  • Corresponding section in the inspection report (for reference)

  • Description of the issue

  • Unit type (square feet, unit number, etc.)

  • Quantity (total number of affected units or areas)

  • Useful Life (UL) – The expected lifespan of the component

  • Remaining Useful Life (RUL) – The estimated time before replacement is necessary

  • Immediate Cost Estimate – The projected cost for immediate repairs

  • Variance – A margin of error for cost fluctuations

  • Cost source(s) (optional) – Reference to pricing databases or local quotes

  • Limitations notice – Explanation of any constraints in cost estimation

This report helps clients answer three key financial questions:

  1. What repairs and replacements should be anticipated?

  2. How often will these expenses occur?

  3. How much will these repairs and replacements cost?

Final Thoughts

An Opinion of Cost Report is a powerful tool in commercial real estate transactions, investment decisions, and property management. It allows stakeholders to understand both the physical and financial realities of a building, equipping them with the knowledge to make sound decisions.

For commercial property inspectors, integrating Opinion of Cost Reports into their services not only enhances the value of their inspections but also strengthens their reputation as trusted advisors in the real estate industry.

By providing clear, data-driven financial insights, inspectors can empower their clients to make smarter investments—turning potential uncertainties into well-planned financial strategies.

 

Bibliography

  1. CCPIA - Certified Commercial Property Inspectors Association
    https://ccpia.org/

  2. RS Means - Construction Cost Estimating Data
    https://www.rsmeans.com/

  3. Repair Pricer - Home & Commercial Repair Pricing
    https://www.repairpricer.com/

  4. Marshall & Swift - Building Cost Estimation
    https://www.msbinfo.com/solutions/marshall-swift/

A reputable and professional commercial building inspection company should guide each client through every phase of the inspection process with ease. The client should feel reassured and well-informed at every step.

How to confidently hire a commercial building inspector.

5 Things You Should Know About Your Commercial Building Inspector

Professional Commercial Inspection Proposal - What to Expect

1. What are the commercial inspector’s professional and educational qualifications?

2. Can the commercial building inspector produce a professional portfolio of work?

3. Does the commercial inspector have proper insurance coverage?

4. Does the commercial inspector have a formal proposal process and require legally binding pre-inspection agreements?

5. Does the commercial inspector have a website that transparently provides important information?

Read the full article here >

Choosing the right commercial inspector involves thorough research and careful consideration of their qualifications, experience, and professionalism. By doing so, you can ensure that you receive a reliable and detailed inspection that will help you make informed decisions about your commercial property.

Focus Building Inspections - Certified Commercial Property Inspectors (CCPIA)

CCPIA and ASTM set the standard high - and we meet it every time

When we conduct inspections and write reports, we adhere to the standards and guidelines set forth by CCPIA and ASTM. The Certified Commercial Property Inspectors Association (CCPIA) is a national elite organization that trains and supports dedicated commercial building inspectors. They "enhance the commercial property inspection profession by providing its members with online training and resources for the purpose of professional development and improvement." The American Society for Testing and Materials (ASTM) is one of the world's largest and most well-established organizations developing international standards for good commercial practices for conducting a baseline Property Condition Assessment (PCA).

Meet our Lead Commercial Building Inspector!

Lance Coffman | Lead Commercial Inspector | Owner

Our team is led by Inspector Lance Coffman, who has carved out an excellent reputation as one of Oklahoma and it’s surrounding states’ most sought-after commercial property inspectors. Along with his business and life partner, Brit, he has grown a team of reputable inspectors who are highly talented and thoroughly trusted. His integrity and collaboration within the inspection industry have led him into positions of teaching both residential and commercial inspectors at the national level through CCPIA and InterNACHI. He’s also been a guest on Spectora’s podcast several times; Spectora is North America’s leading report-writing software for commercial services. Lance also owns and operates a thriving home inspection business that serves Tulsa, OK, and surrounding counties.

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Commercial Inspection, ADA Compliance, Opinion of CostBritFocus Building InspectionsCommercial Inspector, Arkansas, Oklahoma, Missouri, Kansas, Commercial Building Inspection, Property Condition AssessmentComment