Do you remember when Dorothy was walking down the yellow brick road, and was introduced to three different characters? Okay, so I’m not Dorothy, and I haven’t come across the Tin Man, Scarecrow, or Cowardly Lion, but I have been recently introduced to three new elements in my real estate career. In the real estate world, homeowners, lenders and investors often look to a licensed real estate agent for an evaluation on a particular property. The most commonly used terms for these evaluations are CMA’s, BPO’S and Appraisals. These acronyms can easily become confusing to most people, including myself, which is why I decided to open this month’s blog with simple descriptions explaining these terms.
A Comparative Market Analysis (CMA) is primarily used in residential real estate. This report is usually informal and free to the consumer. The licensed agent will use comparables, also called comps, from recently sold and active properties on the market to determine an estimated list price for a seller or an offer price for a buyer.
Very similar to a CMA, a Brokers Opinion of Value, or BOV, is a brief report prepared by a licensed agent or broker, to determine an estimated value of a particular property. BOV’s can be done by doing a “drive by” of the property or an interior inspection if access to the property is available. Often times, banks or lenders will request a BOV if a property is subject to foreclosure and is not worth the time and expense to have an appraisal done by a licensed appraiser which can be costly. CMA’s and BOV are not considered an appraisal.
Unlike a CMA or BOV, An appraisal is an expert opinion conducted by a licensed property appraiser. Typically when purchasing a property, the bank or lender will require the buyer to have the property appraised before lending money. This is to ensure the bank that the property is not worth less than the lending amount. The appraisal report usually takes longer and are more costly but are very detailed.
I hope this blog post helped to clear up the quick definition of these commonly used evaluation terms.
In my last article I talked about the LOI; in this article I’ve talked about the CMA, BOV and Appraisal. I don’t know what I will come across next, through my commercial real estate journey, but I look forward to sharing another new adventure in defining commercial real estate terms with you all next month. Take care and please share!
About Shannon Gilbert – Shannon is a commercial real estate associate for Sperry Van Ness | SouthLand Commercial. She is based in Pensacola, Florida and started working in the real estate industry in 2015. Prior to joining SouthLand Commercial she worked on the residential side of real estate. She is now exploring the various aspects of commercial real estate, and identifying the area of the business in which she would like to specialize. To contact her, you can call her at 850-610-8339, or email her at [email protected] You can also find her on Twitter at @.