There’s more than one way to learn the value of your property.
Whether you’re buying or selling, knowing what the property is worth ensures you’re paying or receiving a fair price. To find that value, you can rely on an appraisal or a broker’s opinion of the value.
What’s the difference between the two? And why is understanding that difference important?
What's an Appraisal?
When preparing for a property sale or inspection, the term “appraisal” is usually the first that comes to mind. An appraisal is a formal evaluation of a property conducted by a state-licensed third party. Appraisers are fully trained and certified for the role, and their inspections must meet a set of standards set by an oversight body.
Appraisals can be requested by the property owner or ordered by a bank or lender (usually only when a loan is part of the equation). They’re also performed at a cost, which, depending on the property/real estate in question, averages $300 to $400.
What’s a Broker Opinion of Value?
While similar in several ways, a broker opinion of value (or “BOV”) is a much different process than an appraisal. A BOV is conducted at the request of the property owner, and on a more informal basis than an appraisal requires.
As the name implies, any evaluation is strictly the opinion of the broker conducting it. These evaluations are also often performed for free, with the broker offering the service for a chance to officially represent the property in the future. Due to the opinion-based nature of a BOV, investors don’t typically give it the same weight as an appraisal.
The Benefits of A BOV VS. AN APPRAISAL
Despite the differences between each option, both serve to give you a better sense of the property’s value. They also provide their own perks and advantages.
The most obvious benefit with appraisals is that the evaluation is certified. The final results rely on facts rather than opinions and come with the reassurance of a trained appraiser, a strict standard set of principles, and the support of investors and lenders.
A BOV might not come from a trained appraiser, but a broker’s opinion carries advantages that the appraisal does not. In addition to being a free service, a reliable opinion of value from a trusted source can be beneficial when soliciting investment capital. When buying property, a BOV can be used as a second opinion to compare against an investor’s independent conclusion.
Which Option is Right for You?
In the end, your own unique circumstances will dictate the best choice. If you need an in-depth property evaluation backed up by the state and supported by banks and lenders, consider investing in an appraisal. If you’d like to save some cash and get a second opinion regardless of lender support, a broker opinion of value is your best option.
If you need further advice on accurately evaluating your property, contact the experts at DRK.
Until next time,
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