A common question real estate agents are asked is, “What is the difference between a broker price opinion or property valuation and an appraisal?”
A broker price opinion or property valuation is typically completed by a real estate agent or broker; they do not have to be a licensed real estate appraiser. However, don’t underestimate the real estate broker as they are typically professionally qualified in their market to give you a professional opinion of a property’s value based on recent market activity. To determine an estimated value for your property, they will find comparable properties in the market area and base their opinion of value on sales prices and sales dates. This is how a real estate agent determines a listing price for a property. They are basing their opinion on the actions of buyers and sellers in the market.
A real estate appraisal is along the same premise but a bit more complex and detailed. It must be conducted by a state licensed real estate appraiser and adhere to the Uniform Standards of Professional Appraisal Practiceor better known as USPAP. Appraisers can use one or all three approaches to value: Sales Comparison, Income, and Cost. Most residential properties will utilize the sales comparison approach. This approach is much like the broker price opinion as it relies on the recent sales price of comparable properties in the market. However, an appraiser offers a detailed analysis of the property and comparables. Adjustments will be made to the comparables for dissimilarities with the property being appraised (often referred to as the subject). They then use the adjusted sales prices of the comparables to determine a concluded value for the subject. In order to get a mortgage, a lender will usually require a full appraisal.
Both methods serve their purpose in the market. The broker price opinion helps sellers determine a realistic sales price for their property and the appraisal reaffirms that the purchase price is within a market acceptable range.
Contact Stutesman Action Realty, 833.286.8400, today for your broker price opinion and get your property listed and sold.