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Home is one of
the most significant assets. When it comes to buying and selling you may
want to protect your investment by knowing the value of home or property.
You may
consider the following analysis to determine the value of a home:
Comparative Market Analysis (CMA), Broker Price Opinion (BPO) and Appraisal.
All these analysis are an opinion of value and in a
perfect world a CMA, a BPO,
and an Appraisal shall provide similar values.
Comparative Market
Analysis (CMA) is usually performed by a real estate agent. Agents
normally provide CMA for free to home-sellers as part of the listing
presentation. A CMA provides an opinion of value by comparing listings and
sales. Listings are active listings, under contract listings, withdrawn
listings and expired listings. Sales are homes sold within last 3-6 months.
In the analysis agents may consider other factors such us market conditions,
average days on market, months of inventory, distress sales, etc. Once agent
put all information together, agent provides an opinion of value to
home-seller.
Broker Price Opinion
(BPO) is performed by a real estate agent. A BPO is a tool used by
Banks and
lending institutions to determined fair market value of distress homes (Ex.
short sales, homes in pre-foreclosure, etc.). Home-owners and buyers may use
a BPO to find out a fair market value of a home they are planning to buy or
sale. Others may use a BPO to show the tax-assessor office the current value
of a property. A BPO
provides an opinion of value by comparing 3-active listings and 3-sold homes
within last 3-months, located as close as possible to subject property.
Generally there are two kinds of BPO, interior BPO and Exterior BPO, both of
them provide pictures of subject property and comparables. BPO provides more
details than a CMA, provides information of market trends in the area,
employment trends, amenities in the area, and an estimated cost of repairing
home.
Appraisal is
performed by a licensed appraiser registered with the State. Appraisals are
requested by Banks or lending institutions when there will be a mortgage
loan for a purchase or refinancing. Appraisal determines if subject property
is worth the amount the lender will be lending. Lenders will not lend
more money than what an appraisal determines the home is worth. Appraisal
report uses three approaches to determine the opinion of value, cost
approach, comparison approach and income approach. An appraisal provides an
opinion of value by comparing 3-active listings and 3-sold homes generally
within last 3-months, located as close as possible to subject property. When
determining value of subject property, appraisal usually gives more weight
to the comparison approach and provides an opinion of value of how much
subject property should sell in an open market when there is a willing buyer
and a willing seller in an arms-length transaction. Appraisal provides
detail description with pictures of subject property and comparable. Also,
an appraisal provides detail information of condition of subject and an
estimate of cost repairs, location, neighborhood, market trends in the area,
employment trends, rental trends, accessibility of subject property to
transportation, stores and high ways. Thus, an appraisal is the opinion of
value of subject property as of the date appraisal is performed.
To request a free
Comparative Market Analysis, call 626-688-0114 or
go to
To request a BPO or to find
out more about BPOs go to
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