Broker's Opinion of Value (BOV)

Definition

A Broker’s Opinion of Value (BOV), also referred to as a Comparative Market Analysis (CMA), is an analysis provided by a real estate broker designed to assist a buyer or seller in making informed decisions regarding the listing price or an offer for real estate. A BOV typically involves a detailed comparison of similar properties in the area that have recently sold, are currently on the market, or are pending sales.

Key Points:

A BOV is not an official appraisal and does not hold the same legal or financial weight.
It typically includes an examination of local market trends, features of the property, and an estimate of the time it might take to sell.
A fee may or may not be charged for providing a BOV.
For mortgage lending purposes, a formal appraisal by a state-certified or licensed appraiser is required.

Examples

Residential Property Sale: A homeowner looking to sell their house might request a BOV from a real estate broker to determine a competitive listing price. This analysis will take into account comparable home sales, the current state of the housing market, and the property’s unique features.
Property Purchase: A prospective buyer might seek a BOV to assess whether the asking price of a home is fair, which can help in making a suitable bid. The broker would evaluate the prices of similar properties recently sold in the area.
Investment Analysis: Real estate investors may request a BOV to gauge the potential resale value of a property currently under consideration for purchase.

Frequently Asked Questions (FAQs)

1. What is the difference between a BOV and an appraisal?

** BOV:** Provided by a real estate broker and used for setting listing prices or making purchase offers.
Appraisal: Conducted by a state-certified or licensed appraiser mainly used for mortgage lending and legal purposes to determine the property’s market value.

2. How is a BOV prepared?

A real estate broker conducts a market analysis which includes comparing similar properties in the area, examining current market trends, and evaluating the unique characteristics of the property.

3. Is there a cost associated with obtaining a BOV?

The fee for a BOV can vary; some brokers may provide this service for free, while others may charge a fee depending on the depth and complexity of the analysis.

4. Can a BOV be used for obtaining a mortgage?

No, for mortgage lending purposes, an official appraisal performed by a certified or licensed appraiser is required.

5. How accurate is a BOV compared to an appraisal?

While a BOV can provide a close estimate of a property’s value, it generally lacks the rigour and legal standing of an appraisal, which follows stricter guidelines and standardized methods.

Comparative Market Analysis (CMA): A method used by brokers to evaluate the market value of a property by comparing it to similar properties in the area.
Appraisal: A professional assessment of a property’s market value conducted by a licensed appraiser, often required for mortgage lending.
Market Value: The estimated amount for which a property should exchange between a willing buyer and a willing seller in an open market.
Listing Price: The price at which a property is offered for sale as set by the seller, often based on a BOV or CMA.

Online References

Suggested Books for Further Studies

“Mastering Real Estate Appraisal” by Dennis H. Carr.
“The Real Estate Agent’s Guide to Fist-Pumping Results: Selling Like the Real Estate Pro’s” by Tyler Reese.
“Modern Real Estate Practice” by Fillmore W. Galaty.
“The Book on Rental Property Investing” by Brandon Turner.

Fundamentals of Broker’s Opinion of Value (BOV): Real Estate Basics Quiz

### What is a Broker's Opinion of Value (BOV) commonly used for? - [ ] Legal disputes over property ownership. - [x] Setting listing prices or making purchase offers. - [ ] Determining property taxes. - [ ] Home insurance evaluations. > **Explanation:** A BOV is frequently used by sellers to set listing prices and by buyers to determine suitable offers for properties. ### Can a Broker's Opinion of Value (BOV) be used for mortgage lending? - [ ] Yes, the lender accepts it as sufficient. - [ ] Only for a second mortgage. - [x] No, a certified or licensed appraiser's report is required. - [ ] Sometimes, but it depends on the lender. > **Explanation:** For mortgage lending purposes, a report from a state-certified or licensed appraiser is legally required. ### What is one key difference between a BOV and an appraisal? - [x] BOVs are provided by real estate brokers; appraisals are done by certified appraisers. - [ ] Both serve the same purpose and process. - [ ] BOVs are more legally binding than appraisals. - [ ] Appraisals are typically free, while BOVs are not. > **Explanation:** A BOV is provided by a real estate broker, while an appraisal must be conducted by a state-certified or licensed appraiser. ### Which term is often used interchangeably with Broker's Opinion of Value? - [x] Comparative Market Analysis (CMA) - [ ] Property Inspection - [ ] Title Assessment - [ ] Insurance Valuation > **Explanation:** The term Comparative Market Analysis (CMA) is often used interchangeably with Broker's Opinion of Value. ### What does a real estate broker typically compare when preparing a BOV? - [ ] Weather conditions in the area. - [ ] Historical significance of the property. - [x] Similar properties in the neighborhood. - [ ] Utility bills of the property owner. > **Explanation:** A real estate broker compares similar properties in the area, considering recent sales, current listings, and pending sales. ### Is a fee always required for a BOV? - [ ] Yes, it is always required. - [x] No, a fee may or may not be charged. - [ ] Only if the property is commercial. - [ ] Only during peak real estate seasons. > **Explanation:** The fee for a BOV varies; some brokers may offer it for free, while others might charge depending on the depth of the analysis. ### When preparing a BOV, what market information is essential? - [x] Local market trends and comparable property sales. - [ ] Climate data of the region. - [ ] Historical ownership records. - [ ] Local crime statistics. > **Explanation:** Local market trends and comparable property sales are essential information for preparing a BOV. ### Which of the following is a characteristic of an official appraisal? - [ ] Conducted by any real estate professional. - [x] Performed by a state-certified or licensed appraiser. - [ ] Used only for rental properties. - [ ] Typically released to local municipalities only. > **Explanation:** An official appraisal is performed by a state-certified or licensed appraiser and is often required for mortgage lending. ### How does a BOV help sellers? - [ ] It can serve as a legal document in court. - [ ] It guarantees a final selling price. - [x] It helps in setting a competitive listing price. - [ ] It is used to determine property taxes. > **Explanation:** A BOV helps sellers by providing a basis to set a competitive listing price, making informed decisions. ### In what scenario might a buyer seek a BOV? - [ ] When purchasing insurance for a property. - [ ] When asking for a property tax reassessment. - [x] To assess if the asking price of a home is fair. - [ ] When looking to refinance their current home. > **Explanation:** A buyer might seek a BOV to assess if the asking price of a home is fair before making a purchase offer.

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