If you want to make a good investment, it is important to have an accurate property value, regardless if you are buying or selling a house. This is particularly necessary if a if mortgage note is involved.
There are four ways your single family property and mortgage note are valued. These are each based on the accuracy and the various features they provide. Valuing commercial and multi-family properties often costs more and takes longer.
Completion: 3 to 10 days
Cost: $300 to $500
Accuracy: Very accurate
Appraisals are almost always required by conventional lenders. An appraisal is your best option for obtaining the most accurate property value. When an appraisal is completed, you receive a detailed report on the property itself, as well as real estate value of home recently sold in the surrounding area. If you are not using a conventional lender or have limited time and money for an appraisal, the options below may be best.
Broker’s Price Opinion (BPO)
Completion: 1 to 5 days
Cost: $100 to $250
BPO’s are known for providing an accurate property value and being completed quickly at a great price. BPO’s are most often used when purchasing a mortgage note. It is a simpler version of an appraisal that also offers information on the property and the surrounding area. BPO’s lack some of the details appraisals have, it is a general overview. As a result, a conventional bank may not accept a BPO when considering a loan.
Comparative Market Analysis (CMA)
Completion: 1 day
Cost: No charge
Accuracy: Somewhat accurate
Most licensed real estate agents complete a CMA at no cost when you are working with them. A CMA includes a list of comparable properties in the market, as well as their recent sold prince or current listing price. It provides information on property value trends and can give you a somewhat accurate look at a property’s value. In the event you decide to enter into a contract or investment, it is a good idea (and much safer) to have a BPO or appraisal completed for a more accurate value of the property.
Completion: Around 1 hour
Cost: No cost
Accuracy: Not Very Accurate
In a manner of seconds, anyone with an internet connection with can quickly go on Trulia or Zillow and examine estimated property values. These sites list recent sales data, including selling price, as well as an estimate of the current value of the property. While this is a quick and free way to get an idea of a property’s value, the estimates tend to be wildly inaccurate. As a result, they should not looked at as a reliable property valuation.
Now that you are aware of your options for valuing your property or potential property, don’t forget about your mortgage note’s value. There are two options. One, contact a note buyer for a quote, or two, access a free note calculator to receive an instant valuation.