of the property's value.
COMPARATIVE MARKET ANALYSIS
A comparative market analysis (CMA) is conducted by a real estate agent and provides an estimate of a home's value based on recent sales of comparable properties in the area. Adjustments are made for differences such as lot size, amenities, and upgrades.
BROKER PRICE OPINION
A broker price opinion (BPO) is another valuation method typically requested by mortgage lenders. It is less detailed than a professional appraisal but more comprehensive than a CMA. There are two types of BPOs: Drive-by BPO – An exterior evaluation based on visible property conditions. Interior BPO – A more detailed assessment that includes interior features and conditions. While a BPO is a useful tool, it should not replace a formal appraisal if legal proceedings require a definitive market value.
COST APPROACH
The cost approach determines a property's value by estimating the cost to rebuild it from scratch, subtracting depreciation, and factoring in land value. This method is commonly used for new construction but is less relevant for resale properties.
PROFESSIONAL APPRAISAL
A professional appraisal is often required by courts when dividing marital property. Some states mandate that a judge independently determine fair market value, while others allow
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