I recently received an email from a woman who identified herself as a trustee of vacant land on Tucson’s west side. She asked if I could provide her with an analysis of this area and give her its current market value. I have received plenty of these requests before from individuals, whether lawyers, accountants, bankers, or others, because, as a land lot specialist, I have the expertise to evaluate the market value of vacant properties.
She then asked me to provide what is known as a Broker Opinion of Value (BOV), also known as a Broker Price Opinion (BPO).
What is a Broker Opinion of Value (BOV)?
BOVs, or BPOs, are often intended to help buyers and sellers who are trying to determine the listing price of a vacant property or the amount they should offer if they are considering buying a land parcel. It is essentially an estimate of value determined by a real estate broker.
How is the value determined?
Value is generally determined by studying market sales and understanding current market conditions and trends. The specific characteristics of the subject property, such as its topography, zoning regulations, and availability of utilities, can significantly impact its value. Thus, the broker’s detailed knowledge of these aspects and the property’s immediate surrounding area guarantees a more accurate BOV.
What happens when there are missing specifications?
Looking at the vacant property in question, I saw it was adjacent to a subdivision that I know well, but I did not spot any roads connecting to the property from the public streets. Looking at the land’s topography, I noticed that most of the property was very sloped and would be subject to the Hillside Development Overlay Zone requirements (HDZ).
From past knowledge, I knew that the utility infrastructure in this specific part of the subdivision was never fully finished. Because of that, I was not sure of the availability of water, electricity, or gas to the parcel and, if available, certainly had no idea of the connection costs.
With all these challenges to the property, I quickly realized that I could not provide an accurate BOV and needed to refer her to a licensed real estate appraiser to do a thorough land appraisal and determine the property’s true market value.
Appraisals vs. BOVs
Appraisers are regulated by state and federal agencies and must follow a prescribed format and methodology. Appraisals go well beyond the scope of a BOV and require extensive research, analysis, and data collection to arrive at an accurate value. Appraisals are also fee-based and property-specific, whereas a BOV can estimate the value of a client’s full portfolio of real estate assets.
There are different levels of appraisals depending on the client’s needs, from a simple drive-by appraisal to a full-blown, several-hundred-page appraisal performed by an MAI appraiser, which means the practitioner has completed one of the highest professional designations offered and is a member of the Appraisal Institute. Only the Certified General Appraiser designation is higher.
Both a BOV and an appraisal are valuable tools. Starting with a BOV is a great first step in understanding your property’s value because it is quicker and less expensive than an appraisal. While a BOV is not as detailed as an appraisal, brokers typically have a strong understanding of property values and can provide a reliable estimate. This initial estimate can help you decide if a more detailed, formal appraisal is necessary.
From lawyers and accountants to trustees and property owners, if you are looking to understand a parcel’s value, I am here to help. Whether you are considering a Broker Opinion of Value (BOV) for your property or need a detailed appraisal, contact me at 352.918.5477 or rick@buytucsonlots.com.
Sources
