I’m sure you have all experienced a conversation where two or more people begin using jargon and industry lingo and acronyms and text abbreviations complete with #hashtags and you thought “Whaaaa?”
Meanwhile in the back of your mind you are certain that at any given moment a hologram will arrive and spill your drink. What happened to actually pronouncing all the syllables in words? What happened to actually conversing with your fellow man in clear and concise, and yet complete sentences – with nouns and verbs and adjectives and prepositional phrases? (Actually this is where I get a little lost….not sure I ever grasped those smarmy little phrases). Regardless – allow me to take a few moments to interpret “Realtish, or Realtan” – things your Realtor says to you that you feel are probably important to know, but you are afraid to ask.
Most people recognize the term “Appraisal” and are familiar with it’s meaning. A Broker Price Opinion – or BPO – is a version of that completed by a licensed and preferably experienced Real Estate Agent. Don’t let anyone fool you – it’s not ALWAYS completed by a BROKER. It is an opinion of value on a property based on current market conditions and recent sales data. It is NOT accepted by lenders for mortgage purposes, but is commonly used for valuing estate property, assessing foreclosure properties, and sometimes for re-financing or home equity lines of credit – depending on the amount and lending source.
You’re probably thinking that a BPO and an appraisal sound pretty similar, so what’s the difference? A BPO is NOT a certified appraisal, but it also won’t set your checkbook back as far. A BPO can be a very accurate representation of property value given the property is not outrageously unique, and assuming there is active market data available to quantify. Realtors are not licensed to make property value adjustments for 6 car garages instead of 2, solid gold faucets instead of typical Home Depot brand, or a backyard complete with a helipad and a moat, rather than just a sprinkler system. If you are the proud owner of a Roswell-style earth shelter complete with a Zombie Apocalypse escape system – certainly you will want a Licensed Real Estate Appraiser valuing your property – and a good one at that — probably not a BPO.
You may hear these letters tossed around whether you are considering buying OR selling real estate. This term has been used with a bit of artistic license by Realtors for decades. A CMA – or Comparative Market Analysis is typically completed by licensed Real Estate Agents to establish a listing price for a property. You may also hear it called a Competitive Market Analysis – meaning let’s see who you are playing against in the current championship homes “bracket”. As a Seller – you want to know what other properties Buyers will most likely also see and consider when they are looking at your property. A CMA can get your listing price SPOT on – and give you insight to any repairs or improvements you may need to make to contend at the level you want.
Although CMA’s are most normally associated with listing prices – they can also be insightful and magically helpful when purchasing a property. There are plenty of stories to be told of the property listed at $110K that sold for $35K two years later. Outside of tornado or road flare damage, there is absolutely no explaining that except there was a ridiculously inept Real Estate Agent involved. (Yes, I know, I just said that). It can be very difficult for first time or less experienced Buyers to know where the “sweet spot” might be to begin negotiations. Not too low to offend the Seller, and yet not so high that they use up all their comfortable wiggle room. That’s like wearing your tight jeans to Thanksgiving. Not a comfortable situation. Referring to CMA completed by a professional and knowledgeable Realtor will show you what properties like your dream home have been selling for – and if there were any extenuating circumstances that would have affected the sales price. Like if the Seller had thrown in a Cruise to the promised land, 2 poodles and a 1973 red pinto (in mint condition) – WITH the house at no additional charge that can definitely skew the value – no matter what.
The best thing about CMAs?: Most times CMA’s are provided free of charge to you as a client of the exceptional Realtor you have chosen to work with. The key to that sentence is “exceptional”. If your Realtor asks you “Why?” or “What?” – Run Forrest RUN!
Stay tuned for more fascinating “Realtish” translations and maybe some interpretive dance….