There’s a major difference between an MHP broker’s opinion of value (BOV), and an MHP appraisal. The first is what a broker would tell a seller that they could get them for selling their home. This is a forward looking process that makes a decision based on current market trends.
MHP appraisals, on the other hand, take a very different approach. They tend to look backwards, using market stale comps for cap rates, price per lots, and so forth. This is a much more thorough financial audit of your property for replacement value, sale comp value, and more.
BOV Vs MHP Appraisals
In short, in a BOV, the goal isn’t to guess the appraisal. It’s simply to provide context based on the state of the industry. It’s also very unlikely that what a broker pitches and what the home will be appraised for will have a gap between the figures. This is by design. One’s looking towards what recently closed and for how much. The other is looking more towards how much they can push the deal based on best projections.
While it certainly holds value, a BOV is hardly worth the paper it’s written on from the standpoint of a financial institution. Sometimes, banks will reach out for a BOV, but still, it’s not the most sophisticated valuation technique. In short, an appraisal is bankable, while a BOV isn’t. That doesn’t mean it doesn’t serve its purpose, though.
Is One More Accurate Than The Other?
While it may seem appraisal has a leg up in this sense, there’s still great value in a BOV. The thing about a good broker in any industry, is that they know the business in and out. And they may catch certain factors in their valuation that an appraiser may not know to look for.
A lot of local appraisers in tertiary markets will likely not be as hands on, and thus base their metrics on a formula that leaves out the nitty gritty. While this may not seem like much, it’s actually well worth the acknowledgement. An appraiser may put a 9 cap on a market based on past statistics that’s currently more of a 6 cap market. This is where a broker can shine with their follow through as subject matter experts.
Working With The MHP Expert
It’s highly advised to use an appraisal group that is a specialist in Mobile homes. There are a few out there that are great at finding a good balance between looking backwards and looking forward. They’re worth the investigation, as it may aid in getting you a better overall deal. Listen to the rest of our talk on the matter in the linked clips!
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