David Saks: April 2013

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

The Saks Equation Revisited Part II

                               saks equation 

The Saks Equation suggests that :
{amv} + {bpo} / 2=avo or av
(appraised market value + broker price opinion divided by 2 = absolute value opinion or absolute value)

 If the appraised market value is 275000 dollars and the broker price opinion is 245000, the absolute value would be equal to $260000.



275000 amv
245000 bpo
260000 = avo or av

In the days to come I hope to have some new information and thoughts on comparative marketing issues, including preparation of the Broker Price Opinion, as well as consideration of any opinion of value performed by the appraiser or the broker.

I'm not licensed to perform an appraisal, but I believe that the broker price opinion is beginning to gain popularity because of it's relationship to comparative sales data and the ability to perform it rather expeditiously and cost effectively, as opposed to more rigorously defined components in a formal appraisal which consider the three principal elements of an appraisal which include the sales comparison, cost comparison, and income approach to value and their commensurate variation and applicability to one another.

The bpo, as you know, would not be used for determing a loan to value option for a borrower for the purpose of securing a loan. Perhaps it will come into play in the future and have impact on the process. However, I believe that the bpo will assist rather importantly in defining reserves for auction properties that don't rely on financing and are point of sale transactions. More to come...

David Saks

Time&Temp Memphis

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Comment balloon 4 commentsDavid Saks • April 23 2013 09:21AM
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