Home › Guides › Appraisal vs CMA vs BPO

Appraisal vs CMA vs BPO

Three things that produce a number for a house. They are not interchangeable, and using the wrong one is an expensive mistake in a narrow set of situations that happen to be the situations where it matters most.

What each one is

CMA — comparative market analysis. Prepared by a real estate agent, normally free, normally as part of winning or pricing a listing. The agent pulls recent comparable sales and current listings and produces a suggested price range. It is a marketing document as much as an analytical one, and the person producing it has an interest in the outcome.

That is not an accusation. A good agent's CMA from someone who works a neighbourhood daily can be very accurate. But it is not independent, it is not performed under appraisal standards, and it carries no professional liability.

BPO — broker price opinion. Also prepared by a licensed agent or broker, but ordered by a lender, servicer or asset manager rather than by a seller, and paid for. Usually cheap and quick, often exterior-only. Servicers use them at volume for low-stakes decisions — monitoring a portfolio, screening a short sale, setting an REO list price.

Florida restricts what a BPO may be called and what it may be used for; it may not be represented as an appraisal.

Appraisal. Prepared by a state-licensed or state-certified appraiser under the Uniform Standards of Professional Appraisal Practice, for a stated client and intended use, as of a stated effective date, with a signed certification of independence.

Which one holds up

This is the whole practical difference.

| Situation | What is accepted | |---|---| | Mortgage or refinance | Appraisal | | Estate / date of death, IRS basis | Appraisal | | Divorce, equitable distribution | Appraisal | | Bankruptcy | Appraisal | | Property tax appeal | Appraisal | | Sale between family members | Appraisal | | Litigation, expert testimony | Appraisal | | Deciding your list price | CMA is often fine | | Servicer portfolio monitoring | BPO |

The pattern: wherever a third party with their own interests will scrutinise the number — a court, the IRS, a lender, an opposing attorney — you need an appraisal. Wherever the number is for your own business decision and nobody will contest it, a CMA may be all you need.

The independence point

An appraiser may not accept an assignment where the fee is contingent on reaching a particular value or on the deal closing. That prohibition is what the appraisal is actually selling.

An agent's compensation, by contrast, is usually contingent on a sale happening at a price. Again — not an accusation, a structural fact, and the reason a CMA is not accepted where the number will be fought over.

When we tell people they do not need us

More often than you would expect. If you are deciding between two list prices a few percent apart and nobody is going to challenge you, a good local agent's CMA will get you there and cost nothing.

Where we push back is the reverse mistake: someone about to file a probate inventory, negotiate a divorce settlement or petition a Value Adjustment Board with a printout from a listing site. That is where a few hundred dollars of appraisal prevents a much larger problem.

What is a home appraisal? · Appraisal vs Zestimate and AVMs · Estate appraisals · Tax assessment appeals

Matt Thoren, State-Certified Residential Appraiser. 561-853-2129 · Residential only.