Broker Price Opinion (BPO) and Comparative market Analysis (CMA) are terms that often get thrown around interchangeably. While both tools are used by brokerages to estimate the value of a property, they are not the same thing.
Comparative market Analysis (CMA)
A CMA is a tool used by Realtors® to help sellers determine a pragmatic price for their property before listing with a brokerage. A CMA can also be used by buyers to help them decide on a offer price. The process of creating a CMA involves comparing the subject property to similar properties in the same area. The Realtor® will consider factors such as the number of bedrooms, bathrooms, square footage, property age, and unique features. The Realtor® will also consider any current market conditions that could affect the price, such as high demand or lack of inventory.
Broker Price Opinion (BPO)
A Broker Price Opinion (BPO) is a method used by real estate brokers to estimate the probable selling price of a property. Banks and mortgage lenders often request BPOs when determining the value of a property during the loan origination process, or in situations involving foreclosures or short sales. A BPO involves a thorough examination of the property in question, including its overall condition, neighborhood, any unique features, and more. A BPO could also be used when the subject property doesn’t have any comparable properties nearby. The broker then uses this information to estimate the likely selling price for the property.
Comparing BPOs and CMAs
While BPOs and CMAs both serve to estimate a property’s value, the key differences lie in their purpose and intended audience, Both tools are essential and serve a unique role in real estate.
Citations
Joint guideline on Broker Price Opinions (BPOS) – real estate commission. (n.d.). https://irec.idaho.gov/wp-content/uploads/guidelines/Guideline-20-rev-7.11.pdf
Responsible valuation policy. www.nar.realtor. (2012, February 16). https://www.nar.realtor/appraisal-valuation/responsible-valuation-policy
June 2014 Hot Topic Alert – realtorparty.realtor. (n.d.-b). https://realtorparty.realtor/wp-content/uploads/2017/08/HTA-Broker-Price-Opinions.pdf