What’s the difference between a Certified Appraisal vs. Comparative Market Analysis (CMA) vs. Broker Price Opinion (BPO)
Certified Appraisal
- Purpose: Used for official transactions like mortgage lending, estate planning, or divorce settlements.
- Process: Conducted by a licensed appraiser who follows strict guidelines and standards.
- Scope: Involves a detailed analysis of the property, including its condition, location, size, and unique features.
- Data: Uses comparable sales data, market trends, and other relevant factors to determine the property's value.
- Output: A formal report with a detailed valuation and supporting documentation.
Comparative Market Analysis (CMA)
- Purpose: Used to help sellers price their property competitively or buyers make informed offers.
- Process: Conducted by a real estate agent who analyzes similar properties and trends in the area.
- Scope: Focuses on recent sales and also competition of comparable properties (comps).
- Data: Relies primarily on recent sales and for sale data and current market trends.
- Output: A less formalized report providing a range of estimated values and usually includes a marketing component.
Broker Price Opinion (BPO)
- Purpose: Often used for loan modifications, short sales, or REO (Real Estate Owned) properties
- Process: Conducted by a real estate agent or broker. Can be done by appraisers as well.
- Scope: Typically involves a visual inspection of the property, but may not include a full interior inspection.
- Data: Relies on recent sales data, market trends, and the agent's knowledge of the local market.
- Output: A less formal and quicker report providing an estimated value.
Key Differences:
- Credibility: Appraisals and CMA’s are deemed more credible and accepted by lenders and legal entities due to the appraiser's or agent’s licensing and adherence to professional standards.
- Detail: Appraisals/CMA’s provide a more in-depth analysis of the property and its specific characteristics. CMA’s commonly include marketing data as well.
- Purpose: Appraisals are used for official transactions, while CMAs and BPOs are generally used for general guidance, marketing and selling of property and decision-making.
When to Use Which:
- Appraisals and CMA’s: Required for mortgage lending, estate planning, divorce settlements, or any transaction where a formal valuation is needed.
- CMA: Useful for sellers pricing their property, buyers making offers, or real estate agents providing market insights and pricing to industry professionals and to potential clients.
- BPO: Often used for loan modifications, short sales, or REO properties.
Drive-By Appraisal:
- Can be done by appraisers as well. Also known as a summary appraisal, this is a type of home appraisal where the appraiser only inspects the exterior of the property. It's faster and less expensive than a full appraisal.
Reach out if you'd like more details on any of these.
