What's the difference between a BPO, a CMA and an Appraisal?

Real Estate Broker/Owner with Erica Ramus - Ramus Realty Group - Pottsville, PA RM420589

What's the difference between a BPO, a CMA and an Appraisal?

BPOs (Brokers Price Opinons) are normally done by real estate agents (or brokers). A bank will order a BPO before or during a foreclosure process, to get an estimate of what the agent or broker thinks the house is worth in today's market. The agent or broker may or may not be experienced in this kind of work! It is no more than a "guesstimate" of value, in most eyes.

The lender wants to agent or broker to give them an estimate of value, in case the lender must take over the property and sell it either to an investor or on the market. The lender usually will look on the internet for local agents, call one and order a BPO. Many firms pay an agent $25-75 to perform this task. The agent will go to the house, most times just drive by and take photos, then fill out a bunch of paperwork for the lender. The agent does it for the small payment, plus in the hopes that if the bank forecloses, the agent might get the listing. The lender is looking for an inexpensive way to have someone look at the property and report on its current marketability and value. Hungry brokers will take on this kind of work.

In some states (such as Pennsylvania) is is ILLEGAL for agents or brokers to perform BPOs. Yes many agents will do them. Either they don't realize they are illegal, or don't care. But the Commonwealth of Pennsylvania has declared that a BPO is a form of "valuation" and therefore only a licensed appraiser may do this kind of work. Agents and brokers MAY NOT do BPOs legally.

In our office, agents are forbidden from taking this kind of work. A close cousin of the BPO is the CMA, which stands for comparative (or sometimes "competitive") market analysis and involves an agent researching sales on the local Multiple Listing Service (MLS). The agent who hopes to now list your home compares your home to other homes on the market, and to homes that recently sold, and gives you a rough estimate of what it would sell for on today's market. An appraisal is a valuation of property done by a LICENSED appraiser.

Again, an appraisal can only be done by a licensed appraiser who is registered with the state. Period. BPOs may be used before a bank takes possession of a house, or to evaluate a short sale offer, but they are not used in lending situations when a buyer is purchasing a home. Why not? Because then a lender is serious and wants to make sure they are truly getting their money worth on lending money to the buyer. They want a licensed appraiser to value the property then, and will pay more for it than they will for a BPO to make sure an expert is looking at the property.

No matter what you say, a BPO, a CMA and an appraisal are still JUST OPINIONS. They are not set in stone and they are not the "word of God." They are one person's opinion. Now, how experienced or how educated that opinion is -- that is a very different point!

 In our office, we have a licensed residential appraiser, Marcy Kleckner. 

We operate Schuylkill Appraisal Services in house and can help you with any appraisal needs you may have. 




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  1. Michele Myers 02/02/2011 12:12 AM
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Mike Mitchell
Real Living Kee Realty - Saint Clair Shores, MI

Good explanation Erica and I agree with you, all 3 are just one persons opinion.

Jan 18, 2011 02:57 PM #1
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Erica.. it's about time someone broke this down... I see many confused about the differences.. especially consumers.  Good info and a good break down between the differences. And as Mike said... it comes down to different opinions. 

jeff belonger

Jan 18, 2011 03:20 PM #2
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Erica Ramus

MRE, Schuylkill County PA Real Estate
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