BPO vs. Appraisal vs. CMA: What Each One Is and When It's Used

The short answer

BPO vs. appraisal vs. CMA: a BPO is an agent's written price opinion ordered by a bank, servicer or investor. An appraisal is a licensed appraiser's value report, needed for most purchase mortgages. A CMA is an agent's pricing analysis for a seller or buyer. Same comps, different jobs, different rules and different readers.

Below: a side-by-side table, when each one is used, and how to explain the bank's BPO to a seller in a short sale.

Side by side

Cost wording is general on purpose. Fees vary by market, property and client.

Step by step: BPO vs. appraisal, which one applies

Here's how I sort it out when someone asks "what kind of value do I need?"

1. Ask who will rely on the number. A bank deciding on a short sale or REO price: BPO. A lender making a new loan: appraisal. A seller picking a list price: CMA.
2. Ask if a loan is being made. For the purchase of a consumer's main home, federal law (12 U.S.C. 3355) says a BPO can't be the primary basis of value. That means an appraisal.
3. Ask if it's for court, an estate or taxes. Those usually want an appraisal. Send the client to an attorney or CPA on what's required.
4. Ask what the client already has. A seller with a fresh appraisal can still use a CMA to price against today's competition.
5. Match the format. BPO clients want their form, their comps rules and their deadline. Appraisals follow appraisal standards. A CMA is yours to design.
6. Say what you are. If you're an agent, call your work an opinion or an analysis, never an appraisal.

When each is used

BPO. A servicer reviewing a short sale offer. An asset manager pricing a bank-owned home and checking it every month or two. A HELOC review. An investor valuing a pool of loans.

Appraisal. Almost every purchase or refinance loan. Estates, divorce, court cases and tax matters when a formal value is needed.

CMA. Listing appointments. Buyer offer strategy. A homeowner asking "what's my house worth?" See how to explain a CMA pricing report.

How to explain it to your client

Here the "client" is the seller in a short sale, when the bank sends an agent to do a BPO on their home.

Keep it calm. The seller has no control over the bank's number, but a clean, accessible home and good repair notes can help it reflect reality.

Watch-outs

• Don't call your BPO or CMA an appraisal. Only an appraiser does appraisals.
• Don't pressure the BPO agent. You can share comps and repair facts. Don't push a number. The same goes for appraisers.
• Don't promise a short sale approval. The lender, and any mortgage insurer or investor, decides.
• Don't mix the reports. A seller's CMA isn't a bank's BPO. Keep them separate in your file.
• Check your state. BPO rules differ. In Colorado, check the Division of Real Estate.

Sources

• 12 U.S.C. 3355: Broker price opinions (Cornell LII)
• Colorado Division of Real Estate

Further reading

• REO and BPO partners, The Kenna Group
• Short sales, The Kenna Group

Keep going

• What is a BPO?
• How to do a BPO, step by step
• Short sale listing agent playbook
• How to explain a CMA pricing report

Want the whole system? The BPO & REO Kit gives you the asset-manager outreach playbook, six email templates, the BPO checklist, photo shot list, comps worksheet, REO listing checklist and a tracking sheet.

This is training for real estate agents. It isn't legal, tax, lending or appraisal advice. Program rules change; check the official source. Check with your managing broker.

Frog tip: For a move-up client, pick the order before the first showing: sell first, buy first or same-day closings. That one choice sets the budget and the offer. Learn more →

Questions

Is a BPO the same as an appraisal?

No. A BPO is a real estate agent's price opinion. An appraisal is done by a licensed appraiser and follows appraisal rules.

Is a BPO cheaper than an appraisal?

Usually, yes. Fees vary by market and client, but BPOs typically cost less than appraisals.

Can a lender use a BPO instead of an appraisal?

Not as the primary basis of value for a purchase mortgage on a consumer's main home, under 12 U.S.C. 3355. BPOs are used for other decisions, like short sales and REO pricing.

Why does the bank order a BPO on a short sale?

To check whether the offer is close to what the home would sell for on the market before it agrees to take less than it is owed.

Is a CMA the same as a BPO?

No. A CMA is your pricing analysis for your own client. A BPO is a report on a set form for a bank or investor who orders it.

Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.