Can Valuations of Homes Differ?
When a Real Estate Broker values a home for sale, he or she does what is called a Comparative Market Analysis, or CMA, to assist in the decision to list and sell a home at a particular price. Ask two Brokers to do a CMA on the same home, and you will most likely get two different price suggestions. Which is right? They both are. A CMA is merely an opinion on what the value of the home is, compared to what has sold in the past. A Brokers Price Opinion, which goes one step further in the valuation process, is closest to an appraisal as it adds or subtracts value based on the differences in the homes selected.
Can a Brokers Price Opinion be used instead of an appraisal? No, it cannot, because the Real Estate Broker is not a licensed Real Estate Appraiser. It is only his or her opinion on the value of the property and cannot be used in the approval process for a loan. Banks typically rely on a BPO when they decide to sell a property that has been taken back in the foreclosure process. It is closest to an appraisal, but is less expensive then an appraisal.
Can a CMA, a BPO and an appraisal differ in value? The answer to that is a resounding yes! The valuation process is not an exact science, so the values can differ. The valuation is only as accurate as the person doing the analysis and their experience level in doing the valuations.