A Broker Price Opinion, sometimes called a competitive market analysis (CMA) by agents, is a "tool developed by the real estate industry to determine a competitive listing price." [1] It is important for consumers to understand that Broker Price Opinions (BPO's) are not appraisal reports.

As a real estate broker and a licensed appraiser I am often asked if a Broker Price Opinion can be prepared for their banker, for bankruptcy court, for a divorce settlement or for some other use that is an entirely inappropriate use of a BPO. It is understandable that consumers do not want to pay for an appraisal report if they think they can get an equivalent product from a broker for free.

Broker Price Opinions are not, however, equivalent to appraisal reports and they cannot legally conclude a market value. Most of the BPO's that I have seen, even those prepared to procure commercial listings, are poor substitutes for appraisals. Typically an agent displays what he believes to be similar property sales to those of the potential listing in an attempt to assist the seller with a price conclusion.

Some BPO's go further and display adjustments, and commercial agents feel compelled to provide an income and expense analysis with a capitalization rate. It is not difficult for a reader, or a regulator, to assume that a BPO with adjusted sales and capitalized net income are concluding a market value opinion whether that is stated as its purpose or not.

In Nevada, Broker Price Opinions cannot be prepared for any reason other than to provide a seller with a potential listing price for his property, and no compensation can be paid for this service. Agents or brokers who violate Nevada law and charge for BPO's or provide them for other than listing purposes can be fined up to $ 5,000 by the State. Consumers should realize that market value opinions can only be expressed by licensed appraisers, and that BPO's are not accepted as an appraisal substitute.

[1] State of Nevada, Department of Business & Industry, Real Estate Division, http://www.red.state.nv.us/publications/announcements/bpo.pdf