New Jersey Real Estate Salesperson · Valuation and Market Analysis
Comparative Market Analysis
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In 30 seconds
A comparative market analysis is a licensee's opinion of the price a property will likely sell for, built from sold, active, and expired comparables. The tested distinction is that a CMA or BPO is an opinion of price by a licensee, while an appraisal is an opinion of value by a licensed or certified appraiser.
Why this matters
Licensees prepare CMAs every week, and the exam and the regulators both punish anyone who calls that price opinion an appraisal or who claims appraiser authority they do not hold.
The college version
In normal terms
- A CMA helps a seller pick a list price or a buyer shape an offer by comparing the subject with similar homes that sold, are for sale, or failed to sell.
- Both a CMA and an appraisal compare properties, but only an appraisal is a formal opinion of value prepared by a licensed or certified appraiser under professional appraisal standards.
- A licensee may prepare and be paid for a CMA or BPO within the scope of the real estate license but may never label it, describe it, or imply that it is an appraisal.
Concepts in this outline
- Purpose of a CMA — help a seller choose a realistic list price or a buyer frame an offer by comparing the subject to sold, active, and expired similar properties.
- Difference between CMA/BPO and an appraisal — a CMA or BPO is a licensee's opinion of price; an appraisal is a licensed or certified appraiser's opinion of value under professional standards.
- Licensee limitations — a licensee may prepare a CMA or BPO within brokerage work but may not perform appraisals or hold out as an appraiser without appraiser licensure.
- Avoiding representation that a CMA is a formal appraisal — never label, sign, describe, or imply that a CMA or BPO is an appraisal; state plainly that it is an opinion of price.
Eli explains
The same idea, in plain words
Explain it like I’m 10
When a seller asks what a house should list for, the licensee does not guess. The licensee builds a comparative market analysis, usually called a CMA. A CMA looks at three groups of similar homes: recently sold, showing what buyers actually paid; currently for sale, showing the competition; and expired unsold, showing prices buyers rejected. Borrowing the adjustment habit from the sales comparison approach (see Topic 03), the licensee adjusts each comparable toward the subject and lands on a likely price range.
A broker price opinion, or BPO, is the same kind of work, often ordered by a lender, and is also an opinion of price by a licensee.
An appraisal is different in kind. It is a formal opinion of value prepared by a licensed or certified appraiser following the appraisal process and professional standards (see Topic 03).
A licensee may prepare a CMA or BPO as ordinary brokerage work, but may never call it an appraisal or let a client believe it carries an appraiser's weight. Honest labeling protects the client and the license.
Worked example
Theresa is meeting the Okafors, who want to sell their Cherry Hill colonial. She pulls three colonials that sold nearby in the past few months, two that are listed now, and one that expired after sitting overpriced all summer. Adjusting for the Okafors' newer kitchen and smaller lot, she suggests a list price range and explains that this is her opinion of price based on the market, not an appraisal. When Emeka Okafor asks her to write "appraised value" on the sheet for his records, she declines, explains that only a licensed or certified appraiser can produce an appraisal, and offers to recommend one if he wants a formal opinion of value.
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