Brokers are often asked by potential sellers to give a valuation of their property, especially early in the year before the market really heats up. Conscientious brokers take great care to research and carefully analyze comparable sold and pending properties in order to form an opinion of value for the subject property that is as accurate as possible. But some brokers “wing it” and just offer a guess. Some brokers skip that hard work and list the property for what the seller wants to get without ever doing any research.

It is important to note that whether or not the broker spends a little or a lot of time on a Market Analysis, it is still just an opinion of value, not fact. Nonetheless, wouldn’t you rather have the most professional version of a market analysis where the broker has made every effort to be as informed as possible? Beware of the shoddy broker who offers an opinion of value on the spot without first gathering the available sales information. No one is really that good!

Remember that a Realtor® generated market analysis is not the same as a formal appraisal by a licensed appraiser, even though the process is the same and the product is similar. One difference is that an appraiser has the advantage of seeing an established sales price before they start their work. There is a ready, willing and able buyer already committed to a price. The Realtor’s® job is arguably more complex because they have to accurately analyze a starting price range for a listing.

A Comparable Market Analysis (CMA) or Broker’s Price Opinion (BPO) should be a tool to protect a seller from underselling or over pricing, and a tool used by buyer’s agents to keep a buyer from over-offering. All the more reason for real estate brokers to be as accurate as possible!

Some cynical consumers think listing brokers intentionally over price properties because they will make more money, when the reality is that the listing broker makes zero money if the listing does not sell and they incur greater expense as market time extends. The flip side is that some listing brokers intentionally under price properties because they want to lure buyers into a bidding war. I find this practice fundamentally dishonest and not in keeping with business practices that are best for consumers. Consumers should reasonably expect to always receive an accurate and honest analysis of the market data.