An appraisal is a reasoned opinion of value, supported by facts and performed in accordance with the Uniform Standards of Appraisal Practice.
It can use the Income Approach, the cost approach or the market value approach. And the “Value” determined can vary as well. It can Value in use, or in the cost approach you can look at reproduction cost or replacement cost and come up with very different numbers. In dealing with homes and Estates it’s almost always “Fair Market Value” or what a property will bring if exposed to the market with both buyer and seller in possession of all the material facts and neither under any undue pressure.
A “Broker’s Price Opinion” is just that, it does use comparable sales but the emphasis is not on easily quantifiable facts, but on a broker’s understanding of what buyers want and how much they will pay for it.
And a broker who knows their local market may well have advantages over an appraiser who has to go by publicly available information. He or she is likely to have personally seen the comparable sales and be able to judge the relative quality of the materials, design and workmanship in a way that someone using a formula and public information can not. The same goes for evaluating a parcel of land, you can see, smell (Sonoma aroma) and hear what’s there and judge what uses the land is suited for in a way no one working from maps and photographs can.
I recently wrote a BPO for someone I know whose spouse died recently, he had an appraisal done for tax purposes and I read it and disagreed with the conclusions. It was too low by almost 15% in my opinion. This is a tricky but high quality property and proper presentation would be important in realizing the highest price. There were NO good comparable sales within 5 miles and I used the same ones that the Appraiser did ( Three of them, anyway). My “Adjustments” were very different, partly because I had seen the places personally and could remark on the qualitative differences and partly because I was privy to non public knowledge about the sales. My opinion of value was conservative, I can get that price or better if I listed the property today, and it was 15% above what a very well qualified appraiser could justify on the basis of the information he had.
Appraisals and BPO’s are OPINIONS of value, no more and no less. And some opinions are more valuable than others. In my experience a good BPO is more likely to be accurate in predicting a sales price than a good appraisal. Just don’t forget that Real Estate is priced at the margin and that values and prices can change rapidly.