What is a Broker Price Opinion or BPO?
A Broker Price Opinion, also known as a “BPO,” is a real estate agent’s opinion of value for a property. A BPO report is a little more detailed than Comparative Market Analysis but much less detailed than a full appraisal.
When conducting a BPO, a broker will consider the following factors affecting the resale value of a property:
Mortgage companies order a BPO to get an indication of value because its cheaper than a full appraisal. A BPO report might cost $50 to $75, whereas a full appraisal can cost $250 to $500. Any licensed real estate agent can do a BPO, but only licensed appraisers are qualified to provide an appraisal report.
A BPO report might take a half-hour (plus travel time to see the property) to generate and it frequently comes in an auto-generated report once all the numbers for sales and condition are taken in account. A full BPO report is anywhere from 1 page to 20 pages.
An appraisal report might take an appraiser 6 hours to generate. The report is anywhere from 60 to 100 pages, with the appraiser providing an extensive written description of the exterior and interior condition of the property and neighborhood selling activity. An appraiser can use multiple appraisal methodologies to arrive at his value of the property.
Mortgage companies order a BPO report usually through an online system and have very little interactions with the agents that produce these reports. A broker can either do a “drive by BPO” report, where they only see the external part of the property, or an internal BPO, where they get access to the interior of the property.
Mortgage companies use BPO’s to obtain an indication of value for pre-foreclosures. The loss mitigation department of a bank will use BPO’s when negotiating a short sale to get a sense of what their projected loss might be on the loan. This also helps them negotiate with the buyer, so they can get the highest value possible on a short sale to minimize their loss.
An appraisal trumps a BPO report. This means a bank must give more credence to the value in an appraisal report than is the case with a BPO. In a short sale negotiation, presenting the bank with an appraisal can be a powerful negotiating tool if the BPO’s are coming in above a realistic selling price.
BPO agents will generally provide BPO’s to a bank with the prospect of getting the listing once the house becomes an REO (Real estate owned) after the foreclosure auction or foreclosure sale.
When conducting a BPO, a broker will consider the following factors affecting the resale value of a property:
- Sales trends in the neighborhood.
- Value of similar surrounding properties.
- Condition of the property including costs of any needed repairs.
Mortgage companies order a BPO to get an indication of value because its cheaper than a full appraisal. A BPO report might cost $50 to $75, whereas a full appraisal can cost $250 to $500. Any licensed real estate agent can do a BPO, but only licensed appraisers are qualified to provide an appraisal report.
A BPO report might take a half-hour (plus travel time to see the property) to generate and it frequently comes in an auto-generated report once all the numbers for sales and condition are taken in account. A full BPO report is anywhere from 1 page to 20 pages.
An appraisal report might take an appraiser 6 hours to generate. The report is anywhere from 60 to 100 pages, with the appraiser providing an extensive written description of the exterior and interior condition of the property and neighborhood selling activity. An appraiser can use multiple appraisal methodologies to arrive at his value of the property.
Mortgage companies order a BPO report usually through an online system and have very little interactions with the agents that produce these reports. A broker can either do a “drive by BPO” report, where they only see the external part of the property, or an internal BPO, where they get access to the interior of the property.
Mortgage companies use BPO’s to obtain an indication of value for pre-foreclosures. The loss mitigation department of a bank will use BPO’s when negotiating a short sale to get a sense of what their projected loss might be on the loan. This also helps them negotiate with the buyer, so they can get the highest value possible on a short sale to minimize their loss.
An appraisal trumps a BPO report. This means a bank must give more credence to the value in an appraisal report than is the case with a BPO. In a short sale negotiation, presenting the bank with an appraisal can be a powerful negotiating tool if the BPO’s are coming in above a realistic selling price.
BPO agents will generally provide BPO’s to a bank with the prospect of getting the listing once the house becomes an REO (Real estate owned) after the foreclosure auction or foreclosure sale.
