What is a Broker Price Opinion or BPO?
A Broker Price Opinion or BPO is an alternate method of assessing a property’s price. A BPO is NOT an appraisal or an opinion of market value. Lenders and mortgage companies hire a real estate broker or Realtor to write an opinion of the property’s potential selling price and suggest a listing price for properties in situations where they believe the expense and delay of an appraisal is not necessary. Once an order to do a BPO is issued, the broker does either a Drive-By BPO or an Internal BPO depending on the specifications requested.
The forms used by lenders, mortgage companies and loss mitigation companies vary greatly. Most require at least the following basic information:
- Broker information
- Property type, style, year built
- Visual condition of Exterior features
- Occupied or Unoccupied
- Lot size
- Square feet of living area
- Room count
- Two photos of subject property
- Three recent sold comparable properties
- Three listed comparable properties
- Suggested List Price & Broker Comments
Fannie Mae and Freddie Mac have their own guidelines as do most lenders, mortgage companies and loss mitigation companies. Requirements for BPOs can vary significantly depending on the institution request and the reason for the request.
There are many reasons for using a BPO. BPOs are used in foreclosure situations and also when refinancing. BPOs have a more narrow scope and are less lengthy than a formal appraisal. They should never be referred to as an appraisal or opinion of current market value. Brokers and Realtors should be careful not to misrepresent what they are providing.
Lower cost is a determining factor in using a BPO. Since BPOs take less time to complete, they cost about a quarter of the price of an appraisal. Reducing the cost of refinancing and foreclosing has created a strong demand for BPOs.