What is a Broker Price Opinion (BPO)?
What Is a Broker Price Opinion (BPO)?
A broker price opinion, often shortened to BPO, is the estimated value of a property according to a real estate broker or a qualified industry individual or source that is NOT a licensed property appraiser. A Broker price opinion and an appraisal may at first sound like the same thing, but they are not the same in many important ways. The most important of which being that unlike appraisals, BPOs are based on general characteristics of the property. In that distinction alone, it must be understood that a broker price opinion is not representative of a property’s official appraised value, does not necessarily correspond to the property's market value, and is not meant to be utilized for official uses such as a commercial real estate transaction.
As a matter of fact, in many states, broker price opinions are not accepted or even allowed. Most of these states have laws that either prohibit brokers from being able to charge a fee for a BPO, or outright ban brokers or industry professionals from providing a BPO at all. That hasn’t prevented many brokers across the country from undergoing the readily-available optional training to be able to assess a property and issue soft price opinions, but it does make any assessment of the property’s value that they come up with legally unacceptable. State laws in many cases tend to limit the use of broker price opinions to only specific circumstances.
How is a Broker Price Opinion determined?
When considering a price opinion, some of the factors that a broker will consider include the value of comparable properties within the same market and sales trends in the area. Property location and the structure’s surroundings also factor into the average broker price opinion. Common broker due diligence research like comparable listings and recent sales can heavily affect the BPO for a given property. Some brokers will also factor in an estimate of any costs associated with any needed repairs or renovations.
The drive-by broker price opinion, one of the most common methods for the calculation of a BPO, Is when brokers only scrutinize the property from the outside. A good portion of the time, even when the broker does leave their car, they often will not attempt to enter the property. Conversely, an internal broker price opinion is developed when the broker does gain authorized access to the property and is able to accurately review common areas, units, and amenities. BPOs can sometimes include photos of the property.
Why Broker Price Opinions Are Sought in Real Estate
Even though BPOs aren’t legally recognized in many states, and do not count as an official appraisal, they are still often requested. A broker price opinion is typically requested by lenders who want a quick assessment of a property to get some early bearings for the refinancing of a mortgage or a foreclosure procedure. Some property owners also seek a broker price opinion if they are looking to refinance their mortgage or come up with an idea for a possible sale price. In most cases these broker price opinions are only requested for unofficial uses, mainly because they are both affordable and the results are typically given faster than with an appraisal.
It isn’t uncommon for brokers to submit a price opinion in the hopes of winning the listing in question. Some brokers even go as far as to include a marketing plan for the property along with the price opinion to demonstrate how they would represent the property for a sale.
Related Questions
What is the purpose of a Broker Price Opinion (BPO)?
The purpose of a Broker Price Opinion (BPO) is to provide an estimated value of a property according to a real estate broker or a qualified industry individual or source that is NOT a licensed property appraiser. BPOs are typically requested by lenders who want a quick assessment of a property to get some early bearings for the refinancing of a mortgage or a foreclosure procedure. Some property owners also seek a broker price opinion if they are looking to refinance their mortgage or come up with an idea for a possible sale price. In most cases these broker price opinions are only requested for unofficial uses, mainly because they are both affordable and the results are typically given faster than with an appraisal.
It isn’t uncommon for brokers to submit a price opinion in the hopes of winning the listing in question. Some brokers even go as far as to include a marketing plan for the property along with the price opinion to demonstrate how they would represent the property for a sale.
When considering a price opinion, some of the factors that a broker will consider include the value of comparable properties within the same market and sales trends in the area. Property location and the structure’s surroundings also factor into the average broker price opinion. Common broker due diligence research like comparable listings and recent sales can heavily affect the BPO for a given property. Some brokers will also factor in an estimate of any costs associated with any needed repairs or renovations.
The drive-by broker price opinion, one of the most common methods for the calculation of a BPO, Is when brokers only scrutinize the property from the outside. A good portion of the time, even when the broker does leave their car, they often will not attempt to enter the property. Conversely, an internal broker price opinion is developed when the broker does gain authorized access to the property and is able to accurately review common areas, units, and amenities. BPOs can sometimes include photos of the property.
What are the benefits of obtaining a Broker Price Opinion (BPO)?
The benefits of obtaining a Broker Price Opinion (BPO) are that they are typically more affordable than an appraisal, and the results are typically given faster than with an appraisal. BPOs can also be used to help property owners come up with an idea for a possible sale price, or to help lenders get some early bearings for the refinancing of a mortgage or a foreclosure procedure. Additionally, some brokers will include a marketing plan for the property along with the BPO to demonstrate how they would represent the property for a sale.
SourceWhat are the steps involved in obtaining a Broker Price Opinion (BPO)?
The steps involved in obtaining a Broker Price Opinion (BPO) include:
- Researching comparable properties within the same market and sales trends in the area.
- Considering the property location and the structure’s surroundings.
- Conducting broker due diligence research like comparable listings and recent sales.
- Estimating any costs associated with any needed repairs or renovations.
- Conducting a drive-by broker price opinion, which is when brokers only scrutinize the property from the outside.
- Conducting an internal broker price opinion, which is developed when the broker does gain authorized access to the property and is able to accurately review common areas, units, and amenities.
- Including photos of the property.
Source: Apartment.loans
What are the qualifications for a Broker Price Opinion (BPO)?
In order to qualify to provide a Broker Price Opinion (BPO), a real estate broker or qualified industry individual must have completed optional training to be able to assess a property and issue a price opinion. In many states, broker price opinions are not accepted or even allowed, and state laws in many cases tend to limit the use of broker price opinions to only specific circumstances.
The qualifications for a BPO vary by state, but typically include:
- A valid real estate license
- Completion of a BPO training course
- Experience in the real estate industry
Source: Apartment.Loans
What is the difference between a Broker Price Opinion (BPO) and an appraisal?
It's important to note that an appraisal is different from a broker price opinion, or BPO. A BPO — also known as a broker opinion of value, or BOV — is a written analysis of the estimated market value of a property, created by a real estate broker, rather than a licensed and certified appraiser.
A BPO is typically used for less formal purposes, such as pricing a property for listing or determining a reasonable offer price. Appraisals, on the other hand, are more formal evaluations that are typically required for lending and other financial purposes. They are typically more detailed and involve a more thorough analysis of the property, the market, and other factors.
Even though BPOs aren’t legally recognized in many states, and do not count as an official appraisal, they are still often requested. A broker price opinion is typically requested by lenders who want a quick assessment of a property to get some early bearings for the refinancing of a mortgage or a foreclosure procedure. Some property owners also seek a broker price opinion if they are looking to refinance their mortgage or come up with an idea for a possible sale price. In most cases these broker price opinions are only requested for unofficial uses, mainly because they are both affordable and the results are typically given faster than with an appraisal.