Broker's Price Opinion
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||It has been suggested that this article be merged into BPO Standards and Guidelines. (Discuss) Proposed since August 2011.|
A Broker’s Price Opinion is the process a hired sales agent utilizes to determine the selling price of a real estate property. BPOs are popularly used in situations where lenders and mortgage companies believe the expense and delay of an appraisal to determine the value of properties is unnecessary. A financial institution will order a BPO from a Real Estate Broker in which the broker will do a drive by BPO or an interior BPO.
Overview of the BPO Process
The price from the BPO is entered into a brief 2-3 page BPO report, which includes; neighborhood analysis of the property, comps (comparable properties), and local as well as regional market information. The process of deciding a price is similar to a CMA (Certified Market Analysis) and also a residential real estate appraisal. Some factors that will affect the price of a property in a BPO report are the values of similar surrounding properties, sales trends in the neighborhood, the amount of repair or preparation the property needs to be put up for sale BPOs are different then Appraisals as they are generally completed by real estate professionals and not licensed appraisers. They are less thorough than an appraisal but more thorough than a basic comparative market analysis.
Who hires BPOs
BPOs are carried out when a financial institution such as a bank, lender or a BPO company hires either a real estate agent or a broker to complete a BPO report on a property. BPOs may be occasionally requested without a fee in hopes of the financial institution, bank or lender receiving a sales listing for the property.
Benefits of performing BPOs
BPOs can be a side income for Real Estate Agents and Sales Agents because BPOs are an ideal prospect to evaluate their markets, acquire and perfect pricing skills and knowledge. Real Estate Agents and Sales Agents create a fortified relationship and rapport with Financial Institutions.
Uses of a BPO
A Financial institution may order a BPO for:
- REO property (Real Estate Owned property)
- Short sale
- An addition or a cross check to an appraisal
- Home Equity Loans and Home equity lines of credit of less than $250,000
- Appeals to get rid of PMI (Private Mortgage Insurance)
- Diligence for Financial Institutions
- A selling/purchase price for a portfolio of home loans (usually for thousands of loans)
- "What is a BPO for?". About.com. Retrieved 3 July 2011.
- "What affects BPOs?". Investopedia.com. Retrieved 4 July 2011.
- "How to Complete a BPO". BPOForms.com. Retrieved 3 March 2014.
- Ramer, Michael. "What A BPO is". NABPOP. Retrieved 30 June 2011.
- Williams, William L. Ventolo, Jr., Martha R. (1992). The art of real estate appraisal : dollars and cents answers to your questions. Chicago, Ill.: Dearborn Financial Pub. pp. 25–73. ISBN 0-7931-0207-3.