The Broker’s Price Opinion

by HomeLoan.com
​A Broker’s Price Opinion or BPO, occurs when a licensed real estate agent gives their opinion of the value of a property. Yes, everyone has an opinion, but in the case of a short sale situation, the broker’s opinion of a home’s value is used by the lender to process the short sale and most approvals or denials will be based on the broker’s opinion of value.

A BPO is not the same as an appraisal. Even though lenders can utilize the services of licensed real estate appraisers, many banks and lenders believe agents and their brokers are more up to date on exactly what a property can sell for and that they can deliver a more accurate valuation of a home than an appraiser would. Agents and brokers will examine recent sales of properties similar to the property they are evaluating in order to find comparable sales. The comparables need to be recent sales in the same neighborhood and similar in the size and number of bedrooms and bathrooms to get the best equivalent. The main factors that a broker will consider when pricing a property include the value of similar surrounding properties, sales in the same neighborhood, the cost of getting a property ready for sale and the cost of any repairs that might be needed.

The broker or agent’s opinion of a home’s value is the price that the home will most likely actually be sold for eventually, and this fact means agents and brokers are usually very accurate with their valuations. In turn, this causes lenders to tend to first employ their broker’s opinions to determine a short sale valuation price instead of using an official and licensed appraisal service.

Because a broker’s opinions are usually closer to the true market values and actual selling prices, many real estate agents and brokers supplement their home sales commission incomes by performing BPOs. Although an individual BPO service may only pay between $50 and $150, by streamlining their procedures and forms they can knock down quite a few BPOs in a short time.

The two main categories of BPOs are known as the Drive by BPO and the Internal BPO. The name “Drive By” implies only a cursory evaluation, and in general the drive by BPO will not require a broker to get out of their vehicle or go into the home, but they will do most of their work in their office using comparables. An Internal BPO is definitely more complex and may require contact with an unhappy homeowner in foreclosure, or with a tenant who isn’t aware a house is up for sale. A complete Internal BPO will also include the following:

Measurements of each individual room.
Overall square footage measurement.
Complete inspection of the interior.
Thorough value adjustments using comparables.
Individual photos of interior and any damage present.
Repair estimates.
Cleaning estimates.

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