BPO – Broker Price Opinion
A Broker’s Price Opinion is the process where a hired real estate sales agent is utilized 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.
The price from the BPO is entered into a 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.
BPO reports focus on a standardized set of parameters such as GLA (Gross Living Area), number of bedrooms, bathrooms, garage, lot size, views, and age of the property just to name a few report requirements. The BPO report also sets limits on how far away the comps are from each other, along with the dates of sales.