What Does Broker Price Opinion (BPO) mean? It is the estimated value of a particular piece of property or real estate determined by a Qualified Real Estate Broker. It is based on the characteristics of the property being evaluated.
The broker will consider the following when determining the value of the said property:
•1. The value of similar homes in the area
•2. Sales trends in the neighborhood or area where the property is located
•3. The costs associated with getting the property ready to sell or the cost of needed repairs
•4. The age of the home
It is similar to an appraisal in the fact that they will use comparable houses that have sold in the area which meets the same criteria as the house that they are evaluating. They normally will choose three properties in the area and adjust up or down in value for differences in the homes.
Examples would be things like a fireplace, the number of bathrooms, family rooms, 2 car garage compared to a one car or no garage and the upgrades to the home. They may also adjust up or down for the age or the home and the condition that the houses are in. They try to determine the value of the property by adding value and taking value away from the comparable properties.
It is important not to confuse it with an appraisal. It is often used for a foreclosure or short sale. It also may be used when you are taking out a Home Equity Loan or Home Equity Line of Credit. The reason lenders often use a BPO is because it is a lot less expensive than an appraisal.
Sometimes BPO's can be controversial if the Broker is not real familiar with the neighborhood or location the said property is in.