The BPO has a distinct place in the valuation process. The perspective of a real estate agent is different than that of an appraiser. Appraisers, after all, never actually walk into a house with a prospective client, something agents do all the time (or at least, presumably, do).The agent, like the appraiser, uses facts to arrive at an opinion of value. Neither evaluator has a crystal ball or employs wizardry.
An appraisal's emphasis relies heavily on recently sold properties and physical value. When an agent prepares either a CMA or a BPO, comparables are pulled from both currently listed and recently sold properties. An agent is more likely to be influenced by the aesthetics of the property and its marketability, while the appraiser's value is more likely to be influenced by measurable aspects. In other words, an agent will more readily see the property through the eyes of a buyer.
In spite of the similarity of the two processes, one does not take the place of the other. They do, however, compliment each other very well; and the BPO is most valuable when it it used in tandem with an appraisal. The negativity that most appraisers feel toward BPOs seems to be at least partially based on a fear that agents are taking work away from appraisers. A bad BPO can wreak havoc on a listing price, but so can a bad appraisal. In fact, a bad appraisal is MORE LIKELY to result in a misguided listing price. That is a very strong argument in favor of using both methods in the valuation process.
It just does not make sense to me to say, on the one hand, that a real estate agent knows enough write contracts, to advise buyers and sellers, and to market and sell real estate--but then to turn around and say that the same agent cannot be compensated for their unique perspective.
More on this topic in To BPO or not to BPO part 2.