A broker price opinion (BPO) agent is a neutral third party hired to assist in determining a property’s current fair market value. A mortgage company, loss mitigation company, or financial institution hires these agents, who are usually real estate brokers. It is faster and less expensive to provide a broker price opinion than to conduct a full appraisal. A BPO agent will determine the property value based on several factors. BPO agents, like licensed property appraisers, use their knowledge of other properties sold in the area to help determine the value of a property.
A property appraisal accomplishes the same goal as a BPO, with the exception that appraisals require a more thorough inspection and are handled by licensed appraisers. Banks will hire a BPO agent because it is less expensive and can be completed much more quickly than a traditional appraisal. The validity of using a BPO rather than a traditional property appraisal is debatable; however, when times are tough and foreclosure rates are high, BPOs can be completed faster than appraisals. When a bank wants to “short sell” a property in 30 to 90 days, this is especially useful. When the owners want to refinance their mortgage at a lower interest rate, BPO agents can perform a property evaluation.
When making a property evaluation, a BPO agent considers the current condition of the property, the selling price of similar homes in the area, and any repairs that may be required in order to sell the house as quickly as possible. Most BPO agents include photographs of the house, property, and surrounding neighborhood in their report of the property’s exterior. They look for any obvious exterior flaws or problems and use that information to estimate the condition of the interior. When determining the fair market value of a property, a BPO agent considers factors such as the need for a new roof, an extra bathroom, or a better view.
A BPO agent with a real estate license, some experience in the local real estate market, and knowledge of the neighborhood in which they work is preferred by most companies. A BPO agent, like a licensed property appraiser, is expected to be independent of any parties with a vested interest in the property transaction. The natural choice for performing the duties of a BPO agent is a real estate broker or agent with a current license.