BPO stands for “Broker Price Opinion” and is performed by real estate brokers to find the market value of a piece of property for sale. BPOs are used by mortgage lenders and banks to value a property in the current market and avoid the cost of an appraisal.
BPOs usually include local and regional Real Estate market information, neighborhood analysis, and comps to the house that is being priced.
BPOs are more in-depth and involved than a CMA (comparable market analysis), which can be done by sales agents to price a listing.
BPOs are NOT appraisals. BPOs are performed to find the market value of a home in order to list the property for sale. Appraisals can be performed for a number of reasons other than market value such as a tax appraisal.
If a broker does a BPO for you, that does not mean the home will sell for that amount; the broker is giving you his best estimate for the value of the home on the open market in its “as-is” or “repaired” condition.
If a lender is considering foreclosure, they will order a BPO or multiple BPOs to discover a reliable estimate of the current value of the property, compare it to the mortgage balance, and recommend further action.
A BPO Company is a middleman between banks and lenders and real estate brokers. They usually keep a list of qualified real estate brokers who are on call to perform BPOs for their clients. In addition to assigning BPOs, they will track job status, provide quality assurance, ensure accuracy, and expedite BPOs when necessary for the banks and lenders.
For example, if an investment firm was to purchase a portfolio of home loans, they might first contact a BPO Company to perform a BPO on each property. The BPO Company would then contact brokers from their list of Real Estate professionals in the area to assign properties and a due date. Depending on the client, they might assign multiple brokers per property to ensure accuracy of the BPO.
The broker would then perform an inspection of the home, gather local, state, and national market data relevant to the subject property, and compile the information to determine a selling price.
The broker submits the BPO to the BPO Company who performs a quality review before submitting the final BPOs to the investment firm.