What is a BPO?
When you request a broker price opinion, or BPO, you are requesting a valuation of a property from a professional real estate agent. Whilst you may have an idea of what the property is worth, you will need the brokers price opinion in order to convince your mortgage lender that your house is worth the amount that they will be loaning to the next occupants. The BPO is also used in the cases of short sales as the expert opinion of a broker will help speed up the sale process.
Isn’t a BPO the same as an appraisal?
When you have an appraisal of a property, this is not the same as a broker’s price opinion. You can request one of these as a buyer if you wish. It will tell you what the property is actually worth, and should outline any obvious costs that you will incur in getting the property in a livable condition if necessary.
So why is the BPO so valuable in Real estate sales?
A seller instead requests the broker price opinion. Whilst the property appraisal is not mandatory; usually the BPO is required in order to get the property on the market. The value of a property in a broker’s price opinion is calculated by looking at the prices of nearby properties. The price that the properties are actually selling for and the actual asking price may vary so this is taken into account.
Other things that the broker price opinion looks into include the amount of money needed to get the property into a state where it can be sold. This means that if the property will be sold in a short sale, the sale price will be enough to cover the cost of the house as well as any repairs that may need to be done. Because the brokers price opinion will usually be the selling price that the property is placed on the market for, the valuation will tend to be more carefully made than an appraisal value. It looks into all the variables and creates a valuation that is most appropriate for the current market situation.
The lender involved in a short sale of a property may choose to hire an estate agent to give them a broker price opinion because they know it will be more realistic and accurate than an appraisal. The Broker Price Opinion therefore holds great value in real estate sales to help sellers and lenders come up with the best price to market a property at.