The Broker Price Opinion is a now commonly utilized evaluation tool utilized by banks, mortgage servicers and corporate property owners. Broker Price Opinions are completed by licensed real estate agents and brokers who are familiar with the market conditions and recent transactions in the area where an asset is located. Broker Price Opinions are common in foreclosures and bank owned properties.
A BPO is not an appraisal. Although some standards now exist for Broker Price Opinion reports, they are not universally accepted as those utilized when an appraisal is completed. A Broker Price Opinion is exactly as it is titled: an opinion. The BPO is the agent or broker’s opinion of the potential sale price of a particular asset.
Banks and mortgage companies often utilize BPO reports for several reasons. Broker Price Opinions are often much less expensive than an appraisal report. Additionally, the turn around time frame of a Broker Price Opinion can be much shorter than the lead time of an appraisal.
An investor or property purchaser must be aware of the BPO as it is sometimes the primary pricing tool of a corporate seller. Broker Price Opinions are utilized in short sale transactions and REO sales by many banks. It is common for a bank to have multiple BPO reports from several agents/brokers for the same property.
When considering an offer on a REO property, the bank or mortgage company will refer to a previous BPO for the property to determine the market conditions as well as the potential sale price (according to the agent/broker who prepared the report) of a property. It is important for a buyer to know that the Broker Price Opinion is often where a bank seller is getting their perceived value of a bank owned property.