BPO is an acronym for Broker's Price Opinion. In general, the term Broker's Price Opinion (BPO) is a method that a Real Estate Broker (or an agent acting on behalf of their employing broker) uses to estimate the probable selling price of a Real Estate property/house. The estimate of price is submitted in a BPO report (2-3 pages) that includes local and regional Real Estate market information, neighborhood analysis, and (comps) properties that compare to the (subject) house that is being priced. This method of estimating a price has similarities to a Comparative Market Analysis CMA and a residential Real Estate appraisal.
Performing a BPO, in the BPO industry, means that a Real Estate Professional (agent, broker, or appraiser acting in an agent/broker capacity) is requested by a financial institution to submit an estimate of a selling price for a property in a BPO report for a fee.
A financial institution may order a BPO for the following situations:
BPO Usages
The following chart is a listing of the most common usages of Broker Price Opinions - BPOs.
Residential Sales
- For seller - to gain a listing
- For buyer as buyer's broker
Additional diligence on appraisal
- Appraisal review
- Appraisal supplement
- Quality control
- Fraud
Loan origination where permitted by FIRREA (under $250,000)
Internal non-lending purposes
- Valuation of portfolio
- Mark to market
Home Equity Line of Credit - HELOC (under $250,000 per FIRREA)
Home Equity Loan (under $250,000 per FIRREA)
Private Mortgage Insurance - PMI removal
Secondary markets (loan but not underlying property not sold)
- Establish portfolio price - seller
- Due Diligence - buyer
Distressed loans
- Ongoing diligence/disposition
- REO
- Short Sale
- Loan Modifications
- Pre-Foreclosure
Legal
- Divorce
- Estate settlement
- Lawsuits
- Prenuptuals
A Real Estate Professional with an active license. For purposes of this website, Real Estate Professional are:
If you are a Real Estate professional considering BPOs, you must discuss this with your employing brokerage and/or attorney to determine the ramifications of performing BPOs in your specific state as most Real Estate law is determined and enforced by each individual state. Some states may have specifications and/or certain restrictions to performing BPOs. In many cases, the specifications and/or restrictions are subject to interpretation and many BPO practitioners justify their practice and business model on their own individual interpretation of their specific state statutes and/or regulations. Due to the fact that each state's statutes and/or regulations are subject to interpretation, and for liability purposes, NABPOP does not give legal advice. Each BPO practitioner must determine for themselves if they are able to and comfortable with performing BPOs.
BPOs are not restricted and/or mentioned in FIRREA - Financial Institutions Reform and Recovery Act - the federal law that governs the appraisal industry.
A Broker Price Opinion BPO is an excellent means of information for banks and lenders to make financial decisions on residential properties.
Due to the financial practicality and quick turnaround time of a BPO, banks and lenders order BPOs from a BPO Company. The BPO Company in turn contacts a Real Estate professional to complete the BPO. The BPO Company pays the Real Estate professional for the BPO report. BPOs have become a lucrative niche in the real estate industry for Real Estate Professionals. Performing BPOs have become a reliable source of either supplemental income or the sole source of income for many Real Estate Professionals across the country. The BPO Industry is a thriving niche in the Real Estate Industry and is poised to grow.