A Broker’s Price Opinion is the process a hired sales agent utilizes to determine the selling price of a real estate property. BPOs are popularly used in situations where lenders and mortgage companies believe the expense and delay of an appraisal to determine the value of properties is unnecessary. A financial institution will order a BPO from a Real Estate Broker in which the broker will do a drive by BPO or an Internal BPO, which is more common.

Overview of the BPO Process

The price from the BPO is entered into a 2-3 page BPO report, which includes; neighborhood analysis of the property, comps (comparable properties), and local as well as regional market information. The process of deciding a price is similar to a CMA (Certified Market Analysis) and also a residential real estate appraisal. Some factors that will affect the price of a property in a BPO report are the values of similar surrounding properties, sales trends in the neighborhood, the amount of repair or preparation the property needs to be put up for sale

Who hires BPOs

BPOs are carried out when a financial institution such as a bank, lender or a BPO company hires either a real estate agent or a broker to complete a BPO report on a property. BPOs may be occasionally requested without a fee in hopes of the financial institution, bank or lender receiving a sales listing for the property.

Benefits of performing BPOs

BPOs can be a side income for Real Estate Agents and Sales Agents because BPOs are an ideal prospect to evaluate their markets, acquire and perfect pricing skills and knowledge. Real Estate Agents and Sales Agents create a fortified relationship and rapport with Financial Institutions.

Uses of a BPO

A Financial institution may order a BPO for:

• REO property (Real Estate Owned
  Real estate owned
  Real estate owned or REO is a class of property owned by a lender typically a bank, government agency, or government loan insurer, after an unsuccessful sale at a foreclosure auction. A foreclosing beneficiary will typically set the opening bid at a foreclosure auction for at least the outstanding...
  
   property)
• Foreclosures
• Short sale
  Short sale
  A short sale can refer to various kinds of transactions:*Short – the seller is not the owner of a security that he or she sells*Short sale – the lender allows a property to be sold for less than the amount owed on a mortgage and takes a loss. This usually occurs when the market drops and the...
  
  
• An addition or a cross check to an appraisal
• Home Equity Loan
  Home equity loan
  A home equity loan is a type of loan in which the borrower uses the equity in their home as collateral. These loans are useful to finance major expenses such as home repairs, medical bills or college education...
  
  s and Home equity lines of credit
• Appeals to get rid of PMI (Private Mortgage Insurance)
• Diligence for Financial Institutions
• A selling/purchase price for a portfolio of home loans (usually for thousands of loans)