The Value of the Broker Price Opinion
Ever heard of Broker Price Opinion? In this article we will explain exactly what it is and give reasons for why it’s used and when it’s used.
- In cases where a lender is considering foreclosure
- When an appraisal is being avoided
- When attempting to refinance
When lenders are considering foreclosure, they may order a BPO in hopes of getting a reliable estimate of the current value of the property in question. The estimate provided by the BPO allows them to compare the value to the mortgage balance. In cases where the lender is working with a borrower facing foreclosure, the information from the BPO will help the lender recommend solutions.
In a refinance situation, a full appraisal may have been performed recently. To avoid the cost of another appraisal, especially if one isn’t necessarily needed, the lender will hire a real estate broker to do a BPO.
There are two major categories of BPO’s:
- Drive by BPO
- Internal BPO
The Drive by BPO is usually a lot quicker than an Internal BPO. However, it does involve more work for the broker than just driving by the property and taking a few photos. They still need to identify and record the location, property type, style, approximate age, estimated square footage, room count and more.
While it will never take the place of a Comparative Market Analysis or a formal appraisal, the BPO is a quicker, less expensive way to determine the market value of a property. If you find yourself in a situation where an appraisal is not feasible, ask your real estate agent about BPO.
Know more on Foreclosure listings and foreclosed homes for sale
It seems that there are becoming more and more innovative valuation tools for pricing other than BPO’s. I’d love to learn about some of those.
Great little speech, hope the values will go up.
A knowledgeable, local, value consideration is worth its weight in gold.