A broker price opinion (BPO) gives you a professional estimate of the property's price point or selling price in the current market. Lenders and mortgage companies may ask for a BPO to avoid delays related to appraisals. You can also use a BPO to understand a realistic offer price and whether the asking price is fair. Read on to understand broker price opinions and how to use a BPO when buying a property.
Understanding Broker Price Opinions (BPOs)?
A broker price opinion is a selling price estimate on a given property without a formal valuation or appraisal. It's usually faster and cheaper than a formal appraisal. Lenders may request a broker's opinion on property value, but BPO rules vary by state. In some states, real estate brokers aren't allowed to charge for these services.
Sometimes, you may get a BPO to better understand the value of an unlisted property or a foreclosure. For brokers, it can be an opportunity to make some extra income and potentially secure the property listing. Broker price opinions can be a way for real estate brokers to track the condition of the homes, local market trends and possible foreclosures to gain a competitive edge.
How Do Broker Price Opinions Work?
A real estate agent or a broker performs a BPO. It's their professional opinion of the property's price based on either a visual assessment of the outside of the property or also including the inside. BPOs can be completed in as little as a day, making them an attractive solution for a quick estimated property assessment.
During a BPO, the broker will visually assess the house and look at the comparable properties (comps) in the local housing market on the multiple listing service (MLS) and through similar listings. The BPO will include the suggested sale price plus an estimate of the cost of any noted repairs. In addition to comps, the BPO will usually include:
- Property age
- Size
- Neighborhood average values and trends
- Zoning information
- Property condition
For example, suppose there's a property in foreclosure going to auction. You cannot enter the property but want an idea of the price to guide your bidding. You can hire a real estate agent to do an external BPO. They will drive by the property and walk around it if allowed. They will also search the MLS and show you comps to give you an idea of the estimated value and possible external repairs required.
Types of Broker Price Opinions
The two primary types of broker price opinions are based on whether the real estate agent or broker can enter the property or only perform an external visual assessment. Here's what you need to know about each option.
Internal BPO
An internal BPO is more comprehensive and allows the agent to visit the home to assess features, finishes and conditions. The agent will have the time to measure rooms and verify information on the number of bedrooms and bathrooms, property layout and design.
External BPO
An external BPO, sometimes called a drive-by BPO, requires the broker to assess the property without entering it. Instead, the broker or agent will assess the property from the exterior.
To supplement observations, the broker may use official records about the home to verify information like property size and home size. These records also usually include square footage, number of bedrooms and additional features. External BPOs are the more common type of BPO, especially on properties in foreclosure.
What Is the Difference Between BPOs and Home Appraisals?
The difference between BPOs and appraisals centers on costs. Home appraisals are both more time-consuming and more costly than BPOs. In addition, any real estate agent or broker can perform a BPO, while only professional, certified appraisers can perform an appraisal.
Appraisers must meet specific appraisal criteria, including educational guidelines and specific benchmarks. They must also meet strict criteria and take continuing education courses in valuation to maintain current standards.
Trained experts conduct home appraisals, while BPOs are done by agents or brokers. Appraisal accuracy is much higher and considers detailed assessment of all major house systems. Appraisers must meet certain educational guidelines and benchmarks, including the uniform standards of professional appraisal practice. They must also take continuing education courses in valuation to stay on top of their skills and best practices.
An appraisal can take a week or more, while a BPO is usually returned the same day. BPOs cost an average of $50 to $300, while appraisals can cost anywhere from $300 to $600-plus, depending on the property type and location.
The amount of time and amount of substantive work, including detailed findings through appraisals, often takes a week or two to complete.
When Does It Make Sense to Get a Broker Price Opinion?
The perfect time to get a broker price opinion is when you need a quick price quote. For example, if you're considering bidding on a property in foreclosure or short sale. In that case, speed can be a significant advantage. Likewise, if the seller wants a fast sale, getting a BPO and waiving an appraisal contingency can help you secure the property.
When Should You Not Get a BPO?
If you are processing a standard sale and need a mortgage, you will need an appraisal instead of a BPO. Mortgage lenders require a full appraisal as part of the mortgage approval process. If you are working with a real estate agent who has already given you their professional opinion about the property, a BPO may be an unnecessary expense. This is especially true if you need a mortgage and will have to get a professional appraisal.
Pros and Cons of a Broker Price Opinion
Here are the pros and cons of a broker price opinion and when it makes sense for you.
| Pros | Cons |
| Quicker than an appraisal | Less detailed than an appraisal or assessment |
| Low cost | May not uncover all issues with major home systems |
| Offers insights into property value, market and condition | BPOs aren't accepted by mortgage lenders in place of an appraisal |
How to Get a Broker Price Opinion
Many companies offer broker price opinions. You can also contact local agents or real estate brokers to inquire about a BPO. Here are the steps to take:
- Review the legality of BPOs in your state to understand whether it's an option where you live.
- Check the National Association of BPO Professionals' website and search for certified BPO vendors with the NABPOP BPO certification.
- Consider national companies that offer BPO services, including:
- Clear Capital
- Equator
- LRES Corp.
- Pro Teck Valuation Intelligence Ltd.Residential RealEstate Review Inc.
- Compare prices, online reviews and delivery times to choose the BPO service that offers the best solution
Final Tips on Getting a BPO
When you want to waive an appraisal contingency and purchase a property in a short sale or during a foreclosure auction, getting a BPO can be a smart move. It will give you a realistic idea of property value with minimal time and costs so you can make an educated offer on the home. Comparing costs and understanding whether it makes sense for your situation can help you save more. When buying a foreclosed home or short sale, you need to move fast. A BPO can help you accurately estimate property value and capitalize on an opportunity.
Frequently Asked Questions
How accurate is a broker price opinion?
A broker price opinion is less accurate than an appraisal. Lenders usually won’t accept a BPO in place of an appraisal during the underwriting process.
How much does a broker price opinion cost?
Broker price opinion costs vary by property size and area, but averages range from $50 to $300.
Can I challenge a broker price opinion if I disagree with the estimated value?
Most lenders offer options to dispute a broker price opinion or appraisal. If you question the broker’s price opinion, you can also speak to the broker to understand the price estimate and if needed, get a second opinion.
About Alison Plaut
Alison Kimberly is a freelance content writer with a Sustainable MBA, uniquely qualified to help individuals and businesses achieve the triple bottom line of environmental, social, and financial profitability. She has been writing for various non-profit organizations for 15+ years. When not writing, you will find her promoting education and meditation in the developing world, or hiking and enjoying nature.