WHAT DOES BPO MEAN

By
Real Estate Agent

What Does Broker Price Opinion (BPO) mean?  It is the estimated value of a particular piece of property or real estate determined by a Qualified Real Estate Broker.  It is based on the characteristics of the property being evaluated.

The broker will consider the following when determining the value of the said property:

•1.      The value of similar homes in the area

•2.      Sales trends in the neighborhood or area where the property is located

•3.      The costs associated with getting the property ready to sell or the cost of needed repairs

•4.      The age of the home

It is similar to an appraisal in the fact that they will use comparable houses that have sold in the area which meets the same criteria as the house that they are evaluating. They normally will choose three properties in the area and adjust up or down in value for differences in the homes.

Examples would be things like a fireplace, the number of bathrooms, family rooms, 2 car garage compared to a one car or no garage and the upgrades to the home.  They may also adjust up or down for the age or the home and the condition that the houses are in.  They try to determine the value of the property by adding value and taking value away from the comparable properties.

It is important not to confuse it with an appraisal.  It is often used for a foreclosure or short sale.  It also may be used when you are taking out a Home Equity Loan or Home Equity Line of Credit.  The reason lenders often use a BPO is because it is a lot less expensive than an appraisal.

Sometimes BPO's can be controversial if the Broker is not real familiar with the neighborhood or location the said property is in.

Posted by

Joanne Tilford

Real Living Home Realty

3424 Frederica Street

Owensboro KY  42301

270-929-8454

Owensboro KY Rea Estate

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Rainer
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Devona Garrigus
1 (888) 9-LIST-IT
Coldwell Banker Kivett-Teeters

Joanne - Great break down of what a broker price opinion, or BPO, is. As agents, we should conduct BPOs as often as possible to stay familiar with market trends.
Garrigus Real Estate

February 04, 2011 05:45 PM
Rainer
38,130
Matthew Francis
The Francis Team

Now if you could just get the junior agents that have all signed up to do BPO work in hopes of getting the REO business.  I ran into problems with a short sale I promised to do for a friend (thats a whole other article, don't do short sales for friends)  They came back at 25K above the asking price.  The home had been on the market for over 9 months and we never could get asking price, infact we only got one offer at that was 10K lower than asking price.  The truth is the property needed over 40K in structural work alone.

I wish they would qualify the BPO agent based on experience and accuracy.  Really too bad the BPO business pays so little, I guesse if you pay peanuts, you get monkys.

Thanks for posting your article.  I did like it

February 04, 2011 05:47 PM
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Rainer
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Joanne Tilford

Touching Lives Building Realtionships
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