Broker Price Opinion: What Is It and How to Get One

Over 30% of sellers find it difficult to price their properties. 1/3rd of sellers overprice their homes and lose out on prospective buyers. This shows how important it is to get the asking price right.

While a home appraisal or a CMA can tell your house’s worth, they can take time. In fact, home appraisals can take weeks and cost over $500. In such a scenario, a Broker Price Opinion (BPO) may be a better option. It is 50% to 75% less than the cost of an appraisal.

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What Is a BPO in Real Estate?

A Broker Price Opinion is a house’s estimated value determined by a certified real estate broker. The agent usually calculates the BPO based on the home’s characteristics and the recent sales figures of comparable properties.

However, a BPO isn’t as comprehensive as a home appraisal. It is a broker’s opinion of your house’s worth. So, a BPO can’t be considered an official representation of your house’s appraised value.

How Do Broker Price Opinions Work?

Sellers often request a broker’s opinion when they plan to sell their house or refinance their mortgage. Additionally, lenders or mortgage companies also hire brokers to provide a BPO for loan approvals, short sales, and foreclosures.

When contacted, the broker inspects the house. They also analyze the MLS database and consider factors like:

• Property’s size
• House’s age
• Condition
• Days on market
• Amenities

Based on these factors, brokers provide the BPO in the form of a report. This report generally spans 2-3 pages and contains all the parameters considered to calculate the house’s value.

Different Types of Broker Price Opinions

There are two types of BPO in real estate:

1. External BPO

Also referred to as drive-by BPO, brokers conduct external BPO when they can’t access the property. They inspect the house from the outside and assess its value based on data available in public records.

Although external BPOs are less comprehensive and, thus, less accurate, they are still the most common type of BPO.

2. Internal BPO

For internal BPOs, brokers evaluate homes based on interior conditions. They consider factors like the number of bedrooms, square footage, home improvements, damages, and more.

They combine their home assessment with local market research to arrive at their price opinion.

BPO vs. Appraisal: Which Is the Better Choice?

While BPOs are a quicker alternative to appraisals, they are not guided by any law. So, which method is better to assess your house’s value? Let’s explore the differences between BPO and appraisals for answers.

1. Accuracy of Assessment

• BPO: A BPO is a high-level report of what the broker thinks is the house’s value. Instead of a complete home inspection, a broker can provide a price opinion solely based on external inspection and public records.
• Appraisal: Appraisals require comprehensive internal and external inspections. Also, an appraiser is a trained expert and conducts a full-fledged real estate market analysis to derive a dollar value. So, appraisals are more accurate.

2. Cost and Speed

• BPO: Brokers often do a drive-by inspection of the house. So, they can provide you with a BPO in just around 3 days at less than half the cost of an appraisal. Realtors may even provide a free BPO if you list the property with them.
• Appraisal: Because of the thorough house assessment process, an appraiser may take around 2 weeks to hand you an appraisal. At the same time, it can cost you around $350 to $600.

3. Legal Compliance

• BPO: There’s no official body to govern BPO standards. So, they have limited use cases. In fact, 14 American states have limited BPOs to provide interested parties with an idea of the sale price.
• Appraisals: Appraisals comply with the Uniform Standards of Professional Appraisal Practice (USPAP) and state law. So they are universally accepted. Appraisals are also mandatory when you apply for a mortgage.

4. Profit Motive

• BPO: With their price opinion, brokers also hope to bag the listing agreement from the owner. And as you know, their commission is around 2% to 3% of the sales price. So, to get a bigger cut, brokers may inflate the house’s value.
• Appraisal: In contrast, the law requires an appraiser to remain unbiased and show no interest in the property. They are paid to evaluate houses, and their role ends with the completion of the appraisal process.

How to Get a Broker Price Opinion?

You can contact your local Realtor to get a BPO. You can also find certified brokers who provide BPOs using the National Association of BPO Professionals directory.

Many national real estate companies, like Clear Capital, Equator, and Residential Real Estate Review, also issue BPOs.

When Should You Get a BPO?

A BPO is perfect when you are listing your house for sale. You can get your Realtor to provide a price opinion based on which you can decide your property’s sale price.

It also makes more sense in distressed properties and short sale or foreclosure cases. Since sellers want to sell their properties for quick cash, BPO allows them to close deals faster.

If you need help listing your house or setting its price, turn to Houzeo. For a flat fee of $399, you can get an MLS listing in less than 48 hours. What’s more, you can easily manage offers and make counter offers.

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FAQs about Broker Price Opinions

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