What Is a Broker Price Opinion (BPO)?

Real estate agent working on tablet outside a home
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Definition
A broker price opinion (BPO) is an estimate of the selling price of a property prepared by a broker without using a computerized valuation model. Lenders or mortgage companies may request brokers for a BPO to avoid delays caused by appraisals, but the level of details provided may vary with each BPO.

Key Takeaways

  • A broker price opinion (BPO) is a selling price estimate provided by a real estate agent without a formal valuation model
  • Broker price opinions may be faster and less expensive compared to the appraisal process
  • Lenders and mortgage companies may request broker price opinions
  • BPO rules vary by state, including whether real estate brokers can conduct them for a fee
  • Brokers may do BPOs to get a better understanding of potential listings or foreclosures

How A Broker Price Opinion Works

The broker price option (BPO) is an estimate of the value of a property provided by a real estate broker without crunching the numbers using an automated valuation model. It is a tool that lenders and mortgage companies use to value properties in situations where they believe the expense and delay of an appraisal are not necessary.

Real estate brokers are given an order to do a BPO by the lender, mortgage company, or loss mitigation company. The broker does either a drive-by BPO or an internal BPO in most cases.

Note

In some states, real estate brokers aren't allowed to charge for services, especially when they step on the toes of appraisers.

However, that's slowly changing, as the appraisers don't want to do BPOs anyway, as the work doesn't pay enough. Some real estate agents who are barely hanging on, though, are happy to make $75 to $150 or so to go out and fill out the lenders' form for valuation of a property.

But collecting a fee may not be the only motivation for a real estate agent to work on broker price opinions. Some brokers want to do BPOs because it gives them an opportunity to list the property.

Broker price opinions may also be a great way for real estate brokers to keep a track of possible foreclosures about to hit the market as well as the condition of the homes. That could give them a competitive edge.

However, many states have strict conflict of interest rules governing broker price opinions. For example, if a broker gets requested for a BPO but the property is listed or is under contract through another broker at their real estate agency, it may trigger a conflict of interest, according to rules in Maine.

When Is a Broker Price Opinion Used?

Lenders and mortgage companies might use a broker price opinion for many reasons including saving on time and cost.

Note

Broker price opinions can be generated as quickly as three days as opposed to two weeks for an appraisal and can cost 50%-75% less than an appraisal, according to National Association of BPO Professionals (NABPOP).

Lenders may also use BPOs to evaluate homes without involving the occupants of the home. That could occur in certain specific circumstances such as foreclosures or in homes where the lender may want to consider a refinance or mortgage forbearance agreement.

Types of Broker Price Opinions

By far, two major types of broker price opinions are used by national lenders and loss mitigation companies:

Drive-By BPO

A drive-by BPO is a common tool for lenders in foreclosure and refinance situations. If the property is occupied, the lender may not want to alarm the borrower or create an antagonistic situation with the real estate person.

Note

Drive-by BPO doesn't mean stay in the car necessarily. Getting out and walking around without getting too noisy or trespassing can sometimes give the agent a better look and more information.

Sometimes the agent will arrive to do a drive-by BPO only to find the property abandoned. They would then call the company ordering the BPO to see if they want to convert it.

Internal BPO

The more thorough type of BPO, the internal broker price opinion, requires a great deal more in the way of information, valuation work, and photos.

It is important to follow the instructions of the lender and take care to fill in the forms properly if you want to get paid. Also, photos should be taken as the instructions direct. If they want front, rear, and side views, make sure you get them all.

Frequently Asked Questions (FAQs)

How do you start a broker price opinion business?

To start a broker price opinion business, you would first need to set up a real estate business with the most basic requirement – a real estate broker license. You could go ahead and get E&O insurance as well. The next step would be to enhance your credentials with a BPO certification, though that is not required. You should then look at cultivating relationships with banks and mortgage companies so that they can send BPO business your way.

How do you get a broker price opinion?

Normally, a resident would not seek a broker price opinion. A BPO is requested by lenders or mortgage companies. Such companies would reach out to a real estate agent to seek a BPO. Typically, lenders or mortgage companies ask for a BPO because its faster and cheaper than an appraisal. Lenders may also use BPOs to evaluate homes without involving the occupants of the home.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Cornell Law Legal Information Institute. "12 U.S. Code § 3355 - Broker price opinions."

  2. New Jersey Office of The Attorney General. "Advisory Opinion."

  3. Maine.Gov. "Are You Doing Opinions of Value (aka Broker Price Opinions or BPO’s) for a fee?," Page 2.

  4. National Association of BPO Professionals. "What Is a BPO?"

  5. National Association of BPO Professionals. "How to get started doing BPOs."

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