The Broker Price Opinion (BPO) is a tool employed by lenders and mortgage companies to assess the value of properties when an appraisal is deemed unnecessary. Usually, a BPO is requested from real estate brokers by the lender, mortgage company or loss mitigation company. The broker will then do a Drive-By BPO or an Internal BPO.
Some states do not allow real estate brokers to charge for BPO services, primarily to avoid conflict with appraisers. Yet in many cases, appraisers are willing to forego assessments since there is little money in them. Meanwhile, real estate agents, who must contend with fluctuating sales markets, are happy to fill out valuation forms for an extra $75 to $150.
When is a Broker Price Opinion Used?
Lenders and mortgage companies tend to use BPOs for a variety of reasons, though they are mainly employed when a lender or loss mitigation company is dealing with homeowners that are delinquent on their mortgage payments. After several missed payments, the lender or asset manager may request a BPO to check the condition of the home in case they need to proceed with a foreclosure sale. They will usually contact a real estate agent or qualified broker to do a quick assessment or inspection of the property.
There are two types of Broker Price Opinions, the Drive-By BPO and the Internal BPO.
A Drive-By BPO is generally used by lenders when dealing with a foreclosure and refinance. Though both BPOs are used to get a rough estimate of the value of a property, the Drive-By BPO is used when the lender does not want the homeowner to be aware of the BPO and they want an initial assessment before further action is taken. Occasionally, a Drive-By BPO is done after the homeowner is believed to have moved out. In this case, the BPO will confirm if the property is vacant by seeing if there is any furniture in the home, or if the gas or electric meter is shut off for non-payment. The Drive-By BPO is merely a preliminary BPO and the assessment of the value of the property is speculative.
The Internal Broker Price Opinion
The Internal Broker Price Opinion is much more comprehensive since it takes place inside the home. The Internal BPO will generally check the square footage of the home, as well as the room count. It will also take photos of the interior, as well as photos of any damage or items in need of repair. An internal BPO may be conducted with or without the owner, depending on if the property is occupied or not. When dealing with refinancing, Internal BPOs tend to be agreed upon, however, in pre-foreclosure cases, brokers may have to exercise a tactful approach when dealing with the homeowner in order to avoid conflict.
Broker Price Opinion Measurements
The Internal BPO will measure each Individual room to verify that no major changes have been made to the home. It will also measure the overall square footage of the home to see if any additions have been made to the property.
Additional BPO Services
A real estate broker may also be asked to provide the following services:
- Boarding up the property
- Damage repairs
- Lawn care and snow removal
- Re-key locks
- Secure the property
- Trash removal
A real estate broker can be expected to pay for any expenses out of pocket. They will usually be reimbursed within 30 to 60 days. BPOs can be extremely profitable when foreclosures are common. Also, brokers may be afforded an inside track into listings after the lender completes the foreclosure, which can also be highly lucrative.
The National Association of Broker Price Opinion Professionals (NABPOP)
The National Association of Broker Price Opinion Professionals (NABPOP) is a non-profit trade association composed of Broker Price Opinion (BPO) Practitioners, both real estate brokers and sales agents from across the United States. The NABPOP provides a BPO Education/BPO Training Course and is the BPO Certification Authority for Certified Real Estate Pricing Specialists C-REPS. NABPOP membership supports the BPO and the real estate industry.
The NABPOP oversees the BPO Standards Board (BSB) which develops, reviews, and maintains BPO Standards and Guidelines (BPOSG) for the BPO industry. The NABPOP does not provide valuations, only BPO training, BPO education, and BPO advocacy.
- National Association of REO Brokers
- Five Star Conference
The following website provides links to a variety of BPO forms: