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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About Broker Price Option (BPO)
When you are looking through the real estate listings only, every property has a price associated with it.
This price gives you an estimate of how much the property could be sold for. But how is this price determined?
To know that we need to know what is a broker price opinion (BPO). In this post, we will learn what is a BPO in real estate and how it works.
What Is A Broker Price Opinion?
When a realtor or other qualified professional determines the estimated value of a property, it is called a broker price opinion.
The BPO in real estate is used as part of the listing contract when selling a home. Loss mitigation companies, Lenders, or mortgage companies who want to know the value of the property can apply for BPO.
Homeowners that are planning to sell their home or foreclose on their home can also request a BPO.
The reason why most people would like to go with a BPO is that it gives quick results and is cost-effective compared to an appraisal.
In some states, BPO could be used instead of home appraisals.
BPO in real estate is often used in the following situations:
- Foreclosure and Short Sale
- Asset and Portfolio Valuation
- Sales of re-performing loans and non-performing loans
- Sales Of Whole Loans
- Request for Removal of Private Mortgage Insurance
Note that BPOs are not accepted in all states. Most lenders require a home appraisal to determine the value of the property before lending.
How Does Broker Price Opinion Work?
BPO is not applicable or accepted in all states. Depending on the law, the broker may not be able to provide this service or charge a fee for performing this operation.
Brokers may be trained to offer and provide price advice, but it does not mean that it is legal to provide the BPO. State law may restrict the use of BPO under certain situations.
A few factors that a real estate agent considers when providing a price opinion include similar property values in the surrounding area and surrounding sales trends.
The location of the real estate property and the surrounding area plays an important role in providing a BPO. Similar listings and recent sales affect home price opinions.
The estate agent also considers the cost of preparing the property for sale and/or the cost of any necessary repairs. It is important to note that a BPO is not the same as an appraisal.
What Are The Types Of Broker Price Opinions?
There are two basic types of BPOs, internal and external. Based on its definition you might be able to choose the one best for your situation
- Internal BPO: In this type of BPO, a certified real estate broker walks into a home and spends time measuring and viewing the features of the home to get a more accurate price opinion. Real estate agents evaluate the interior of your home, measure rooms to get the right size, measure bathrooms, bedrooms, and more in person.
- External BPO: In this type of BPO, the certified real estate broker evaluates the home from the outside without entering into the property, unlike in internal BPO. Real estate broker can view official information about a home, such as square footage and the number of bedrooms. Though the external BPOs are more in use, they are less accurate compared to internal BPOs.
Conclusion
A broker price opinion is one of the best ways to know the assessment of the property in case of a short sale or foreclosure.
However, if you are applying for a mortgage, the lender would require an appraisal and the BPO would not be accepted.
If you are looking to buy a property and you are not sure if the price is just, it could be the right thing to get a broker price opinion.
