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Definition: Broker Price Opinion (BPO)
A Broker’s Price Opinion (BPO) is a process in which an external Real Estate broker - which is generally a sufficiently qualified individual or a firm, is employed by a bank or a mortgage company to estimate the value of the property and is based upon the quality of the property under consideration. A BPO is generally undertaken in case the homeowner wants to refinance, or if the bank/mortgage company wants to avoid the appraisal cost and delay in determining the value of the property, or when they are considering a foreclosure or even in case the owner of the property wants to determine the best ask price or as a cross check mechanism for an appraisal. BPO’s are less thorough than a full appraisal.
The following factors may be considered by the broker while giving a BPO:
• Property condition
• Neighbourhood charecteristics
• Value of similar properties
• Sales trends in the market
• Cost involved to ready the property for sale
• Cost for repairs
There are two major categories of BPO’s. They are Drive-by BPOs and Internal BPOs. Drive-by BPOs in general do not require the broker to go into the home and check. It usually deals with minimum information like occupancy status, property age and style, visual condition, sold comparables, neighbourhood zoning etc. On the other hand in the case of an Internal BPO, it most often requires lot of information, taking photos, doing valuation, contact with the homeowner/tenant in case of foreclosure etc.
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