A broker price opinion (BPO) agent is a neutral third party hired to help establish the current fair market value of a particular property. These agents are typically real estate brokers hired by a mortgage company, loss mitigation company, or financial institution. Providing a broker price opinion is faster and cheaper than conducting a full-blown appraisal. A BPO agent will make a property value determination based on several factors. With duties similar to licensed property appraisers, BPO agents use knowledge of other properties sold in an area to help determine a property's value.
A property appraisal serves the same purpose as a BPO, except that appraisals tend to involve a more detailed inspection and are handled by licensed appraisers. Banks will use a BPO agent because it costs less and can usually be done a lot faster than a traditional appraisal. There is debate as to the validity of using a BPO rather than a traditional property appraisal; however, when economic times are tight and foreclosure rates are high, BPOs can be done more quickly than an appraisal. This is especially valuable when a bank wants to "short sell" a property within 30 to 90 days. BPO agents may also perform a property evaluation when the owners wish to refinance the mortgage at a lower interest rate.
The basic factors which a BPO agent considers when making a property evaluation are the current condition of the property, the selling price of similar homes in the surrounding area, and what repairs may need to be made in order to sell the house as soon as possible. Most BPO agents provide a report of the property's exterior, which includes photographs of the house, property, and surrounding neighborhood. They look for any obvious exterior defects or problems and use this information to make an estimate of the interior condition. Adjustments like the need for a new roof, an extra bathroom, or better view are also considered by a BPO agent when determining the fair market value of a property.
Most companies prefer that a BPO agent have a real estate license, some experience in the local real estate market, and knowledge of the neighborhood in which they are working. Like licensed property appraisers, a BPO agent is expected to remain free of any influence by any parties with a vested interest in the property transaction. Real estate brokers and agents working with a current license are the natural choice for performing the duties of a BPO agent.