Term Tuesday: BPO

Image via Renjith Krishnan

A BPO, or Broker Price Opinion, is used by mortgage lenders, banks and others to determine the value of a home. They are often associated with, but not limited to, foreclosures and short sales. Similar to a CMA, companies will hire real estate agents to prepare an opinion on the value of a property based on similar properties that have sold in the area and current market conditions surrounding the subject property.

There are two main types of BPOs: drive-by and interior. A drive-by BPO is a simple opinion of the value of a property and will only require photos taken of the outside of the subject property. An interior BPO requires a much more in-depth evaluation including the inside of the subject property.

A real estate agent might be contracted to create a BPO for a specific property to avoid the cost of an appraisal, evaluate pending foreclosures and homes in delinquency or in a refinance situation on behalf of a lender.