A BPO, or Broker Price Opinion, is a tool used by mortgage lenders, banks and others to value a property in the current real estate market. Reasons a financial institution might order a BPO include:
- – Refinancing a recent mortgage
- – REO property (Real Estate Owned property)
- – Foreclosures
- – Short sale
- – An addition or a cross check to an appraisal
- – Home Equity Loans and Home equity lines of credit of less than $250,000
- – Appeals to get rid of PMI (Private Mortgage Insurance)
- – Diligence for Financial Institutions
- – A selling/purchase price for a portfolio of home loans (usually for thousands of loans)
When a homeowner is refinancing for lower rates or other reasons, the lending institution may order a BPO. In many cases, the home has a recent mortgage, which usually means that a full appraisal was conducted recently. As a result, there is no need to incur the cost of another full appraisal, so the lender may decide to hire a real estate broker to do a BPO, or broker price opinion.
In cases where foreclosure is a consideration, or even when the lender is working with the borrower to delay or prevent foreclosure, the lender will order a BPO. This allows the lending institution to get a reliable estimate of the current value of the property, compare it to the mortgage balance, and recommend solutions.
The commonly accepted standards and best practices for BPOs in real estate are the BPO Standards and Guidelines (BPOSG). These are the widely accepted BPO standards allow for flexibility in application and ensure ethical and consistent BPO valuations. BPO standards also help maintain high quality valuations by setting clear expectations for brokers/agents conducting BPOs.
The BPOSG establish expectations for:
- – Ethical conduct and competency
- – Photo requirements and guidelines
- – Comparable selection and use
- – Definitions and applicability of market, property and neighborhood terms
The Broker Price Opinion Standards and Guidelines (BPOSG) were established by the BPO Standards Board, which consists of BPO industry leaders, experts and real estate professionals, in conjunction with the National Association of BPO Professionals.
MetroMax Solutions depends on our network of brokers and agents for BPOs and other field evaluations. We maintain oversight of our network to ensure that we work only with brokers who have a track record of accurate and efficient BPOs that uphold all BPO standards.