A Broker Price Opinion (BPO) is an estimate of a property’s value, typically performed by a real estate broker or agent. While similar to a property appraisal, a BPO is often less detailed and less expensive. There are different types of BPOs, and one distinction often made is between an “interior” BPO and an “exterior” BPO.
Exterior Broker Price Opinion (Drive-By BPO)
An exterior BPO, sometimes referred to as a “drive-by” BPO, involves the broker or agent assessing the property’s value based solely on its external characteristics, without entering the property.
Steps involved in conducting an Exterior BPO:
- Property Visit: Even though it’s an exterior assessment, the broker or agent will often visit the property. They’ll assess the property’s exterior condition, the condition of neighboring properties, and the overall neighborhood.
- Photographs: The broker will typically take photos of the front, sides, and rear of the property. They might also take photos of the street view and neighboring properties.
- Comparative Market Analysis (CMA): Similar to how they would estimate the value for a potential listing, the broker or agent will look at recent sales of comparable properties in the area. They’ll adjust for differences in features, size, condition, and location.
- Consideration of External Factors: The broker or agent will also take into account any external factors that might affect the property’s value. This could include nearby amenities, schools, or businesses, as well as any potential negatives like high traffic roads, noise pollution, or other undesirable elements.
- Report Compilation: Once the broker or agent has gathered all necessary information, they’ll compile it into a BPO report. This report will typically include the estimated value, photographs, comparables used, and any other relevant information.
Uses of BPOs:
- Mortgage lenders might use a BPO instead of a full appraisal when considering refinancing a loan.
- Banks often use BPOs for assessing the value of properties in foreclosure.
- Investment companies might use BPOs for purchase decisions.
- Portfolio value verification
Limitations: While BPOs can be a cost-effective way to estimate property value, they are not as thorough as a full appraisal. Since the broker or agent does not inspect the interior of the property in an exterior BPO, there might be factors that are overlooked which could significantly impact the property’s actual value.
If you’re considering relying on a BPO for a significant financial decision, it’s essential to understand its limitations and consider whether a more detailed appraisal might be appropriate.
If you’re a need of a Brokers Price Opinion please contact [email protected], for assistance.