Broker Price Opinion (BPO): What Is It And When Should You Get One?

When you’re looking at the price on a home listing and thinking, “Wow, that’s ambitious,” or “What a steal!” a broker price opinion, or BPO, likely helped inform that number. Similarly, when a homeowner falls on hard times and can’t pay their mortgage, their servicer might turn to a BPO to get a sense of the property’s current value. But what goes into this number, and who comes up with it?

What Is a BPO?

BPO stands for broker price opinion, which is a real estate agent or broker’s professional opinion of how much a property could sell for under current market conditions. A BPO is based on the prices of active listings and recent comparable sales along with a property inspection.

What Are the Main Types of Broker Price Opinions?

Brokers conduct a BPO in one of two ways:

• External BPO. During an external BPO, also called a drive-by BPO, a broker only evaluates the property from the outside. They’ll estimate the number of rooms and room sizes, note the property’s exterior condition and snap photographs of the front and back of the home. Due to the lack of inside access to the property, external BPOs are less accurate than internal BPOs.
• Internal BPO. During an internal BPO, a broker evaluates the property from the inside and outside. They’ll verify the room count and square footage, take photos, note any damage and point out other details—such as renovations—that may increase or decrease the home’s value.

Both types will incorporate public records data, and the onsite visit can confirm or refute that data. For example, public records might show a home as having three bedrooms and two bathrooms, but an internal BPO may reveal an unpermitted fourth bedroom.

How Do You Get A Broker Price Opinion?

Anyone can order a BPO. If you want to sell your home, the real estate agent or broker you’re considering may perform one for free. If you’re buying a home, your agent may perform one to help you decide how much to offer.

If you work for a mortgage servicer or investor, you’ll typically order BPOs through a third-party company.

When Should You Get a Broker Price Opinion?

You may find yourself requesting a BPO if you:

• Want to sell or rent your home and need to establish a listing price
• Must determine your home’s value for estate planning purposes
• Are involved in legal proceedings such as divorce or estate settlement where property needs to be divided fairly or one party wants to buy out another party’s ownership share

Mortgage servicers will also often request BPOs to obtain an estimate of a home’s value as part of the refinancing or foreclosure process.

BPOs even help mortgage investors such as Fannie Mae and Freddie Mac with their quality control processes, making sure the mortgages they’re purchasing or securitizing meet their underwriting standards.

Alternatives to Broker Price Opinions

There are several other methods for determining how much your house is worth. Each requires a different level of time and expertise.

Comparative Market Analysis

A comparative market analysis (CMA) examines what similar properties in the area have sold for recently. Depending on who you ask, a CMA is either less detailed than a BPO or the same as a BPO.

Home Appraisal

For a home purchase, mortgage lenders typically require a home appraisal. It’s the gold standard for assessing a home’s value. You’ll pay for one as part of your mortgage closing costs. They’re more complex and expensive than BPOs, but they also provide a more detailed assessment of the property.

Appraisers often follow a standardized format—Fannie Mae’s Uniform Residential Appraisal Report—to provide their impartial opinion using information from third-party records and sometimes, an in-person visit. An appraisal can tell lenders everything from what type of windows the home has to whether it complies with zoning laws.

Automated Valuation Model

An automated valuation model, or AVM, uses software to estimate a home’s value based on third-party data such as public records. It’s fast and cheap—in fact, you can get one yourself from any major real estate listing site.

Lenders sometimes use AVMs in lieu of appraisals on lower-risk transactions. For example, a lender might use this method for a rate-and-term refinance if the borrower has excellent credit and plenty of equity. Or they might use an AVM when they’re confident in the quality and quantity of data they have.

Frequently Asked Question (FAQs)