What Is a Broker Price Opinion (BPO)?

What Is a Broker Price Opinion?

A broker price opinion is an informal estimate of a property's value that's usually performed by a licensed real estate broker or agent. A BPO may be completed in one of two ways.

• External BPO: External BPOs take into account the age, size and location of a property as well as a visual evaluation of the exterior, but the broker or agent doesn't enter the home to review the condition of the interior.
• Internal BPO: Internal BPOs include an evaluation of the interior and exterior of a home as well as its age and location. It provides a more in-depth and accurate assessment because the person conducting it can go inside the home to take measurements and see how well (or not) the home has been maintained. Improvements, such as replacing shag carpeting with hardwood floors and upgrading laminate countertops to granite, will be reflected in the estimate.

Learn more: Factors That Affect a Home's Value

How Does a Broker Price Opinion Work?

To complete a BPO, your real estate agent or broker will review information about the property and the surrounding area to come up with an estimate of its value. Here's how it works.

1. Property identification: The homeowner, lender or potential buyer lets the agent or broker know what property they want evaluated.
2. Comparative market analysis: The real estate agent or broker gathers information about the property's location, including school districts, surrounding neighborhoods, recent home sales, homes currently listed for sale and local real estate market conditions.
3. Property analysis: The agent or broker evaluates the condition, age and size of the property, including any renovations that have been made. They may also take photos of the home to include in their report.
4. Value estimation: When the agent or broker has completed their analysis of the market and the property, they use the information they've gathered to estimate the value of the home.
5. BPO report creation: The information is compiled into a report that includes details from the comparative market analysis and property analysis.

Broker Price Opinion vs. Appraisal: What's the Difference?

While BPOs and home appraisals may provide similar information, they're not the same thing. BPOs are conducted by real estate agents or brokers who provide quick and inexpensive property value estimates, but not all states allow them.

Appraisals are formal assessments performed by certified appraisers who must meet certain educational and training requirements. They cost more and take longer to complete than a BPO. If you're buying or selling a home or refinancing your mortgage, your lender will typically require an appraisal.

Learn more: How to Increase Your Home's Appraisal Value

When Should You Get a Broker Price Opinion?

Getting a BPO can be helpful in multiple scenarios, such as:

• You're selling your home. Getting a BPO before you put your house on the market can help you decide how to price your home competitively to attract potential buyers.
• You're buying a home. By providing a ballpark figure for a home's value, a BPO can help you decide how much to offer for a property you want to buy.
• You want to cancel private mortgage insurance. Lenders often require borrowers to maintain private mortgage insurance (PMI) on conventional loans if they put less than 20% down. A BPO can help determine whether you've achieved the 20% equity threshold required to cancel PMI.
• You're thinking about a home renovation. Understanding the current value of your home can give you an idea of how much your home may be worth when the renovations are complete.
• You're thinking about buying a short sale or property in foreclosure. Getting an appraisal in these situations may not be possible. A BPO can be a quick way to get an estimate of a home that's in foreclosure or being considered for a short sale.
• You're requesting a loan modification. A BPO can give your lender an estimate of the value of your home if they're considering granting your request for a loan modification.

Tip: BPOs aren't permitted in all states, so it's a good idea to familiarize yourself with the laws in your state to better understand if, when and how a BPO may be used.

How to Get a Broker Price Opinion

There are two ways to get a broker price opinion.

1. Ask your real estate agent or broker. Most real estate agents or brokers can complete a BPO for you. If you're listing your home for sale, it's often part of the listing agreement.
2. Go through a professional BPO network. If you're not working with a real estate agent or broker, you may be able to find someone who is qualified to provide a BPO through a professional network.

Frequently Asked Questions

The Bottom Line

A broker price opinion is a quick, easy and inexpensive way to get a ballpark estimate of a property's value. A BPO can be a valuable tool for making certain housing-related decisions. However, if you're buying or selling a home, you'll likely need a formal appraisal because lenders usually require it.