In the lending world, banks and other financial institutions generally order an appraisal to determine value of a property. However, what is becoming more popular is a valuation known as a Broker Price Opinion, or BPO. A BPO is an opinion determined by a real estate agent or broker to establish the selling price of real estate. While this type of evaluation is typically performed by real estate agents and brokers, it is often asked whether an appraiser can perform a broker price opinion, desktop reconciliation of value, or other similar type of valuation. In this article, we share what is included in a BPO and whether or not real estate appraisers can provide one.
What is a BPO
A BPO is a brief report (two to three pages) on the subject property, an analysis of the subject’s neighborhood, and local market statistics. Since the objective of a BPO is to determine the selling price, comparable properties are also included in the report to help the reader understand how the price opinion was established. As stated above, banks and lenders are the typical users of the report, which are completed by real estate professionals such as agents and brokers. BPOs are generally used for REO properties, properties in foreclosure, properties subject to a short sale, and home equity lines of credit.
Can Appraisers perform BPOs?
Before answering this question, it is important to note that real estate appraisers are bound by the Uniform Standards of Professional Appraisal Practice, also known as USPAP. USPAP was developed in the 1980’s as quality control standards for all types of appraisals, including real property, personal property, and business valuations. According to the latest edition of USPAP, an appraisal is defined as “the act or process of developing an opinion of value; an opinion of value.” This means that whenever an appraiser is giving an opinion of value, an appraisal is being performed.
In this case, a BPO is considered to be more of a reporting format than something separate from an appraisal. Therefore, an appraiser can develop a value similar to a BPO, but it must be developed and reported based on USPAP rules and standards.
For more information on this subject, please visit the Bureau of Real Estate Appraiser’s website, which answers this question in more detail.
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