Broker Price Opinion (BPO)
A property valuation estimate provided by a licensed real estate broker, less detailed than a formal appraisal. BPOs are commonly used by lenders for REO properties, short sales, and portfolio reviews but cannot replace appraisals for origination.
BPOs come in two forms: drive-by (exterior only) and internal (with interior inspection). They typically include comparable sales analysis but with less rigorous adjustment methodology than appraisals. Federal law (Dodd-Frank) prohibits the use of BPOs as the primary basis for determining value in connection with mortgage origination. BPOs are permitted for loss mitigation (short sales, loan modifications), REO disposition, and portfolio valuation. Some states, including New Jersey, have specific regulations governing BPO practice.
Related Terms
Comparative Market Analysis (CMA)
CMAAn estimate of a property's value prepared by a real estate agent using recent sales, active listings, and pending sales data.
Market Value
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..
Appraisal Report
Under USPAP, a written report that summarizes the appraiser's analysis and conclusions in sufficient detail for the intended users to understand the basis of the value opinion.
Dodd-Frank Act (Appraisal Provisions)
The 2010 federal financial reform law that included significant appraisal provisions: appraiser independence requirements, AMC registration, customary and reasonable fee mandates, and prohibition of BPOs for origination..
More in Market Analysis
View allMarket Conditions
The current state of supply and demand in the real estate market for a particular property type in a defined area.
Absorption Rate
The rate at which available properties are sold or leased in a specific market during a given time period.
Days on Market (DOM)
DOMThe number of days between when a property is listed for sale and when it goes under contract.
Months of Supply
The estimated time it would take to sell all current listings at the current sales pace, calculated by dividing active inventory by the average monthly sales rate.