The last thing you want to do is go into buying a home without knowing all of the available information. Fortunately, there are many resources for prospective homeowners to find information on properties; although some are more readily available than others. Your bank, for instance, will likely not appraise a property for you until you have a conditional offer on the table. That being said, where do you turn for a trustworthy opinion?
The answer is — everywhere you can! The more information, the better. Once you have a variety of opinions on the table, you can pinpoint anomalies and parse out accurate information.
To make this process easier, many real estate agents and real estate brokers offer evaluations in the form of Broker’s Price Opinions (BPO).
So, what exactly is a broker opinion? Here’s everything you need to know.
What is a broker price opinion?
A BPO is a valuation of a piece of property you have an interest in buying. Real estate agents use BPOs to determine how much a particular piece of property is worth (usually with the consult of a property broker). There are many factors that go into calculating a BPO, including:
- The surrounding neighborhood (and comparable properties)
- The home’s characteristics
- The home’s curb appeal
- The market temperature (hot or cold)
Keep in mind that a BPO is only an informed opinion. Financial institutions and lenders will rely on appraisers to determine a home’s real market value.
How much does a BPO cost?
Expect to pay anywhere between $80 and $150 for a BPO. In many circumstances, the cost of a BPO depends on how quickly you need it, the specific type of BPO, and the location of the home. Real estate brokers and agents might base the price of the BPO on the property’s value, meaning, the higher the projected sale price of the home, the higher the fee for the BPO. Types of BPOs include:
Drive-by BPO: A drive-by BPO is based on observation, as the broker simply drives by the location and doesn’t go inside to evaluate the home’s value. While not as accurate, a drive-by BPO is usually cheaper.
Internal BPO: An internal BPO requires the broker to go inside the home (which usually results in a higher cost).
What Is the difference between a comparative market analysis, residential appraisal, and a BPO?
In addition to a BPO, home buyers and realtors have some other options when it comes to determining the price of a home, including a Comparative Market Analysis (CMA) and a residential appraisal.
Comparative Market Analysis: While not as detailed as a BPO, a CMA compares homes in an area to determine how much an individual property might be worth. The CMA is usually less accurate by comparison to a BPO because the analysis doesn’t take into account everything about the home.
Residential Appraisal: Similar to a BPO, a residential appraisal can give you a good idea of the worth of a particular home. A residential appraisal can give you a big picture value of a home based on its condition, any upgrades it has, and how much similar houses are selling for in your area.