A Broker Price Opinion (BPO) is an estimate of the probable selling price of a property. The BPO has become an important source of information for the real estate industry and, increasingly, for government programs designed to aid the economy and help homeowners avoid foreclosure.
- Homeowners by reducing pass-through servicing costs
- Mortgage investors by decreasing the cost of due-diligence
- Credit risk departments that need to verify collateral value accuracy
- Financial institutions that rely on multiple valuation perspectives to help them manage the dynamic real estate values in a challenging economic environment
According to industry estimates, over 10 million BPOs are performed annually across the country. BPOs provide critical information for decision-making and have been widely adopted as a valuation tool in the mortgage industry due to their timeliness, cost effectiveness, and accuracy.
BPOs are commonly used for:
- Fraud check and additional due diligence on a completed appraisal
- Internal non-lending purposes such as portfolio valuation and review
- Due diligence of loan portfolios by buyers and sellers in secondary market transactions and to help establish the purchase and sales price of a portfolio
- Due diligence and disposition analysis on distressed loans, including loan modification, short sales, REO sales, and foreclosure avoidance efforts
- PMI removal, mortgage refinances, home equity lines of credit (HELOCs, and home equity loans (where allowed by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)).