Is a BPO the Same as a Professional Appraisal?

BPO’s, otherwise known as ‘broker price opinions’ are often used by lending institutions to obtain the current market value of distressed properties including short sales and foreclosures. In addition, brokers and realtors often use BPO’s to help justify a suggested list price for those looking to sell their home.

The Coyle Group - BPOBPO appraisals are NOT completed by professional real estate appraisers and instead, are usually completed by real estate brokers and are far less detailed than that of a professional appraisal completed by a professional real estate appraiser.

Depending on the type of information required, brokers may provide either a drive-by or internal BPO. Drive-by BPO’s are often used for properties that have gone into foreclosure as they allow brokers to gather enough information without having to contact or dialogue with the foreclosed property owners.

Internal BPO’s require more detailed information on the property which can only be obtained by gaining interior access to the property. Internal BPO’s are often used for homeowners involved in a mortgage refinance, loan modification, or short sale.

During an internal inspection brokers gather information about a property’s interior and exterior condition allowing them to more accurately report gross living area, condition of the ceiling, walls, flooring, mechanical systems, countertops, sinks, tubs, fencing, roofing, siding, swimming pools, and more.

Both internal and drive-by BPO reports include year built, lot size, gross living area, number of rooms, property condition, information pertaining to the immediate neighborhood, and often additional information regarding the number of homes listed for sale or rent in the area.

BPO’s and their subsequent property value assessments often require listing the total number of foreclosure properties within a 5-mile radius because when a high number of foreclosed homes are present, most often property values of all homes in the area decline.

In short sale situations, accurate BPO appraisals have often been known to reduce principal loan balances by as much as 15-25%. While this amount is substantial for mortgage lenders it’s still more cost-effective than going through the process of foreclosure.

One important note is that the ‘The Dodd-Frank Wall Street Reform & Consumer Protection Act’ prohibits BPO appraisals from being used as the primary basis for determining property value when real estate is used as collateral to secure the loan. So in any situation, it is always best to consult with an attorney or real estate broker to ensure a BPO is legal and acceptable in your case, as your situation may require a more detailed appraisal performed by a professional state certified real estate appraiser.

I hope you found this helpful and if you have any additional questions, thoughts, or comments please leave them down below.

The Coyle Group, LLC is one of the most well-respected and sought after appraisal firms in the greater Philadelphia area specializing in residential and commercial appraisals for divorce, bankruptcy, estate, date of death, tax appeals, pre-listings, and more. For more info contact us at 215-836-5500, http://www.thecoylegroupllc.com, or email us at appraisals@coyleappraisals.com.

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Comments

  1. As an appraiser I have been asked to do a BPO and I have needed to explain the difference. This is a good way to cover it.

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