What is a Broker Price Opinion?
A broker price opinion is a way of assessing a home’s current value. In some cases when a homeowner is looking to cancel private mortgage insurance a broker price opinion can be very useful. If a homeowner is behind on mortgage payments the lender might request a broker price opinion without informing the homeowner. A lender could also use this tool in the case of foreclosure or other hardship situations.
The details of a broker price opinion
This is an estimate of a home’s potential sale price given by a real estate professional. A broker bases their price assessment on a few different details of the property including its condition, current features, age, and other contributing outside factors such as the neighborhood and current local market conditions. They might also use comps also known as comparable sales of properties in the area.
The two types of broker price opinion
To come to a price opinion conclusion brokers may use a couple of different methods. One method is an external or drive-by BPO. This is when a real estate professional comes to the property and looks at it from the outside and bases their opinion on the home’s exterior and basic data, they find available through public property records and the multiple listing service.
Another method of coming by a broker’s price opinion is the internal or full BPO. This is a more detailed and thorough evaluation taking into account both the interior and exterior of the home. The broker gains access to the physical inside of the home and takes pictures as well as observes in person any damage or neglect or recent changes to the property.
When are broker price opinions used?
A BPO is used most often by a mortgage lender. A lender typically uses a BPO when a borrower is behind on their payments for a property. They will ask a real estate professional to give a BPO to get an idea of the property’s value in comparison to the outstanding balance on the current mortgage. This helps the lender to determine the best path forward in receiving monies owed.
A lender might also order a BPO when a homeowner has applied for a home equity line of credit or a loan modification.
Homeowners or consumers can request a BPO as well. Most often it is used to help settle issues like divorce or selling a family member’s estate to help determine what a property could be sold for. It is also used in the case of helping to cancel private mortgage insurance by receiving a professional assessment of the home’s value to prove the insurance no longer needs to be carried.
How is a broker price opinion different from an appraisal?
Both a broker price opinion and an appraisal are a strategy for obtaining a home’s current value but they are quite different. One of the most significant differences in the cost to have each performed. A professional appraisal can cost anywhere from $300-$450 whereas a broker price opinion may cost about half of that. Appraisals also take longer as compared to a broker price opinion.
Appraisals cost more because they require a longer time for an official appraiser to conduct their assessment of a property. A professional appraiser will assess many more aspects of a home to give a more detailed insight into the fair market value of a property.
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