A BPO (Broker Priced Opinion) is an evaluation of a property as determined by a real estate broker or other qualified individual or firm. A broker price opinion is based on the characteristics of the property being considered. BPOs are often used by lenders and mortgage companies because they are usually less expensive (and significantly quicker) than an appraisal.
The reason BPOs are more trusted than a “free valuation” is that the incentive to perform is changed. When your typical real estate agent gives a ‘free valuation’, his or her incentive is to get a listing, at which that person will usually do and say anything to achieve that. With a BPO, the incentive is satified with a fee, and integrity is maintained by the individual and report. We have seen time and again owners distraught because an agent said their property would sell 20% more than everyone else. Or what is worse, we see agents undercutting the true market value of the property so that it would sell immediately and they do as little work as possible, moving on to the next property.
The best way to protect against this distortion is with a full appraisal, however many think this is not the most cost effective way to get the information they want, which includes most major banks, mortgage companies, and lenders dealing with foreclosures and refinance situations. Texas Ally offers BPO consulting services.