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A Broker Price Opinion is a real estate agent's valuation of a property. The agents don't work for the lender and don't receive a salary from the lender. Most real estate agents work as independent contractors, and earnings are typically based on commissioned sales or leasing agreements completed. Lenders, however, pay a flat fee for each BPO, which the agent might have to split with the broker.
Broker Price Opinion
Lenders order BPOs when a homeowner requests a short sale or when a property goes into foreclosure. A BPO will cost less than an appraisal, so a lender can request a BPO from multiple agents for the same property. Since the determination of value is more of an art than a science, multiple reports allow the lender to better price the property based on a consensus of opinions.
Lenders typically have a loss mitigation department or will hire a separate asset management company to order and analyze the BPOs. The forms differ among lenders, but basically, the majority want the data from three recently closed sales and three active listings that are comparable to the property being valued. Photos of the subject property are almost always requested and, for an interior BPO, the lender will require a photo of every room, as well as of any major damage existent.
The real estate agents who are submitting the BPOs aren't employees of the lender and aren't paid a salary. In fact, many states require that the money for the report is paid to the agent's firm, which may or may not keep a percentage before paying the agent. Unless state law dictates otherwise, real estate agents are usually independent contractors -- not employees of a real estate brokerage firm -- and the majority of earnings comes from sales or leasing commissions. BPOs, however, are paid on a flat rate.
A drive-by BPO requires the agent to take photos of the property, but not to get out of the car. An interior BPO requires the agent to gain access to the inside of the property and make notes on the condition of the property. Residential drive-bys typically pay anywhere from $35 to $75, and interior BPOs pay $45 to $100. Prices may vary by region and urgency; if the lender needs the report within 24 hours, the pay is higher. Commercial BPOs are approximately $20 higher in each category.
Pat O'Connor is the broker/owner of The Veritas Real Estate Group in Coral Springs, Fla. She holds a M.A. in psychology from the University of South Carolina. O'Connor has been writing real estate and loan origination textbooks, as well as developing online courses, since 2005. Her latest publication is the kindle ebook, "The SAFE Mortgage Loan Originator National Exam Study Guide."