Amy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers.
Amy Fontinelle Personal Finance ExpertAmy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers.
Written By Amy Fontinelle Personal Finance ExpertAmy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers.
Amy Fontinelle Personal Finance ExpertAmy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers.
Personal Finance Expert Chris Jennings Loans & Mortgages EditorChris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.
Chris Jennings Loans & Mortgages EditorChris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.
Chris Jennings Loans & Mortgages EditorChris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.
Chris Jennings Loans & Mortgages EditorChris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.
| Loans & Mortgages Editor
Updated: Feb 27, 2024, 5:00am
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When you’re looking at the price on a home listing and thinking, “Wow, that’s ambitious,” or “What a steal!” a broker price opinion, or BPO, likely helped inform that number. Similarly, when a homeowner falls on hard times and can’t pay their mortgage, their servicer might turn to a BPO to get a sense of the property’s current value. But what goes into this number, and who comes up with it?
BPO stands for broker price opinion, which is a real estate agent or broker’s professional opinion of how much a property could sell for under current market conditions. A BPO is based on the prices of active listings and recent comparable sales along with a property inspection.
Brokers conduct a BPO in one of two ways:
Both types will incorporate public records data, and the onsite visit can confirm or refute that data. For example, public records might show a home as having three bedrooms and two bathrooms, but an internal BPO may reveal an unpermitted fourth bedroom.
Anyone can order a BPO. If you want to sell your home, the real estate agent or broker you’re considering may perform one for free. If you’re buying a home, your agent may perform one to help you decide how much to offer.
If you work for a mortgage servicer or investor, you’ll typically order BPOs through a third-party company.
You may find yourself requesting a BPO if you:
Mortgage servicers will also often request BPOs to obtain an estimate of a home’s value as part of the refinancing or foreclosure process.
BPOs even help mortgage investors such as Fannie Mae and Freddie Mac with their quality control processes, making sure the mortgages they’re purchasing or securitizing meet their underwriting standards.
There are several other methods for determining how much your house is worth. Each requires a different level of time and expertise.
A comparative market analysis (CMA) examines what similar properties in the area have sold for recently. Depending on who you ask, a CMA is either less detailed than a BPO or the same as a BPO.
For a home purchase, mortgage lenders typically require a home appraisal. It’s the gold standard for assessing a home’s value. You’ll pay for one as part of your mortgage closing costs. They’re more complex and expensive than BPOs, but they also provide a more detailed assessment of the property.
Appraisers often follow a standardized format—Fannie Mae’s Uniform Residential Appraisal Report—to provide their impartial opinion using information from third-party records and sometimes, an in-person visit. An appraisal can tell lenders everything from what type of windows the home has to whether it complies with zoning laws.
An automated valuation model, or AVM, uses software to estimate a home’s value based on third-party data such as public records. It’s fast and cheap—in fact, you can get one yourself from any major real estate listing site.
Lenders sometimes use AVMs in lieu of appraisals on lower-risk transactions. For example, a lender might use this method for a rate-and-term refinance if the borrower has excellent credit and plenty of equity. Or they might use an AVM when they’re confident in the quality and quantity of data they have.
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The widespread use of BPOs by the mortgage servicing and default industry is a testament to their accuracy and reliability, according to the National Association of Broker Price Opinion Professionals. Of course, the accuracy of any home valuation will depend on the information used and the preparer’s skill.
It may be possible to dispute a BPO by asking for a reconsideration of value and providing evidence to support your argument. Another way to dispute a BPO is to get an appraisal.
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Personal Finance ExpertAmy Fontinelle is a freelance writer, researcher and editor who brings a journalistic approach to personal finance content. Since 2004, she has worked with lenders, real estate agents, consultants, financial advisors, family offices, wealth managers, insurance companies, payment companies and leading personal finance websites. Amy also has extensive experience editing academic papers and articles by professional economists, including eight years as the production manager of an economics journal.
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