Definition of ‘BPO’ : BPO is an acronym used extensively for a “Broker Price Opinion.” While we do CMA’s, or Comparative Market Analysis, for our real estate clients, BPO’s are different.
A lender, bank or loss mitigation company may have homeowners with delinquent mortgage payments. In the period before foreclosure, the lender will pay a real estate broker to complete a BPO on the property. Usually the lender has their own form and criteria for how the valuation will be verified.
Additionally, a BPO is a tool used by mortgage lenders, banks and others to value a property in the current market. The reasons and timing for using a real estate broker for a BPO might include:
- The cost of an appraisal is to be avoided
- Delinquent payments and pending foreclosure
- In a refinance situation
When refinancing for lower rates or other reasons is a booming market, lenders are doing a great many of these loans. In many cases, the home has a recent mortgage where a full appraisal was performed. To lower costs, the lender may decide to hire a real estate broker to do a BPO, or broker price opinion.
There are organizations That Real Estate Professionals can join such as The National Association of Broker Price Opinion Professionals. (NABPOP) is a non-profit trade association comprised of Broker Price Opinion (BPO) Practitioners (real estate brokers and sales agents) from across the country. NABPOP provides a robust and comprehensive BPO Education/BPO Training Course and is the BPO Certification Authority for Certified Real Estate Pricing Specialists.
Now that we more or less understand the BPO let’s talk about CMA’s
Definition of ‘Comparative Market Analysis’; An examination of the prices at which similar properties in the same area recently sold. Real estate agents perform a comparative market analysis for their clients to help them determine a price to list when selling a home or a price to offer when buying a home. Since no two properties are identical, agents make adjustments for the differences between the sold properties and the one that is about to be purchased or listed to determine a fair offer or sale price. Essentially, a comparative market analysis is a less-sophisticated version of a formal, professional appraisal.
Definition of ‘Appraisal’ : A professional opinion, usually written, of the market value of a property, such as a home, business, or other asset whose market price is not easily determined. Usually required when a property is sold, taxed, insured, or financed.