If you’re thinking about selling or refinancing your property, the first step is to figure out how much it’s worth
Broker Price Opinions (BPO) and Appraisals are two common methods of going about this. Of course, which one makes the most sense depends on your situation. Let’s take a look at the options.
What is a Broker Price Opinion?
A Broker Price Opinion (BPO) is an estimate of a property’s value, completed by a real estate broker. It’s important to note that a BPO is not necessarily the same as the market value of a property. It can, however, provide a close approximation of that value relatively quickly.
When completing a BPO, brokers will consider factors such as the value of similar properties in the area, the neighborhood’s characteristics, and the location of the property in light of those factors. They will also take into account any costs that would be necessary to get the property ready for sale. In many cases, brokers will be able to assess the property just by driving by, but sometimes they’ll go check out the interior as well for a more detailed look.
BPO’s can be a very useful way to get a bird’s eye view of the value of your property. They’re often cheaper and are much quicker than an appraisal of the property. Additionally, brokers may include a marketing plan as part of a BPO, giving you a look at what the next steps are. Overall, a BPO is a great place to start if you’re thinking about selling or refinancing.
What is an Appraisal?
An appraisal is a more official and comprehensive look at a property. In many cases, mortgage lenders will require an appraisal before making a loan. Appraisals are completed by certified appraisers who have to follow the Uniform Standards of Professional Appraisal Practice (USPAP). It’s important to note that appraisers are required by law to be unbiased with no interest in the property, and they must keep a detailed log of their work.
When appraising a property, appraisers will inspect the interior and exterior of the property and prepare a detailed report. They will look at many of the same factors as a BPO, including the location of the property and nearby/comparable properties, in making their assessment. However, they’ll also look at public records, legal proceedings, current and planned developments, and many other factors.
As you can probably tell, appraisal reports are often very detailed and authoritative. Of course, that comes at a higher cost in both time and money than a more informal look at the property.
Which One Should I Use?
As always, it depends on your situation and what your goals are. If you’re looking to sell or refinance your property, a BPO is a great place to start. If you’re putting your property on the market, you want someone to give you an idea of how quickly it can sell. A BPO can accomplish all of this faster and more cheaply than a full appraisal.
However, if you’re already in the process of taking out a loan, the lender will likely require an appraisal before moving forward. If you need a more thorough analysis and don’t mind the extra cost, an appraisal might be a good call.
Of course, a real estate agent or broker is a great resource when making a decision. They can look at your situation and help you determine which option is best for you.
Written by Jon Becker
