The short answer
What is a BPO? A BPO, or broker price opinion, is a licensed agent's written estimate of what a home would most likely sell for. Banks, loan servicers, asset managers and investors order them to make decisions about a loan or a property they own. Federal law says a BPO can't be the primary basis of value for a mortgage on a buyer's main home.
Below: who orders BPOs, the two main types, what they're for and not for, and why they matter to your business.
Step by step: what is a BPO and how it works
Here's how a BPO moves from order to answer, the way I see it every week.
- Someone needs a number fast. A servicer, asset manager or investor wants a market value without paying for a full appraisal. They send an order through a valuation panel or their own portal.
- An agent near the home accepts it. Orders go to agents who are signed up as vendors and cover that ZIP code. Speed counts. Many orders go to whoever accepts first.
- The agent reads the instructions. Each client has its own form and rules. Exterior or interior, photo count, comp rules, due date.
- The agent visits the home. A drive-by for an exterior BPO. A walk-through for an interior BPO, usually with a lockbox code or an appointment.
- The agent pulls comps. Most forms want at least three closed sales and three active or pending listings, with adjustments.
- The agent writes the opinion. As-is value, often a repaired value, often a quick-sale or 90-day value, plus a repair list and comments.
- The agent uploads it. Through the client's portal, with photos, by the deadline.
- The client uses it. To price an REO listing, review a short sale offer, check collateral, or decide on a loan workout.
Who orders BPOs
| Who orders | Why they want one |
|---|---|
| Banks and loan servicers | Check the value behind a loan that is late or in loss mitigation |
| Asset managers | Price a bank-owned (REO) home before and during the listing |
| Loss mitigation teams | Review a short sale offer or a loan modification |
| HELOC and portfolio reviews | Check if a home still supports a line of credit or a loan in a pool |
| Investors and funds | Value homes before a bulk purchase or a sale |
| Mortgage insurers and GSE vendors | Second look on a file or a distressed property |
Exterior vs. interior BPO
Exterior (drive-by) BPO. You look at the home from the street only. You photograph the front, both sides if you can see them, the street and the address. You don't go on the property beyond what the order allows. Condition is judged from what you can see, and you say so in comments. Common turn time is 24 to 72 hours.
Interior BPO. You go inside. You photograph every room, the systems, damage and repairs needed. This takes longer, often two to five days, because you have to set up access.
Some clients also order a "desktop" opinion with no visit. Follow the order. If it says no visit, don't visit.
What a BPO is used for, and not used for
The federal rule is short. Under 12 U.S.C. 3355, added by Dodd-Frank, a BPO is an estimate prepared by a broker, agent or salesperson that details the probable selling price of a property. In connection with the purchase of a consumer's main home, a BPO may not be used as the primary basis to set value for a residential mortgage loan origination.
So in plain words:
- Used for: pricing REO listings, reviewing short sale offers, loss mitigation, collateral checks on existing loans, HELOC reviews, portfolio and bulk sale decisions.
- Not used for: being the main value behind a new purchase mortgage on someone's main home. That takes an appraisal.
State rules add their own layer. Some states require extra education, years of experience, or specific disclosures on a BPO. In Colorado, check the Division of Real Estate and your managing broker before you take your first order.
Why BPOs matter for agents
BPOs are paid work, but the fee is not the main reason I do them. Asset managers watch which agents turn good BPOs fast. Those are often the agents they call when a home becomes bank-owned and needs a listing agent. BPO work can lead to REO listings. It doesn't promise them.
BPOs also make you sharper at pricing. You look at a lot of homes and a lot of comps. That helps every seller you sit with.
How to explain it to your client
Here the "client" is the asset manager, or a seller in a short sale who hears the bank ordered a BPO.
"A BPO is my written opinion of what this home would most likely sell for in today's market, based on recent sales and what's listed now. It's not an appraisal. The bank uses it to decide what it will accept. I'll give them the facts, the comps and the condition so the number is fair and backed up."
Watch-outs
- Don't call it an appraisal. Use the word "opinion." Only a licensed appraiser does appraisals.
- Stay inside the order. If it's exterior only, don't walk the yard or knock on the door unless the order says to.
- No value pressure. If anyone tells you what number to hit, don't. Write what the market supports and keep your notes.
- Check your state rules. BPO rules vary. Ask your managing broker first.
- Never free. A BPO is professional work with real cost. Don't do them free to win favor.
- Protect the file. Owner names, loan numbers and photos stay private.
Sources
Further reading
Keep going
- How to do a BPO, step by step
- BPO vs. appraisal vs. CMA
- How to get BPO work as a real estate agent
- What is REO (real estate owned)?
Want the whole system? The BPO & REO Kit gives you the asset-manager outreach playbook, six email templates, the BPO checklist, photo shot list, comps worksheet, REO listing checklist and a tracking sheet.
This is training for real estate agents. It isn't legal, tax, lending or appraisal advice. Program rules change; check the official source. Check with your managing broker.
BPO & REO Kit
Go after BPO work and bank-owned listings the organized way: who to contact, what to send, when to follow up, and how to do the work.
$79 kit / $199 done-for-you setup (proposed)
See BPO & REO KitQuestions
What does BPO stand for in real estate?
Broker price opinion. It's a licensed agent's estimate of a home's probable selling price.
Who pays for a BPO?
The party that orders it, usually a bank, servicer, asset manager or investor. The agent is paid by that client or its vendor panel.
Can a BPO be used to get a mortgage?
Not as the primary basis of value for a purchase loan on a consumer's main home. Federal law (12 U.S.C. 3355) says so. That takes an appraisal.
What is the difference between an exterior and interior BPO?
An exterior BPO is done from the street. An interior BPO includes a walk-through and photos of every room, so it takes longer and usually pays more.
Do I need a special license to do BPOs?
You need an active real estate license. Some states add rules. In Colorado, check the Division of Real Estate and your managing broker.
Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.
- Agent training by Brian Lee Burke, The Kenna Group at Keller Williams DTC
- Colorado Division of Real Estate (https://dre.colorado.gov)
- Division of Real Estate
- 12 U.S.C. 3355: Broker price opinions (Cornell LII)
- REO and BPO partners, The Kenna Group
- Order a BPO in Denver County