Broker Price Opinions (BPOs) give real estate professionals another way to use their knowledge of property values and local housing markets. If you have been working with buyers or sellers, you probably already spend time researching comparable properties, reviewing market activity, and discussing what a home might sell for.
A BPO uses many of those same skills, but the work is usually completed for a specific client or organization that needs an estimate of a property’s probable selling price.
For REALTORS® interested in expanding their services, learning how BPOs work can open the door to additional business opportunities.
What Is a Broker Price Opinion?
A Broker Price Opinion, commonly called a BPO, is an estimate of a property’s probable selling price prepared by a real estate professional.
The estimate is based on information about the property and the surrounding market.
For example, someone preparing a BPO may review recent sales of similar homes, current listings, the property’s condition, its location, and other characteristics that could affect its selling price.
The purpose is to provide an informed opinion of what the property could reasonably sell for under current market conditions.
A BPO is different from a formal real estate appraisal. It does not replace an appraisal when one is legally required, and it must be prepared within the limits of applicable real estate laws.
Why Do Companies Request BPOs?
Not every organization needs a formal appraisal for every property-related decision.
Sometimes a company wants a current estimate of a property’s potential selling price to help with its internal review or business planning.
For example, a mortgage servicing company may want updated information about a property. An asset management company may need to evaluate real estate it manages. Other organizations may request a BPO for purposes permitted under applicable law.
BPOs can also be used in certain situations involving distressed properties, foreclosure-related matters, or real estate portfolios.
The exact purpose depends on who is requesting the report.
For the professional preparing it, the assignment is generally about gathering reliable information and providing a supported opinion of the property’s probable selling price.
What Does a BPO Professional Actually Do?
Let’s say a company requests a BPO for a single-family home in Orlando.
The person preparing the report will usually start by reviewing the property information.
They may look at the home’s size, age, number of bedrooms and bathrooms, lot size, location, and available information about its condition.
Next comes the market research.
The professional looks for comparable properties that have recently sold or are currently listed. They review the differences between those properties and the subject home.
For example, a nearby home may have sold for $425,000, but it has a newer roof, updated kitchen, and larger living area.
Those differences matter when evaluating the subject property.
Depending on the assignment, the professional may also need to inspect the property’s exterior or interior, take photographs, and document visible conditions.
Once the research is complete, the information is entered into a report that explains or supports the estimated selling price.
The assignment requirements can vary considerably from one company to another.
What Is the Difference Between an Exterior and Interior BPO?
There are two common types of BPO assignments.
Exterior BPO
An exterior BPO, sometimes called a drive-by BPO, generally involves reviewing the property from the outside and researching available market information.
The professional may photograph the exterior, observe visible conditions, and compare the property with similar homes.
Because the interior is not inspected, there may be limitations on what can be determined about the property’s condition.
For example, a home may look well-maintained from the street while having significant problems inside.
Those limitations need to be considered when preparing the opinion.
Interior BPO
An interior BPO involves access to the inside of the property when authorized and available.
The professional can observe the interior condition, note visible improvements or damage, and gather more detailed information.
They may document flooring, kitchens, bathrooms, walls, fixtures, and other features that could affect the property’s probable selling price.
An interior BPO may provide more property-specific information, but it can also require additional coordination and time.
Neither type should be confused with a licensed appraisal or a comprehensive home inspection.
How Do Certified Valuation Experts Work With BPOs?
A real estate professional who completes Certified Valuation Expert (CVE) training develops additional knowledge related to property valuation.
That training can be useful when preparing BPOs because the work requires more than simply choosing a number based on nearby sales.
A person preparing a BPO needs to understand how to select comparable properties, recognize differences between homes, review market conditions, and support the final opinion with relevant information.
Consider a home that has been listed for several months without selling.
Someone preparing a BPO may need to examine the asking price, recent comparable sales, competing listings, and the property’s condition to determine a reasonable estimate of its probable selling price.
CVE training can help real estate professionals become more comfortable with that process.
However, certification alone does not authorize someone to perform services outside the scope of their real estate license or guarantee eligibility for BPO assignments.
In Florida, BPO services must follow applicable real estate laws and brokerage requirements.
Can REALTORS® Make Money Preparing BPOs?
BPO assignments may provide an additional source of income for qualified real estate professionals.
Some valuation companies, mortgage servicing organizations, and asset management companies work with real estate professionals who prepare these reports.
Compensation varies depending on the assignment, company, property, and work involved.
An exterior BPO may require less time than an interior assignment, while a more complicated property may require additional research.
Before accepting assignments, consider the time involved, reporting requirements, travel, and compensation.
You should also speak with your broker about whether BPO services are permitted within your brokerage and how the work and compensation will be handled.
Building this part of your business may take time, especially if you are new to valuation assignments.
How Can BPO Experience Help Your Regular Real Estate Business?
Even if you primarily work with buyers and sellers, learning how to prepare BPOs can be useful.
Think about the conversations you have during a listing appointment.
A seller may believe their home is worth more because of improvements they made several years ago. Another may be comparing their property with a nearby home that has a different floor plan or condition.
Understanding valuation gives you a better way to review those differences.
You can also apply those skills when helping buyers compare properties.
If two homes are listed at similar prices, you may be better prepared to explain how condition, location, and recent sales affect their market position.
Working on valuation assignments can also encourage you to pay closer attention to local market activity.
Over time, that research may help you become more familiar with property values across different Orlando neighborhoods and surrounding Central Florida communities.
Is a BPO the Same as a Real Estate Appraisal?
No. Although both involve evaluating property value, they are different services.
A real estate appraisal is performed by a properly credentialed appraiser when required by law or the circumstances of the assignment.
A BPO is an opinion of probable selling price prepared by a real estate licensee within the scope permitted by law.
In Florida, real estate licensees may prepare BPOs and Comparative Market Analyses under applicable requirements, but they must not represent those reports as appraisals.
BPO work must also be handled under the direction and control of the broker, with compensation paid through the broker.
For more information, review the Florida Realtors guidance on appraisals and BPOs and the Florida real estate licensing law, Chapter 475.
Knowing the difference helps you understand which services you can provide and when a licensed appraiser is needed.
Learn How to Prepare BPOs With LEAP
If you want to learn more about property valuation and pursue BPO-related opportunities, LEAP Real Estate Academy in Orlando offers Certified Valuation Expert training.
The course is designed to help real estate professionals strengthen their valuation knowledge, understand how property values are determined, and develop skills that can be applied to Broker Price Opinions and other valuation-related services.
Whether you are interested in additional income opportunities or simply want to become more comfortable analyzing property values, specialized training can help you build on the experience you already have.
BPOs may also introduce you to another side of the real estate business, including working with companies and organizations that need property valuation services.
The more comfortable you become with market research, comparable sales, and property analysis, the more useful those skills can be in your everyday work.
Take the Certified Valuation Expert course at LEAP Real Estate Academy in Orlando and learn how to put your property valuation knowledge to work.
