What is a 'broker price opinion' (BPO) and when is it appropriate?

A Broker Price Opinion (BPO) is a written estimate of probable selling price prepared by a real estate licensee. Common uses: lenders evaluating loan modifications, short sales, foreclosures (REO properties); asset managers tracking portfolios; investors evaluating opportunities; sellers seeking informal valuation before listing. Distinction from appraisal: (1) Appraisals are prepared by licensed/certified appraisers under USPAP (Uniform Standards of Professional Appraisal Practice); (2) BPOs are less formal, less detailed, and typically less expensive; (3) Appraisals are required for most mortgage transactions; BPOs are not acceptable for mortgage financing in most situations under federal law (FIRREA, Dodd-Frank). State laws govern when BPOs can be used: (1) Some states allow BPOs for any purpose except mortgage financing; (2) Some states restrict BPOs to specific uses; (3) Some require specific disclosures on BPOs distinguishing them from appraisals. CMAs (Comparative Market Analyses) prepared for prospective sellers are typically not considered BPOs because they are not for compensation and not used by third parties. Licensees performing BPOs should know state-specific rules and use proper disclosure language.