Broker Price Opinion or BPO as it’s known in the industry is a condensed version of a Real Estate Appraisal that banks order from a local Realtor to determine that value of your home. However, since there are no standardized information on each BPO and every bank has their own criteria to determine Value; it’s smart to understand what is contained in this report and how it’s developed.
Brokers are required by the banks to find at least 3 matching Sold comps and 3 matching Listings that are:
Proximity: All the comps have to be within 1 mile radius of your home. If there are no comps found in this range, they are required to expand the search up to 2 miles and make necessary adjustments due to school district and other criteria that would define the new boundary.
Age: The comps have to be within 5 years of your home. If your home is built 10 years ago, the ALL of the 6 comps have to be within 5-15 years of age.
Size: The comps have to be within 300 sqft of your home’s size and adjusted accordingly. If your home is a 3,000 sqft newly built home; a comp with 2,500 sqft of living space can not be used to determine it’s value.
Lot Size: Less important that the initial 3 criteria sited; but a home on a 2 acre lot can NOT be used as a comp for a home with 8,000 sqft lot!
Floor Plan: Total number of rooms and the ratio between Bedrooms and Bathrooms have to be comparable to your home. But ironically most banks won’t allow more that $1,000 to be used in adjustment for one extra bedroom and $500 for a bathroom which is absurd; but that’ s a topic for a different blog.
Amenities: This criteria includes a wide ranges of items such a Wine Cellar, Pool, Solar Panel,….etc and varies with each bank on how much value they would allocate in the BPO report.
Get your Free Home Value Request to avoid negotiating with the banks in the dark.