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What is a broker Price Opinion?
Before properties go on the market, their values must be estimated. One of the many methods sellers use is the broker price opinion or BPO for short. The PBO is an estimation of a property’s value which is compiled by a real estate broker, according to Investopedia.
Some states prohibit brokers from providing PBO services or charging for these services where they do all it. However, BPO tends to cost much lower than what appraisal would cost. Brokers must go through training before they can provide real estate opinions to clients.
How do brokers determine the value of the house?
Brokers use a lot of techniques when estimating the true value of a property. The following are some of the techniques brokers use when providing the broker price opinion.
- Sales trend in the area: Every time properties are bought and sold, their prices are used to compile the sales trend in the area. In order words, properties sold in the past can be used to estimate if sales are increasing or decreasing.
- Location of the house: When determining the price of houses, the location plays an important role. For example, properties located in Location A and B cost more than other location classes.
- Similar properties sold in the area: Your house will most likely cost the same as similar properties sold in the same location. This is why brokers estimate the value of a house based on similar properties sold in a given location.
