If you are a licensed real estate agent or broker, you can earn fees by writing broker opinion letters, also known as broker price opinions or BPOs. Mortgage lenders request a BPO to set a property's price when they want to avoid the expense or time required for a full appraisal, a situation that commonly arises out of foreclosures. The BPO Standards Board issues directions to brokers on how to write opinion letters. The two main categories of opinion letters are the drive-by BPO and the internal BPO.
The drive-by BPO gets its name because the broker can supposedly gather the information without getting out of the car, although requirements vary by lender. The broker will need to snap a few photos and submit them with the letter. Normally, the drive-by BPO requires information about the broker, the property and the neighborhood. The broker should report whether or not the property seems occupied, its estimated size and room count, parking amenities and conformity to zoning requirements. The broker should base her recommended price on at least three recently sold comparable properties and three currently listed comparables. The information about the comparable properties is included in the BPO.
An internal BPO contains more detailed information than does the drive-by variety. Instead of estimating the number and size of rooms, the broker must make individual room measurements and calculate the total square footage. The internal BPO also documents the property's age, lot size and basement area. The broker will inspect and photograph each room and document any unusual features or problems. If damage is evident, the BPO should contain an estimate for the repair work. The broker should make detailed adjustments to the value of comparables when recommending the property's sale price.
The BPO Standards Board considers the broker's comments to be a very important component of an opinion letter. The comments should be highly descriptive, using clear language and local terms. Commentary should address the local real estate trends, non-conforming features, deferred maintenance, renovations and obsolete facilities. The broker should mention if the neighborhood is a high-crime area but not use pejorative terms like crack house or gang activity. An internal BPO should include photos of and comments about necessary repairs. Brokers should round the final recommended price to the nearest $1,000.
The format of a BPO depends on the lender's particular requirements and business practices. The BPO might be a written document or an electronic one. Normally, a drive-by BPO is a shorter version of the internal BPO form. Brokers file or upload photographs with the BPO and the photos should meet the requirements set by the BPO Standards Board. The photographs should not include pictures of people or animals and should not suggest anything about religion, race, creed or national origin. Brokers should maintain a copy of each BPO for the state-mandated amount of time, but always for at least one year.