Q: What is the difference between a Broker’s Price Opinion (
) and an appraisal?
A: The main differences between a BPO and an appraisal are in who completes it and in the standards followed. A licensed real estate agent, generally the listing agent for the property in question, completes the BPO. It is an estimation of the property’s value based on the broker’s opinion. That opinion is formed after a review of the current listed properties, market trends and forecasts, and recently sold properties.
An appraisal, however, is completed by a licensed appraiser, who has been trained to look at the property in more detail. Appraisers are required to follow the USPAP requirements. They report in more detail any damages or inconsistencies with the property, they look at the neighborhood, trends in pricing, and so on.
BPOs are generally used for updating files or for evaluating a portfolio of loans for purchase or sale. Appraisals are most often used for the loan origination.
Q: What is an FHA appraisal?
A: The appraisal and property condition assessment is used to determine the market value and acceptability of the property for FHA mortgage insurance purposes. The value serves as a basis for determining the maximum FHA insurable mortgage loan. The appraisal is performed for the use and benefit of HUD, and the lender involved in an FHA transaction. In addition to providing an estimate of value, the appraisal provides an examination of the property for any visible, obvious and/or apparent deficiencies that may affect the livability of that property in terms of basic needs, health and safety of the property's occupants.
Q: What is the HVCC?
A: The Home Valuation Code of Conduct (HVCC) establishes standards for solicitation, selection, compensation, conflicts of interest and appraiser independence.