Q: What is a Broker Price Opinion (“BPO”)?
A: A Broker Price Opinion, also known as a “BPO,” is prepared by a real estate broker to provide an estimated value of the probable selling price of a subject property where the requesting party does not want to incur the expense of an appraisal of the subject property. The real estate broker determines the probable selling price of the property by analyzing various factors including, but not limited to, comparable properties in the area. Broker Price Opinions are generally prepared for a fee. The Department of State has clarified that only a real estate broker can collect a fee for preparing a BPO. Accordingly, real estate salespersons and associate real estate brokers cannot receive compensation directly for preparing a BPO. The fee for preparing the BPO would be paid to the real estate broker and the real estate broker, could, in turn, compensate its real estate salesperson or associate real estate broker.
Important Tip: The preparation of a BPO generally requires a certain level of experience and knowledge. A real estate salesperson or associate real estate broker should not undertake the preparation of a BPO without the permission of the real estate broker they are associated with.
The Legal Line Question by:
Neil B. Garfinkel
REBNY Broker Counsel
Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP