BPO vs AVM: A Side-by-Side Comparison

Broker’s price opinion (BPO) and automated valuation models (AVMs) are two popular methods used in the real estate industry to determine the value of a property.

Both have their own unique advantages and disadvantages, and choosing the right method depends on the specific needs of the situation. In this article, we will take a detailed look at BPOs and AVMs and compare them side-by-side to help you make an informed decision.

What is a BPO?

A BPO, or broker price opinion, is a report created by a licensed real estate broker or agent that estimates the value of a property. The report is based on a visual inspection of the property, an analysis of comparable sales in the area, and the broker’s or agent’s expertise and knowledge of the local market.

BPOs are commonly used by banks, mortgage companies, and other financial institutions to determine the value of a property for loan origination, underwriting, and servicing purposes.

An example of when a BPO would be useful is when a bank is considering a loan application for a property in an area where recent comparable sales data is limited or unreliable. In this case, a BPO from a local broker or agent with knowledge of the area would provide a more accurate estimate of the property’s value.

What is an AVM?

An AVM, or automated valuation model, is a computer-generated report that estimates the value of a property based on data from public records and real estate databases. AVMs use algorithms and statistical models to analyze data on the property, such as its size, location, and comparable sales in the area, to determine its value.

AVMs are commonly used by real estate professionals, investors, and lenders to quickly and efficiently determine the value of a property.

An example of when an AVM would be useful is when an investor is considering purchasing a large portfolio of properties in multiple states.

In this case, an AVM would allow the investor to quickly and efficiently determine the value of each property in the portfolio, without the need for individual BPOs for each property.

Advantages of BPOs

Accuracy: BPOs are based on a visual inspection of the property, which allows the broker or agent to take into account factors that may not be reflected in public records or real estate databases, such as the condition of the property or the quality of the neighborhood. This can result in a more accurate estimate of the property’s value.

Human Touch: BPOs are performed by a human, which means that the broker or agent can take into account subjective factors such as the overall feel of the property or potential future developments in the area that may not be captured by an AVM.

Flexibility: BPOs can be customized to meet the specific needs of the situation. For example, a BPO for a bank may focus on the property’s value for loan origination, while a BPO for an investor may focus on the property’s potential rental income.

Advantages of AVMs

Speed and Efficiency: AVMs can be generated quickly and easily, often in a matter of minutes. This makes them a popular choice for those who need to make fast decisions or need to value a large number of properties in a short amount of time.

Cost-Effectiveness: AVMs are typically less expensive than BPOs, which makes them a more cost-effective option for those on a budget.

Scalability: AVMs can be used to value a large number of properties at once, which makes them a good option for those who need to value a large portfolio of properties.When searching for the right company for AVMs or BPOs, it is important to consider the company’s reputation and experience in the industry.

One company that stands out in this regard is Marketwise Valuation. Marketwise Valuation is a leading provider of AVMs and BPOs, with a team of experienced professionals and a reputation for providing accurate and reliable valuations.

BPOs Vs AVMs

In conclusion, both BPOs and AVMs have their own unique advantages and disadvantages. BPOs offer a more accurate estimate of a property’s value, a human touch and the expertise of local market knowledge, while AVMs offer speed, efficiency, and cost-effectiveness. Choosing the right method depends on the specific needs of the situation.

If accuracy, a human touch and local market expertise are important, a BPO may be the better option. However, if speed and efficiency are the primary concerns, an AVM may be the better choice.

When searching for a company to provide AVMs or BPOs, it is important to consider the company’s reputation and experience in the industry, such as Marketwise Valuation. With their team of experienced professionals and reputation for providing accurate and reliable valuations, Marketwise Valuation is a top choice for AVMs and BPOs. Contact our team today!