What is the primary difference between a formal appraisal and a Broker Price Opinion (BPO)?

The primary difference between a formal appraisal and a Broker Price Opinion (BPO) lies in who conducts the evaluation and the level of detail and adherence to professional standards involved in the process. A formal appraisal must be performed by a licensed appraiser who is trained and qualified to assess property value through methodologies that comply with standardized guidelines, such as the Uniform Standards of Professional Appraisal Practice (USPAP). This ensures a high level of objectivity and credibility, as licensed appraisers have undergone extensive education, training, and testing in valuation principles.

In contrast, a BPO is typically performed by real estate brokers or agents who provide their opinion on a property's value based on their market experience and knowledge, but without the same level of regulatory oversight as an appraisal. While BPOs can provide quick insights into property valuation and are often used in real estate transactions or by banks for pricing estimates, they lack the formalized approach and detailed analysis that a licensed appraisal entails.

Understanding this distinction helps clarify how appraisals serve as authoritative evaluations for financing and legal purposes, while BPOs cater more to market trends and quick assessments.