In this corner it’s the linchpin of the mortgage transaction, relied on for the most accurate valuation of residential real estate – the appraisal. In the opposite corner is the challenger, known for accurate market values and generally more bottom-line friendly than the appraisal – the broker price opinion.
It’s no Thrilla in Manilla – it’s not even Rocky Balboa v. Apollo Creed but it is worth talking about. There is no clear answer as to which provides the better service to a client. The plain truth might just be that both have a role to play in the real estate industry. Appraisers generally feel like BPOs take money out of their pockets and it doesn’t help that the FDIC now allows them for loan modifications. Brokers will, on the other hand, tell you that BPOs are a necessary part of the real estate industry.
Chances are that while each finds value differently they generally use the same data. This article suggests that it’s in the best interest of consumers that we all just get along.
The broker has an eye more toward future prices (what they can sell the home for, within a few weeks). The appraiser bases most of their analysis on closed sales. Which means in a very volatile market, values could be changing so rapidly that between the opening and closing of escrow (21-45 days) the values have changes 1 to 5%. Therefore, once the sale closes it may already be considered old.
At the end of the day the most accurate value is going to come from utilizing a combination of both appraisal reports and BPOs. Maybe it’s true and maybe not but it supports the idea that there is a role for both in the industry.