Property ValuationIntermediateCalifornia Exam

What is a Broker Price Opinion (BPO) and how does it differ from an appraisal?

AThey are identical; BPO is just the informal name for an appraisal, as typically applied in a comparative market analysis, under standard appraisal methodology, consistent with USPAP appraisal standards

BA BPO is an estimate of value performed by a real estate broker, not a licensed appraiser; it is used for certain lender decisions but may not be used for federally-regulated loan originationCorrect

CA BPO is always more accurate than an appraisal, consistent with USPAP appraisal standards, under standard appraisal methodology

DA BPO is performed by the DRE for enforcement purposes, per standard California valuation practice, under standard appraisal methodology, consistent with USPAP appraisal standards

Why A BPO is an estimate of value performed by a real estate broker, not a licensed appraiser; it is used for certain lender decisions but may not be used for federally-regulated loan origination Is Correct

Answer B: A BPO is an estimate of value performed by a real estate broker, not a licensed appraiser; it is used for certain lender decisions but may not be used for federally-regulated loan origination

A BPO is a value estimate performed by a real estate broker or agent (not a licensed appraiser). It may be used by lenders for servicing decisions (short sales, loan modifications) but cannot be used as a substitute for a full appraisal in federally regulated mortgage transactions.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.

Key Property Valuation Terms in This Question

Short Sale

A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

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Key Terms to Know

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Short Sale

A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.

Comparable Sales (Comps)

Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.

Loan-to-Value Ratio (LTV)

The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.

State-Specific Concepts

DRE Regulation

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