An appraiser receives a broker price opinion as one possible information source. What is the appropriate treatment?
Correct Answer
A) Assess its data and reasoning, then develop the appraiser’s own conclusion.
A broker’s opinion may provide information to investigate, but it is not automatically a verified transaction or the appraiser’s own conclusion. Assess its purpose, data, reasoning, date and applicability. The appraiser must develop and report the commissioned service under applicable requirements; a document label does not create an automatic exemption.
Why This Is the Correct Answer
Option A is correct because a BPO may provide information to investigate, so the appraiser should assess its data and reasoning for relevance and then develop the appraiser's own supported conclusion. Its purpose, data, date and applicability all matter. The appraiser must collect, verify and analyze all information necessary for credible assignment results.
Why the Other Options Are Wrong
Option B: Treat the broker’s estimate as a verified comparable sale without further inquiry.
Option B is wrong because a broker's estimate is an opinion of price, not a verified comparable sale. Treating it as a sale without further inquiry confuses an opinion with a transaction.
Option C: Adopt the broker’s estimate as the value because a licensed broker provided it.
Option C is wrong because a licensed broker providing an estimate does not make it the value. The appraiser must form an independent, supported opinion rather than adopting another party's estimate.
Option D: Call the assignment a BPO to avoid otherwise applicable USPAP requirements.
Option D is wrong because calling the assignment a BPO does not avoid otherwise applicable USPAP requirements. A document label does not create an automatic exemption for an appraiser performing an appraisal.
Opinion in, analysis out
A BPO is someone else's opinion to examine, not a sale and not your conclusion.
How to use: Use this when a question asks how an appraiser should treat a broker price opinion.
Exam Tip
Choose the answer where the appraiser assesses the BPO and develops an independent conclusion. Answers that adopt it, treat it as a sale or use labels to dodge USPAP are wrong.
Common Mistakes to Avoid
- -Using a BPO figure as a comparable sale
- -Adopting a broker's estimate because of the broker's license
- -Believing a product label can avoid USPAP requirements
Concept Deep Dive
Analysis
This question tests how to treat a broker price opinion received as information. A BPO may contain useful data and reasoning, but it is not a verified sale or the appraiser's conclusion. The appraiser must assess it and develop an independent, supported opinion under applicable requirements.
Background Knowledge
Broker price opinions are prepared by real estate agents or brokers, often for listing or portfolio purposes, and may use different methods and standards than appraisals. An appraiser may consider the information in a BPO but must verify and analyze it independently.
Real-World Application
An asset manager gives an appraiser a BPO on a foreclosed home. The appraiser reviews the broker's comparables, finds two were not arm's-length sales, and develops a value from verified sales instead.
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