It is similar to doing a CMA (Comparative Market Analysis) but most times the real estate professional gets paid to do a BPO.
When doing a BPO, the real estate professional researches the subject property, takes pictures of it, investigates the neighborhood, as well as retrieves six comparable properties (three Active Comps and three Sold Comps) in their MLS (Multiple Listing Service).
The final BPO is used to support their professional opinion that will help determine the potential selling price[1] or estimated value[2] of a property.
A BPO may be occasionally requested without a fee in hopes that the financial institution, bank, or lender will receive a sales listing for the property.
[3] In drive-by BPOs, the professionals do not have access to the interior of the property;[5] they rely on exterior appearance, neighborhood information, comparables, and other documentation.
[10] The interior BPO is more in-depth; it requires the agent to make contact with the borrower or point of contact (POC) to schedule an inspection, and when arriving the agent looks the property over and notes all repairs needed to bring the property to average condition fair market value (updates and upgrades are not allowed, unless the agent can show that the local market calls for updates or upgrades i.e. granite countertops stainless appliances and hardwood floors).
An AVM is a basic evaluation – "just to make sure that the property value is in the right ball park" – and may be replaced by a full real estate appraisal.