A BPO is a “Broker Price Opinion” and was most likely completed by a realty agent who may or may not have ever taken an appraisal course. The lenders use them instead of appraisals because they’re inexpensive and they aren’t very detailed. The broker who did your’s may have only been paid $35 for it, and they may or may not have stepped foot in that house when they did it.
I think it’s unlikely that most of the agents doing these BPOs have any relevant experience with unpermitted improvements, how it relates to the valuation or how to put a reasonable “as is” value on a property that has those types of problems. For that matter, there are some appraisers who shy away from such assignments, too. It does require some familiarity with the trades and with repair/rehab costs.
The general rule of thumb that most of the banks use is that the impact on value will usually be about double the retail cost of completing those repairs – and that includes getting the permits.
In answer to your question, even if the agent did see the unfinished condition of the interior then whatever their initial reaction to it was is probably about all you’re going to get out of them. The people who do these often run through them as quickly as they can. Detail isn’t their thing. I’ve heard that some agents to 8 or 10 of these a day.
