A Broker Price Opinion (BPO) is a useful tool that lenders & banks use to value a property in the current market.  A BPO is done by a neutral party, usually a real estate agent, broker or even an appraiser. Are you doing BPO's for your local housing area?

The reasons lenders might use a BPO over a full appraisal might include:

• REO property (Real Estate Owned property)
• Delinquent Payments and Foreclosures
• Short sale
• An addition or a cross check to an appraisal
• When the cost of an appraisal is prohibitive
• Refinancing
• Home Equity Loans and Home equity lines of credit
• Appeals to get rid of PMI (Private Mortgage Insurance)
• Diligence for Financial Institutions
• A selling/purchase price for a portfolio of home loans (usually for thousands of loans)

Banks are also using BPO's when trying to work with a borrower who might be facing foreclosure.  "This allows them to get a reliable estimate of the current value of the property, compare it to the mortgage balance, and recommend solutions." writes James Kimmons on About.com.  Timeliness is another factor involved, a BPO should take less time than a full appraisal when shorter deadlines need to be met.

Banks are using BPO's more and more in today's market with the oversupply of foreclosures across the nation.  "Now more than ever banks are in desperate need of real estate agents and real estate appraisers to help complete broker price opinion jobs!" writes Broker Price Opinion, an online site for BPO's.

"Some of the factors that a broker will consider when pricing a property include: the value of similar surrounding properties, sales trends in the neighborhood, an estimate of any of the costs associated with getting the property ready for sale and/or the cost of any needed repairs. It is important to note that a BPO is not the same as an appraisal." states an article on Investopedia.com.  

A BPO can be exterior only or might include an interior BPO, depending on what the bank or lender needs. "Most BPOs are actually exterior, or drive-by reports." writes Kevin Lisota on Findwell.com. "Brokers need to visit the property in person and take photos of the home and neighborhood, paying special attention to any obvious defects on the outside. It is a little challenging to determine an exact value without seeing the interior, but you have to estimate what it might be like based on the exterior appearance and any historical data and photos that can be found."

BPOs can be a great side income for Real Estate Agents because they can perfect their knowledge of market evaluation, and pricing skills. "There is a variety of Automated Valuation Models (AVM) that banks can use for a rough estimate of property values, but real estate is highly localized, and there is no substitute for an in-person, local analysis of a property and its neighborhood." writes Lisota.  "A BPO, combined with AVM data, can provide banks with a reasonable estimate of what a piece of real estate is worth."  This is a great way to build a relationship and rapport with local financial institutions.

Posted in National News

Comment from: John [Visitor]

this is a good write up on Bpos. I do them full time and it is challenging and can be very stressful but
it does allow you the freedom of working for yourself. If you stay at it you can build a nice business.
Don't get into it if you don't want to work

Thanks

John
http://www.kingofbpos.com

Permalink May 25, 2012 16:09:44

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