Definition of a BPO (Broker Price Opinion)

BPO Acronym stands for Broker Price Opinion. A Broker Price Opinion can be used for a host of reasons, and is performed by a local real estate agent who is familiar with the real estate marketplace. It is not a formal appraisal. An appraisal is performed by a licensed appraiser who has done extensive training in assessing market value. A borrowers bank may pay for a Broker Price Opinion in the following situations:

a. To consider a short sale offer, or to consider short selling as a whole.

b. To consider a loan modification.

c. To consider an in-house refinance.

d. To evaluate the value of a home that is about to get foreclosed on and revert back to the bank.

e. To evaluate a value of a home that has been foreclosed on.

f. To assess value of a home before it is put on the market at an REO (Real Estate Owned) foreclosure by a local real estate broker.

Broker price opinions are just that, an “opinion” of value. It generally requires three active comparable sales, and three sold comparable sales. The Real Estate makes basic adjustments for the differences between the subject home and the comparable homes used in the report. You can find a list of BPO Outsourcers on this site, to make application to become one of their BPO vendors.

Broker price opinions are requested in four forms
A. Exterior Broker Price Opinion. Also referred to as a “drive by” BPO. This form type requires only exterior photo’s of the home. It will generally require a photo of the exterior of the home, a zoomed in photo of the address on the home (address verification photo), street photo’s in both directions from the home, a street sign photo, and a photo of each side of the home.

B. Interior Broker Price Opinion. The interior Broker Price Opinion requires all photo’s required in the Exterior BPO PLUS a photo of each room of the home, a photo of the water heater, electric panel, heating and air unit(s), and backyard photos, along with a photo of the back of the home. An interior BPO will generally require photo’s of any individual damages as well.

C. Initial BPO for REO (also called the First Opinion BPO). This BPO is completed by the Real Estate Agent who will be listing a home as a REO foreclosure on the market for a bank. This report includes all Interior BPO report requirements and details and photo’s of any damages. Because this involves the sale of a foreclosure, the REO Agent performing the BPO is smart to list all obvious repairs that may eliminate a property from being financed with an FHA loan. The Agent is also generally asked for a 30-90 day suggested sale price. There is a great deal of pressure put on the agent to be on target with their estimated value. A bank may also order a full appraisal to accompany the First Opinion BPO to serve as the primary source of value. Sometimes that agent has to dispute the appraisal value, or further substantiate their opinion of value.

D. A Second Opinion BPO. A second opinion BPO is still regarding a home that is about to be listed on the market as an REO. The agent completing this BPO is NOT the REO Agent that will be listing the foreclosure on the market. A second opinion BPO agent may be a REO listing agent for the bank that owns the property, but just isn’t listing this particular asset for the bank. A second opinion BPO is ordered to help verify the values that the 1st Opinion BPO and/or the appraisal. A bank may require a First Opinion BPO, a second opinion BPO report AND a full appraisal. Banks recognize the importance of pricing well, so they may opt to draw from a multitude of sources.

An agent may be interested in starting to complete BPO reports for banks or outsourcers. Some Agents complete BPO’s to get in to REO foreclosure listing work. Some banks may chose a valued BPO agent as a REO Agent because they have consistently provided quality and accurate BPO’s that require few quality assurance issues. If a BPO agent always provides detailed documentation reqarding any discrepencies in the report and gets the reports on time, then a bank may give them an opportunity for a REO listing.

Where to get BPO work. There are what are referred to in the biz as BPO Mills. These companies just offer BPO work for Agents, they don’t segway into REO foreclosure work. It is often misunderstood that all BPO work may offer REO foreclosure listing agent opportunities. Some BPO companies only offer Broker Price Opinion jobs to agents. It is important to find the distinction between the two. A BPO Mill will offer a fee to the agent for the complete report. The fee will vary by area and by the bank needing the work. Agents can make steady income from BPO work alone. Some agents have no interest in using BPO’s to gain visibility to banks for the purpose of aquiring REO Listings. If an agent is simply interested in fee for service type work, BPO’s can produce a healthy income.

Some companies will ask an agent to complete FREE BPO work for the chance to get a REO listings. This can be risky or rewarding for the agent. The agent is not necessarily offered the REO listing for the same property they are asked to complete the BPO for, but sometimes it is one in the same. I think an agent should always google the company to see what other agents have experienced with that particular company. I have been burned by companies that pretend to offer REO opportunities just so they can get a free bpo from me. BPO’s take time, thought and energy. Research the company before accepting the assignment.

On the flip side, I have also been rewarded with listings for providing quality FREE bpo reports. There are many companies I would continue to offer free BPO’s for.

Hedge Funds will also ask an agent to complete a FREE BPO for the listing. The Hedge Fund will often be purchasing in bulk, and will ask for the agent to provide a free BPO while they are in their due diligence period for the bulk purchase. The problem with this type of agreement (for the agent) is that the Hedge Fund is purchasing in Bulk, so the entire bulk purchase have to make sense for them to close the sale.

If you are an aspiring BPO agent and don’t really have any experience, I have a few tips. It is best to complete Exterior BPO’s during the day. First because many people work during the ay, 2nd, a camera flash will draw attention in the evening. Exterior BPO’s are often completed without the homeowners knowledge. For example, an exterior BPO may be ordered for a home that is about to be foreclosed on. The bank may want an approximate value before it goes to auction. You can understand why a homeowner may not appreciate the intrusion. A flash might catch the attention of a very angry home owner or tenant. Even further, when confronted, you do not know why the BPO has been ordered, so you can’t easily explain why you are taking photo’s of someones home.

So, the occupant or the neighbors might approach you to find out why you are taking photo’s. My go-to answer is something like “I don’t know exactly why I have been hired to offer an opinion of value for your home, it is generally confidential to the home owner. The most common reasons are that you are being considered for a loan modification, or a refinance…..interest rates sure are great right now!” I do not mention short sale or foreclosure. I then refer them to contact the lender.

For interior BPO’s, these places will often be active on the market and the MLS has showing instructions. If you are lucky, it will be vacant and you can go at your leisure without explanation. If not, I generally tell the occupant that i am previewing for a client. If an occupant will be present, you almost have to tell them you are completing a Broker Price Opinion because you have to take so many photographs and your photographs must not have any people in them. The only reason I don’t like sharing that I am the BPO agent, is that the Listing Agent might show up with their comparable homes and a laundry-list of needed repairs for consideration. As a BPO agent, you should try to avoid being influenced by the Listing Agents opinion. In a short sale, it is likely the bank already knows the Listing Agents opinion.

How do you begin to get BPO assignments? Well, BPO outsourcers will generally add you to their list of vendors if you apply. You can find lists of BPO outsourcers that hire agents on this site to start applying to. Once you are added, there will be “blast” emails that go to every BPO agent that completes work for a particular area. You must keep watch for new available assignments via email. Once you receive an email alerting you to an assignment, you must login and accept the assignment faster than anyone else. It is a race to the finish! Some companies offer auto-accept software that is suppose to help you accept assignments before others do. However, some BPO outsourcing companies frown on this type of software and ultimately remove you as a vendor. I have seen some software also that helps BPO Continue..