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..
Comments