Refinances fueling increase in BPO volume

Refinances fueling BPO industry


Banks and lenders pay real estate Agents and Brokers to perform Broker Price Opinions (BPO) as the valuation method for refinances and Home Equity Lines of Credit (HELOC).

Low-interest rates are causing a mortgage refinance boom as homeowners are taking advantage of lower house payments via refinancing.

IncreaseThe Mortgage Bankers Association is forecasting approximately $1.23 trillion in refinances which represents a 36% increase from last year.

The refinance boom is not expected to slow down as the Federal Reserve is expected to lower interest rates in the coming months.

BPO volume increase

Real Estate IncomeThe refinance boom is also fueling a boom in Broker Price Opinions (BPO). Banks and lenders have found BPOs as a great method for their valuation requirements on refinances and HELOCs (Home Equity Line of Credit). Agents and Brokers across the country are earning extra real estate income performing BPOs for refinances and HELOCs.

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REO/Foreclosures on the rise:

ForeclosureREO/ForeclosuresAdditionally, REOs and Foreclosures are on the rise. Banks, lenders, and asset managers will order a BPO when a loan becomes delinquent and then order several BPOs throughout the REO/Foreclosure process. Asset managers use BPO performance, in part, to determine the Agent or Broker to list the property should it go to market.

Furthermore, traditional home purchasing is on a downward trend as REO/Foreclosures are rising. Performing BPOs and taking REO/Foreclosure listings will prove to be a safe haven for Agents and Brokers for some time.

Pricing skills are Apex real Estate Skills:

In addition to being paid to do valuation work for banks and lenders, Agents and Brokers also perform BPOs to gain valuable insights into their markets and to stay on top of their market.

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Who is a BPO Customer?

Who is a BPO customer?

BPO customersAnyone who would like an accurate price estimate on a house or real estate property. Anyone can order a BPO. Homeowners can request a free BPO from a C_REPS for any reason, to make financial decisions. The most common reason is to determine a selling price when listing their house for sale. C_REPS are willing to do a free BPO in order to gain clients and to obtain listings.

BPOs are just as accurate as appraisals and in certain cases even more accurate. How could a BPO possibly be more accurate than an appraisal? Agents and brokers interact with home buyers as a significant part of their daily work routine. Agents and brokers know the mindset of home buyers. Knowing what a buyer is willing to pay for anything is the most critical component of any appraisal. C_REPS are BPO certified agents and brokers who have been trained in the proper procedures to perform accurate valuations. The combination of proper valuation training as well as knowing the mindset of the buyers of real estate will produce the most accurate valuation possible.


BPO CustomerThe overwhelming majority of BPO customers are in the mortgage and lending industry: Banks, Lenders, Mortgage Servicers, Asset managers, Appraisal Management Companies AMCs, BPO Companies to name a few. Government entities such as Freddie Mac, Fannie Mae, FDIC, GSA etc. also utilize BPOs. These organizations order thousands of BPOs every day across the country. These organizations need the vital information in a BPO to make financial decisions.

    The mortgage industry can be broken into three main categories:

  • Default (REO, Foreclosures, Short Sales)Foreclosure
  • Servicing (re-finance, PMI, HELOC)
  • Originations (home purchases)

The default mortgage industry essentially invented the BPO to make financial decisions and the mortgage service industry followed. The mortgage origination industry has limited use of BPOs due to rules and regulations imposed on the lending industry.

BPOs are also finding their way into legal proceedings. Progressive judges and attorneys are starting to utilize BPOs (vs appraisals) to build cases and as evidence in court cases. C_REPS can be hired as expert witnesses as well.

What is a BPO Company?

BPO Companies can be both a BPO customer and a BPO provider. To a C_REPS the BPO company is the customer. A C_REPS is an individual BPO vendor to a BPO company. A BPO company has tens of thousands of agents and brokers as BPO vendors. A BPO company in turn is a BPO vendor to the mortgage industry (dealing in the thousands).

Who is a BPO Customer Page

Is a BPO certification required to do BPOs

NABPOP is often asked “Is a BPO certification required to do BPOs?”

NABPOP’s official response to this question is IT SHOULD BE

NABPOP strongly recommends any BPO customer should demand a BPO certification and strongly recommends agents and brokers to become BPO certified – even if you never do a single BPO, pricing and valuation skills are a good thing in real estate.

If you are asking as a customer, you can and should demand a BPO certification. Why, because it’s a smart thing to do. In any other circumstance where you have nothing else to go on (knowledge of competency, experience etc.) and you are presented with the choice of having work done by a certified person or a non-certified person, who should you pick? If you are presented with competent and experienced choices and the only difference is certified vs non-certified, who should you pick? You have no risk nor obligation whatsoever by asking for a BPO certified agent or broker. If you don’t ask for a certification, you may be getting your valuation work done by a fly by night agent or broker – keep your fingers crossed, it might work out.

If every BPO customer demanded a certification, then the answer is Yes a certification is required – and rightfully so!!!! This would make the world a better place.

If you are a broker or agent asking “Is a BPO certification required to do BPOs?” You are essentially asking “is it a requirement for me to develop myself professionally and go through a training program which teaches me how to do my job more proficiently and have a mechanism to display I have achieved the requisite knowledge to perform in a competent manner”. The answer is No, you don’t have to. It’s not a law, but it’s a very good idea and getting certified will save you a lot of time and frustration.

If you are looking for a way to make a quick buck, performing BPOs is not a good way to make a quick buck. There is a steep learning curve and the industry is relatively a zero tolerance industry. It takes a while to get into the industry and get set up. The NABPOP BPO certification was designed to speed you through the learning curve and NOT make the rookie mistakes. If you never do a single BPO, you will learn how to accurately and efficiently evaluate the market, value houses, and the relevant amenities and render a price opinion. This alone is a highly desirable skill for any real estate professional regardless of their affiliation to the BPO industry.

If you are looking to make a quick buck in the BPO industry, NABPOP invites you to not bother because there are plenty of other quick buck opportunities in real estate. Fly by night agents and brokers bring the BPO industry down. Agents and brokers who are serious enough to go through a certification process are the types of agents and brokers the BPO industry needs and is looking for.

So to answer the question “Is a BPO certification required to do BPOs?”, it SHOULD BE!


Highest and Best Use

Highest and Best use is the most profitable likely use to which a property can be utilized relative to surrounding properties, laws, and environment.  In concept, a property could have a wide variety of uses including residential such as single unit residential housing or multi-unit rentals, or commercial buildings such as a gas station or stores, or green spaces such as a park.  Urban and suburban properties tend to be put to its highest and best use as residential spaces in a competitive market over the long run.  Since the owner, user, or potential buyer of property is presumed to plan to put real estate to its highest and best use, it is a basis for valuation. 

Most residential properties are being used at their highest and best use so long as the properties are in residential areas.  A house built on a property that is zoned for single-family residential building only is the properties highest and best use.  A vacant lot in the same neighborhood is not the highest and best use.  Although a highly profitable business may seem like a higher and better use of the property, the surrounding residential properties and zoning requirements would prohibit that use.  An example of a residential property that is not the highest and best use would be a residential house that is between a gas station and grocery store on a heavily traveled street.

Determining a property’s highest and best use should be a part of every valuation. Consider the entire range of legally possible uses for the property, existing zoning as well as possible zoning changes.  A zoning change may affect the highest and best use.

Real Estate Income

Performing Broker Price Opinions BPOs is a source of income for many Real Estate Agents and Brokers across the country.  Most agents who do BPOs enjoy the steady income from being paid to perform Broker Price Opinions (BPO) which supplement their regular real estate income, especially in the slow times between deals.  For most, BPOs provide a nice supplement to their real estate income whereas there are some agents BPOs are their primary income source.  BPOs have become an integral part of many real estate agents and brokers business.

Banks, Lenders, asset managers etc. constantly require valuations for various reasons all over the country.  Click here BPO reasons.  Regardless of the direction of real estate, there will always be demand for BPOs.  BPOs have become the preferred valuation method for many organizations involved in the real estate industry.  Automated valuations aren’t necessarily accurate, and appraisals usually have more information than is needed, are significantly more expensive, and take longer to get. BPOs are a great happy medium for banks lenders asset managers etc.

Financial organizations utilize BPOs every day

A Broker Price Opinion BPO is a cross between a CMA and an appraisal.  BPOs have more details and are formal than a CMA but less detailed than a full appraisal.  BPOs are more cost effective for organizations who need real estate valuations. More info BPO

Real estate agents and brokers perform BPOs primarily for the following reasons:

  • Receive Income       
  • Opportunities for listings (REO, foreclosure, short sale)  
  • Marketing Opportunities   
  • Increased Skills as a Real Estate Professional    
  • Become a more Proficient and knowledgeable Real Estate Professional 
BPOs are the first step of Foreclosure and BPOs are utilized throughout the entire process.

Pennsylvania permits BPOs

Pennsylvania recently approved a law which removes many restrictions on performing Broker Price Opinions (BPO).   Pennsylvania’s Real Estate Licensing and Registration Act (RELRA) (formerly House Bill 863) was signed into law and is effective August 28, 2018.

“This legislation ultimately helps real estate professionals meet the changing needs of the real estate industry” said Rep. Greg Rothman, a third generation Realtor®, a broker, an appraiser and a former State Real Estate Commissioner.

“It’s taken hard work by dedicated PAR members, staff and legislators to get this bill passed,” said Pennsylvania Association of REALTORS (PAR) President Todd Umbenhauer. “These changes will provide a greater level of service and competency to our clients.”

Over the course of several years, PAR has met with representatives from the State Real Estate Commission, State Board of Certified Real Estate Appraisers, Coalition of Pennsylvania Real Estate Appraisers, Real Estate Valuation Advocacy Association and the Pennsylvania Bankers Association to negotiate specifics of the bill. The final version incorporates many of the requests from these groups.

Click here for details on House Bill 863

Supply and Demand

A core concept in determining a price is the concept of Supply vs Demand.

The principle of supply and demand states that the price of any commodity (Real Estate) varies directly with demand and inversely with supply i.e. as demand goes up, prices will go up and vice versa; and, as supply goes up, prices will go down and vice versa.  In Real Estate, Supply is the amount of a type of real estate available for sale or rent at various prices in a given market for a given period of time.  Demand is the desire and ability to purchase or rent Real Estate at various prices in a given market for a given period of time.

A growing local economy that produces a sudden influx of new workers into a market area, will increase the demand and result in an increase in both market prices and market values for the type of housing the workers are seeking. A sharp increase in mortgage interest rates will increase housing costs and will tend to lessen demand and therefore the property prices in the market area.

Rental properties are an influence on supply and demand and must be considered in valuations.  Rent is also affected by supply and demand.  A high level of vacancies or an influx of new rental properties (increased supply) will cause rents to go lower to attract renters that may otherwise purchase a property.

The single greatest factor affecting negotiations between buyer and seller usually will be the principle of supply and demand.  The cost of any property will be influenced by the number of other similar properties for sale relative to the number of buyers in the marketplace. If there are few buyers and many properties for sale, the seller’s bargaining position is effectively reduced and the buyer can negotiate a lower price.  This is a buyer’s market.  If the situation is reversed, and there are few properties for sale and many buyers seeking to make a purchase, the seller can hold out for the maximum price.  With fewer competing properties to choose from, a buyer will pay a higher price and therefore the value of a property will increase.  This is also known as a seller’s market.

Why do BPOs

Why should an agent/broker do BPOs

Most Real Estate agents and/or brokers perform BPOs to supplement their real estate income.  BPOs are a very reliable and consistent source of income for real estate agents and brokers.  Even agents and brokers, who don’t necessarily need to augment their real estate income, perform BPOs to stay on top of their market, keep their valuation and pricing skills sharp, and for the marketing opportunities which are presented while they are in the neighborhoods completing BPOs. Simply stated, performing BPOs makes a better agent/broker.

Some of the many benefits agents and brokers enjoy performing BPOs:

  • Receive Income
  • Opportunities for listings (REO, foreclosure, short sale)
  • Marketing Opportunities
  • Increased Skills as a Real Estate Professional
  • Become a more Proficient and knowledgeable Real Estate Professional

More information 

Real Estate Income

Perform BPOs

BPO Certification

The Real Estate industry and the BPO industry are certainly skilled professional industries with the need for certifications. NABPOP Members distinguish themselves and increase their BPO credibility by obtaining a BPO Certification from NABPOP. Active BPO certified members of NABPOP receive the C-REPS designation (Certified Real Estate Pricing Specialist).

The NABPOP BPO Certification and C-REPS designation are recognized throughout the BPO Industry. Many BPO/REO Companies give extra consideration for certified BPO vendors.

Performing BPOs increase Real Estate Income – click here for more details to increase real estate income.

How to make Real Estate income

How to make extra Real Estate Income

Earn Real Estate Income performing BPOs for banks and lenders

Performing Broker Price Opinions BPOs is a great way for real estate agents and brokers to make extra real estate income. agents and brokers often have inconsistent Real Estate income flow between deals. Performing BPOs not only put agents and brokers in their service area in front of potential clients, agents and brokers get paid to do BPOs increasing their real estate income.  Performing BPOs can also be an “in” with banks and lenders to get REO/foreclosure listings further increasing real estate income.

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Real Estate Income

Earn extra Real Estate Income