BPO – Broker Price Opinion

Topics covered in the BPO Information section:

  • Click here for a Consolidated Detailed BPO Discussion
  • Click on the following links for Overview of:
      • What is a BPO – Broker Price Opinion
      • Why should Agents and Brokers do BPOs

        BPO Income
        Agents and Brokers get paid to do BPOs

        Apex Skill
        BPO work sharpens Real Estate skills and market knowledge

        Agent Mentoring
        Many Brokers require Agents to perform BPOs for skill development
          • Income– Agents and Brokers can earn a lucrative Income from performing BPOs
          • Skills gained and maintained performing BPOs
            • Pricing skills are Apex Real Estate Skills
            • BPOs make agents and brokers perform an in-depth analysis of their markets regularly.
            • Some Brokers require their subordinate agents to perform BPOs to develop them as Real Estate Agents in general. Pricing and valuation skills are essential and apex skills. Agents who perform BPOs are better Agents in general.
        • Listing from BPO
          BPO performance can lead to Listings

          Listings:

            • BPO performance is a consideration for asset managers and lenders to assign listings for REO, Foreclosure, and Short Sales. BPOs can lead to listings.
            • BPO in neighborhood
              Agents interact w/ people in neighborhoods as Real Estate experts

              BPO performance places agents and brokers in neighborhoods as Real Estate experts for banks and lenders. In essence, many agents and brokers consider this an ideal opportunity to market their services to homeowners or people who may be passing by in the neighborhoods. More on Marketing Opportunities

        • Agent going over BPO
          Agents use BPOs instead of CMAs

          Brokers and Agents can offer free BPOs as a (higher quality) alternative versus CMAs to gain listings from homeowners.

      • Accuracy of BPOs. BPOs are just as accurate as residential Appraisals (in some cases, even more accurate). Click here for a Discussion about BPO Accuracy
          • BPOs take the science of a residential appraisal and combine it with the market knowledge of Agents and Brokers:
            • Agents know customers
              Agents know Home Buyers

              Agents and Brokers frequently interact with home buyers – knowing what buyers are willing to pay is paramount to accurate pricing and valuation.

            • BPOs project a probable selling price into the future vs. appraisals which give you current value (“as of” the appraisal date)
          • Click here for Agent and Broker Qualifications to Perform BPOs
          • C_REPSC_REPSCertified Real Estate Pricing Specialist designation – more info C_REPS
        Proper Valuation/Pricing Procedures & Techniques
        Accurate as an Appraiser
    • What is the BPO industry
      • Freddie Mac
        Freddie Mac & Fannie Mae regularly order BPOs across the US

        Typical BPO Customers

      • Typical BPO Usage
        • Default:
          • REO – Real Estate Owned properties
          • Foreclosure/Pre-foreclosure
          • Short Sale
          • Loan Modifications
        • Servicing:
          • Refinance
          • HELOC – Home Equity Line of Credit
          • Requests to remove PMI – Primary Mortgage Insurance
        • Mark to Market (portfolio valuation)
        • BPO utilized by legal system
          Judges and Attorneys utilize BPOs

          Legal:

          • Divorce
          • Estate Settlement
          • Lawsuits
          • Prenuptials
    • BPOSG – BPO Standards and Guidelines

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BPO is an acronym for Broker’s Price Opinion.  In general, the term Broker’s Price Opinion (BPO) is a valuation which a Real Estate Broker (or an Agent acting on behalf of their employing broker) uses to estimate the probable selling price of a residential Real Estate property/house.

The estimate of price is submitted to customers in a BPO report (2-3 pages) which includes pictures of the property and neighborhood, local and regional Real Estate market information, neighborhood analysis, and sales analysis of comparable properties.  A BPO is more detailed and more accurate than a CMA (Comparative Market Analysis) and just as accurate but less detailed than a residential Appraisal.

A BPO uses the relevant techniques of an appraisal and combines it with the market knowledge of Real Estate Agents and Brokers.

There is no law which requires a BPO certification, but any customer who does not demand a BPO certification is taking a big risk with the efficacy of the BPO.  Certified Real Estate Pricing Specialists C-REPS are trained in proper BPO techniques and procedures. C-REPS must pass a stringent BPO Certification test in order to become BPO certified and achieve the C-REPS designation.

A BPO is not a new valuation product. The mortgage default and mortgage service industry created the BPO, approximately 30 years ago, in order to make financial decisions without having to order expensive appraisals. The above organizations required thousands of valuations at a time and BPOs became the valuation method of choice for these organizations. BPOs continue to emerge as the valuation choice of many banks, lenders, financial institutions et al due to the accuracy of BPOs (more accurate than a CMA), the faster turn around time (3 days BPO vs 2 weeks appraisal), and the lower cost (BPO 50-75% less cost than appraisal).

Performing a BPO, in the BPO industry, means a Real Estate Professional (agent, broker, or appraiser acting in an agent/broker capacity) is requested by a financial institution to submit an estimate of a selling price for a property in a BPO report for a fee. Agents and brokers across the country make a lucrative income performing BPOs.

Agents and Brokers will also provide a free BPO as a value-added alternative to providing a Comparative Market Analysis CMA in order to get a listing from a homeowner. Agents and Brokers can use BPOs as a marketing tool.

 

 

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