What Exactly Is a BPO?
Broker's Price Opinion (BPO). A BPO is the opinion of property value given by real estate agent or broker. The BPO is an estimate of the selling price of property based on condition of the subject house, selling prices of comparable homes in the area and other conditions. This process is often used in the place of a full appraisal when a property goes into default and considered for loss mitigation. You must understand the BPO is an art and not a science so values can vary hence the reason for influencing a BPO. As an investor you want the BPO to be reported to the servicer as low as possible.
Comparable's - must be within 1 mile radius or less of property being valuated and typically sold within the last 6 months.
Comps are based on square footage, lot size, condition, bedroom/bathroom...which are graded on a plus or minus scale. If the comparable home has a garage and the subject property does not the subject property is less valuable the price to add a garage
The BPO always indicates if the property is vacant or occupied. If vacant the property must be secured with or without homeowner valuables inside the home.
There are 3 subject properties used to indicate property value. The BPO contains photographs of the property usually front, sides, street scene backyard and inside pictures if not a drive by BPO, if there is physical damage it.
What to expect during a BPO:
The agent will take pictures of the surrounding neighborhood, subdivision, or area, and make the following observations – they will :
Inspect the overall condition of the home
They will Estimate the cost of repair
They will walk the property and move quickly typically have a full day of reviews so in a hurry a few days later they Submit a detailed report of their research to the lender.
How to Influence the BPO
When speaking with the lender always request a Full BPO or Appraisal, explain the inside of the house is in worse condition than the outside and to get real value the agent needs to go inside. Give the lender your phone number as the contact number and explain to the lender that the homeowner is not available and there is no lock box. You have to let the agent in the house. You have to be flexible because they set the appointment and want to get the request out. Be sure to run low comps, high repair costs and any other flaws in the property or information about the neighborhood that will justify a discount and have available a list of negative factors, including a list of sexual predators that may reside in the area.
You need to be very familiar with the property and arrive early to do a last minute run through to familiarize yourself with conditions again. Be sure homeowner is not available for the BPO. The BPO agent will ask questions to homeowner and disregard your opinions and information. Be sure you are thorough with repair values and be very close with estimates. As the agent walks the house follow the agent very closely and highlight defects and give history of the house including what you are doing and what price you need in order to buy the property. Ask the agent if they have the same opinion of the property value. Be sure you are not too intrusive and let the BPO Agent be in charge and thank them over and over again for their time. You need to be the expert on the neighborhood so the BPO agent will trust your opinion.