What is BPO?
By Pierre Mouchette | Real Property Experts LLC
As a Real Estate Investor, you will be using Broker Price Opinions (BPO’s), especially if you are working with short sales or foreclosures. What is a BPO? A BPO is like an appraisal but not as thorough. A licensed Real Estate Broker or Agent performs the BPO in giving their opinion of the value of the home-based on various comparatives.
Banks hire brokers to perform BPO’s to obtain an estimate of the value of a home. These Brokers are employed instead of appraisers because BPO’s are much cheaper. If you plan on investing in short sales or foreclosures, learning how you can influence BPO’s is essential.
Interior and Drive-By BPO’s
There are two types of BPO’s: An interior BPO refers to interior photos and a glance inside. A drive-by BPO is exterior photos. While lenders do place value on either type, many times, market value will be influenced more by comparatives over pictures.
Why BPO’s Are Important
The Broker will assess the property and provide their professional opinion of its value to the lender. This BPO is crucial because it will influence the lender’s decision about what the home is worth. Most BPO’s are used in conjunction with short sales so that the lender will expend the least amount of money.
There are ways that you can influence the outcome of a BPO, such as
Banks do not have to accept the BPO as fair market value and can increase the home price if they choose. But, a BPO does matter, and it influences the lender’s decision. The good news is that there are things that you can do to help shape that BPO in a way that works in your favor.