Over the next few weeks I'm going to break down the standard Broker Price Opinion (BPO) form section-by-section. First of all, I'm going to be using the Chase Bank Standard BPO form. It can be found at www.REOexperts.net in the form library under "Chase BPO Form". It's about 6 pages (letter) long and is broken down into the following sections:
Marketability of Subject
Homeowner's Assoctiation Information
Values (based on 90-120 DOM)
Broker Recommended Repairs
Attachments (separate pages that Chase and other banks request in conjunction with the BPO)
First, I'm going to cover the Property ID, Property Description, and some preliminary research that should be done with every new BPO.
This is pretty simple. This is where the loan or REO number will be entered. Every subject (property) has an individual Loan or REO number. I've even seen a subject transfer from one company to another in which the loan/REO number was changed. Do not check the "Interior Inspection" box unless you've done an interior inspection. The "Marketing Contact" will be the asset manager who assigned you the order. I've never used the "Project Name" field, so if you know anything that I don't, please let me know. Lastly, I've always put the REO/loan number in the "Property ID" field and the "Key Field/Loan #" field.
Most of this is self-explanatory, so I'm not going to tell you what goes into a field unless I feel it's necessary. In the "Mortgagor's Name (Title Vested In)" field you want to put the name of the person who last purchased the house and is being foreclosed on. This information can be found on your county website or by calling the county office. Only put a "yes" in "Currently Listed" field if the property is actively being listed on the market. "Previous DOM" is the number of Days On the Market the listing had, which you can find either on the current listing MLS or in the Listing History of the property. "Previous LP" is the previous Listing Price. "Current LP" is the Current Listing Price. In some cases you'll have values for both such as when a property has been listed multiple times in the past year. "Recommended Inspections" can be a bit subjective. Unless you have been an inspector, an appraiser, or a construction manager you may not know what inspections will be needed in a property that you have no insight into. You will want to get familiar with an appraiser who can help you out down the road, so start getting to know someone in your area. In the meantime some typical inspections include; roof, plumbing, electrical, architectural/foundation/structural, termite, insect, infestation, mold, crystal meth, and lead/asbestos. In many cases, "none" will be the answer to this field. "Property Type" will be either DSF (Detached Single Family), ASF (Attached Single Family), TWN (Townhome), CONDO (condo), Loft, or AGR (Agricultural). There may be other terms depending on your region.
"Condition" description deserves its own paragraph. To get this accurate you must understand the spectrum of REO condition descriptions.
Excellent = Hardly ever used or it's new build, complete lacking no aspect (such as a lawn), no damage, never lived in.
Good = Fairly new, move-in condition, interior/exterior/lot in good shape.
Average = Could use some TLC, but would be livable with a handful of updates/upgrades.
Fair = This is when the lawn is dying /dead, roof is dilapidated, holes in the wall,carpet needs replaced, windows broken, needs paint and hasn't been updated since the 1970's.
Poor = You wouldn't let your enemy sleep there. Everything needs overhauled, living condition is awful, and the big question is "scrape or fix?".
Lastly "Potential Rent" is something you must research with your local rents market. If you've lived there long enough you've probably been a renter at one point and have an idea of what things go for. Otherwise, going to the classifieds is an easy way to figure that out.
Before you begin your BPO report it's best to have some research already completed and saved. I'm a big "paperless" fan, but I know that I'm the minority so I'll talk about both. The first things I start with are county records. In my state, Colorado, we have what's called a Public Trustee. Here is where I find online records such as the owner on record, purchase price, parcel i.d., the foreclosure dates, and more. Then I go over to the county Treasurer and pull up tax information. Nowadays most CO residents pay taxes along with their monthly loan payment making delinquent taxes less common. Here's an example of a COUNTY website. All I would have to do now is click whichever record is the one I want to see (off to the right in blue). Give it a try. Navigating the sites can be a bit tedious at first, but be patient and LEARN IT! It'll get much easier and it's critical to know.
Then I would map my property using any one of the many free map sites on the internet. Google has one, Microsoft has one, and the ever-popular (yet my least favorite) Mapquest. My preference (and the asset managers seem to like this one) is to get a "Hybrid" map of the subject (it is an option by the zoom bar of your map), copy it and send it to them in the BPO packet. They look at an aerial photo and think that I own my own satellite! It looks sharp and really isn't too difficult to do (another blog perhaps?). Then I map all of my comps in relation to the subject property so the asset manager can see how close they are together (oops...no more cheating!).
Finally, I would search for statical data in that region. Recently, we were doing a BPO in the mountain town of Nucla, CO. This is in the middle of Telluride and Durango with a population between 500-700. You would think that the area would tell much of a story, but on the contrary it was discovered that it's a powerful mining town for coal, iron ore, and uranium! That really helped us describe the subject better and eventually price it accurately too. Remember, getting the listing is fine, selling the listing is GOLD.
I hope that helps. Be on the look out for Part 2 soon....