BPO - How to Kill a Short Sale

Real Estate Broker/Owner with Wendy Smith Real Estate

For those who don't work short sales or foreclosures, or just not familiar with the term, BPO is an acronym for Broker Price Opinion.  A BPO is nothing more than a CMA (Comparative Market Analysis) which real estate agents do on almost a daily basis except that a BPO typically includes at least a couple of photos. 

There is no mystery to BPO's, a BPO does not have to be performed by a broker, any real estate licensee will do - regardless of experience or expertise.  BPO's don't pay very well either; an average fee is about $50 which isn't much considering the amount of work that must be done.  $50 is just an average, sometimes the fees run a bit higher and sometimes a bit lower.  Basically there are 2 kinds of BPO's:  Drive-By and Interior.

It is not uncommon for an agent to spend 3 or 4 hours on an interior BPO - add driving time, finding the right comps, uploading photos and completing the report form

An old adage comes to mind:  "You get what you pay for".

When a borrower is behind in payments, a first step for most lenders is to order a BPO.  Lenders rely on the BPO to report the fair market value of the mortgaged property.  In theory a BPO is expected reflect the property value in it's as-is condition as well as in the current market. 

Typical short sale offers are under fair market value.    Personally, I've never seen a short sale offer at FMV but perhaps somebody somewhere has seen this anomaly.   Most often you will find short payoffs are under FMV.

An example from an actual file:

Single family house in Port Richey, Florida - in 2005 or 2006, comparables homes sold for $125,000 to $140,000 depending on the upgrades, condition, etc.   That was then. This year, 2007, that same neighborhood suffered about a 5 to 6% decrease in home values.  The subject home, the property in foreclosure, however is in very poor condition.  The tenants stripped the house of kitchen cabinets, bathroom vanities & toilets, light fixtures, ceiling fans, the air condenser; they even took the crown molding!  Two separate contractors estimated repair costs in the $40,000 - $45,000 range (that didn't include the pool).  BPO value came in at $145,000 - this was supposed to be as-is condition!  Little wonder the $80,000 short sale offer was rejected.  The lender, EMC, countered at $120,000 and refused to order another BPO (I offered to pay for it).  This property will wind up as an REO.   This short sale died as a result of a bad BPO. 

Bad BPO's are the nemesis of Short Sale negotiators.  BPO agents can take a win-win situation and turn it in to a no-win situation just by carelessness of not doing a thorough job.  

To be fair, credit must be given to those agents that actually take the time to do a thorough BPO.   Until there is some sort of standardization to which agents performing BPO's must adhere, all of us work with foreclosures and short sales, as well as homeowners & homebuyers, will be at the mercy of sloppy BPO's.  

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Counting Blessings & Serving My Community,

Wendy Smith



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Melissa Schnieders
Melissa Schnieders Photography - Wichita, KS
Very well written and informative!  I'd suggest you add it to this group too. When you post to specific groups, more AR members will be able to find it and read it. Thanks for sharing!
Sep 20, 2007 09:41 AM #1
Fred Pickard
Fred Pickard Innovations Realty Inc - Hershey, PA
Hershey, PA


Was it ordered as a Interior or drive-by? Did EMC provide you with a copy? If so, were all of the missing items noted and priced out at retail?

I don't do any work for EMC so I'm not familiar with their systems, but most of these companies will order a 2nd BPO if there is any dispute.

Sep 20, 2007 10:37 AM #2
Sherman Smith
Sherman Smith & Associates - Tustin, CA


I too feel the better job you do on th BPO the better chance you have to get the short sale closed.

Here is a blog I wrote on the listing agent and short sales: http://activerain.com/blogsview/318295/Short-Sale-Suicide-and 


Dec 26, 2007 05:47 PM #3
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