Book Excerpt from: BPO & REO Simplified, "How to Work With Asset Managers!"
What is a BPO?
BPO=Broker Price Opinion
This is also known as an automated valuation model or detailed market analysis. This is a method used to estimate the probable selling price of a real estate asset. The estimate of price is submitted via computer (AVM) in a BPO report (2-4 pages). This report includes local and regional market conditions, neighborhood analysis, subject property condition, repairs needed, as well as list/sold comparable properties that compare to the subject/asset being priced. This method of estimating a price for the asset has similarities to a Comparable Market Analysis – CMA.
These BPOs are specifically assigned to a broker from an outsourcer, lender, or BPO company.
What is an Outsourcer or BPO Company?
This is either a division of a financial institution or a stand alone company. They are also considered to be the “Client”. The outsourcer is essentially the middle man between the broker and the banks/lenders. The outsourcer assigns the BPO to the broker, then tracks, expedites, and provides quality assurance/oversight for submitted BPOs. After insuring BPO accuracy, they will then submit to the banks/lenders. The BPO Company is responsible for qualifying and maintaining the list of real estate brokers. There are numerous types of BPO companies. Many only handle BPOs for their clients and these never become listings. Others assign BPOs which may turn into listings. When getting started, it is advisable to register with as many companies as possible. You want to gain as much experience as possible.
Who can perform BPOs?
Realtors, brokers, appraisers (acting in an agent capacity), and active licensees. If you are considering performing BPOs, this must first be discussed with your employing broker and/or attorney to determine the ramifications of performing BPOs in your specific state or market area.
What purpose does a BPO serve, and when is it requested?
The broker is requested to submit a BPO on an asset for a fee. BPOs are requested for foreclosures, REOs, short sales, HELOCs, and due diligence for investors or investment bankers. This request could be made from the 1st stage of delinquency, or for any other reason. For example, if a lender/financial institution needs to make a financial decision on an asset for a refinance, they may request a BPO. The initial request is most often for an exterior BPO.
What is the difference between an Interior and an Exterior BPO?
The first requested BPO is usually an exterior request. This will require an exterior examination of the property, with photo documentation of all exterior details. You will need to make notes on condition, and visible amenities. An exterior BPO takes less time to do than an interior BPO. An interior BPO is requested when the broker is able to access the home, for determination of value for a short sale or refinance, or once the property has become a REO. There are different fees paid for the types of BPOs and different photo requirements. These will be discussed later.
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James A. Browning, MRE
CEO, REO Institute
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