Understanding BPOs in Real Estate

by Elayne Jassey 11/03/2019

BPO stands for ‘broker price opinion.' It is associated with short sales and foreclosures. BPO involves a process that is almost the same as real estate appraisal but not as complicated. Banks and companies usually hire the services of a real estate broker to prepare an opinion of value for a particular real estate. The representative of the broker, who is a real estate agent, will compare a least three similar properties and arrives at a range of values, and then make some adjustments — the overall analysis results is an opinion of the market value. 

A BPO may be controversial if the agent preparing it is not experienced enough especially when it comes to appraisal techniques. Also, BPO costs less than a full-blown appraisal. 

Types of BPOs 

There are two standard types of BPO: interior and a drive-by. The interior BPO has to do with assessing and taking pictures of the home interiors while a drive-by BPO involves the exterior of the home. In some cases, the agent may not inspect the home exterior personally and may depend on the pictures of the home's exterior posted on an MLS website. Also, the drive-by BPO does not involve the inspection of the home interior. 

Who Needs a BPO? 

In most cases, a financial institution orders a broker price opinion and not an individual. Below are some of the uses of BPO. A Broker price opinion is used to settle the estate of a homeowner that has passed away. It will help you decide if a foreclosure or a short sale is ideal considering the value as compared to the debt amount. It also offers a more recent value amount whenever you choose to sell mortgages on the secondary market. BPO helps homeowners to determine the amount of equity in their homes to see if they qualify for exemption from private mortgage insurance requirements. 

Why Banks Order BPOs

The two reasons why banks order BPOs are as follows:

- They order a BPO for a house in foreclosure that is about to REO homes of bank inventory

- Banks also order a BPO for a short sale 

Banks might request a BPO from two different real estate companies to get an estimate for a range of values. This method helps the bank to avoid the inaccurate BPO values by dishonest agents.

About the Author
Author

Elayne Jassey

 

Your Neighborhood Expert!

Hi, I'm Elayne Jassey and in addition to my passion for real estate, I have a passion for my family, people, competitive games and Stamford! I have loved living in Stamford, Connecticut for the last 35 years. During that time I raised two daughters here and became quite involved in our local civic life. I was very active in Board of Education affairs during all the years my daughters spent in the Stamford public schools, and my early experience as a middle school teacher gave me a great appreciation for the strengths of the Stamford schools. I am currently a member of our Downtown Committee and I'm delighted to have participated in processes that have resulted in everything from encouraging the University of Connecticut to move into their new-in-town branch location, to bringing the excitement of the area's largest Thanksgiving Day Parade, complete with soaring balloons and marching bands, to town. 

I suspect the greatest joy in my professional life is that I meet and work with so many different and interesting people. I enjoy my customers and I am pleased that I build close relationships with them that I maintain for years. These relationships have resulted in a high degree of customer loyalty, and most importantly many close and rewarding friendships. In fact, I continue to work with people I listed, rented or sold properties to when I first entered the profession, and now I have begun selling to the next generation in their families! 

When not spending time with my family or savoring time with my granddaughter as she explores the world, I love to play games. Whether participating in a hard-fought game of Scrabble, playing cards or coming up with the answers in word games and puzzles, I am energized by good competition and problem-solving. In fact, I find creating a successful real estate transaction is a composite of all the things I most enjoy. It combines the problem-solving excitement of detective work with the joy of matchmaking. Each new customer presents a unique set of needs and goals, a special personality and a sense of individual style, all within clearly defined financial strictures. Understanding all these factors and fitting the pieces together successfully is the challenge that makes the selling of real estate so special to me. And it allows me to use my considerable energy, enthusiasm, and entrepreneurial spirit to work hard at meeting my own personal goals. 

People often say that I am a very lucky person. I agree. I live in a community I love. I am surrounded by family and friends, and work in a profession that still engages me deeply. And I've noticed that the harder I work, the luckier I am!