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BPO’s
BPO stands for “Broker Price Opinion.” I complete a LOT of BPO’s in my line of work as I have some knowledge regarding the foreclosure market and as Realtor, banks want to hire me to determine the value of properties they have a lien on so they can decide whether or not to foreclose.
When bank hires me to complete a BPO, they are essentially looking for me to provide them with a cheap, estimated version of an appraisal. Remember, in NC as in most states, appraisals can only be completed by state certified appraisers. Therefore, in order to avoid the $300-$400 price tag for an appraisal, banks hire me to go out and conduct a Broker Price Opinion where I issue an opinion on the value of a home for 1/4 to a 1/3 of the cost of a full-blown appraisal.
When I conduct a BPO, I use tax records, sold comparables, and actively listed comparables to establish a range of values within which I would guess that the subject property would sell on the open market. I also make special note of any needed repairs and estimate repair costs. Since I cannot see the interiors of most of these homes, I usually have to guess as to interior condition, and this can occasionally lead to false estimates on my part.
After I compile all of this information, a bank asset manager takes a look at it and decides what to do with the property. In most cases, the bank has not yet commenced foreclosure proceedings and will use my information whether to decide to do so. Other reasons that they could ask me for a BPO are: the borrower is renegotiating their mortgage, the property is already in foreclosure and the bank wants to decide how to market it, or occasionally, the bank already OWNS the property and just wants to know what it’s worth or is looking for a Realtor to market it for them. In any event, I never know the full specifics when I am commissioned to complete the BPO.
So there you go, BPO basics. Now if someone ever mentions this term to you, you’ll know exactly what they’re talking about. Incidentally, the process of completing a CMA (Comparative Market Analysis) for a seller-client (or sometimes a buyer) when listing residential property is actually quite similar to this. The different terms relate more to the reason for the assessment than differences in the process.