Broker Price Opinions (BPO)
I know that in a number of my workshops participants have asked me about doing BPOs. So what is a BPO? A BPO is a Broker Price Opinion. These can only be done by a licensed real estate broker, or on behalf of the broker, a real estate agent could do these reports. The purpose of the BPO is to determine what the property should be priced to sell within the current market. The real estate agent looks at sold, under contract, withdrawn, expired, and active properties that are similar to the property which they are looking at. As well, they look at the economic information and days on market to determine what is coming in the future to determine both how long it will take for the property to sell as well as what the price could be the price during that time. For example, if there is a property that is within a neighborhood that usually takes 110 days to sell and within that period you know a major employer will be moving into that area - what do you expect to happen? Most probably, the prices are going to be going up! All of this information is put together to come up with the BPO price. This is very different then an appraisal in which the lender is looking at a snap shot in time. So they are trying to determine if the property needed to be sold right now - how much the lender would be able to get for it. The appraisal, unlike the BPO, only takes sold properties into consideration and nothing else.
So why is the BPO such a Hot Topic?
Since there have been such a large number of Short Sales, there have been a HUGE demand BPOs requested by lenders in the attempts to find out what to price the property to sell it now! So you are interested in BPOs? I have listed some of the major companies that request BPOs at the end of this blog post. It is a way for real estate agents to get their information in front of banks so that they can possibly get a chance to list (REO) otherwise known as Real Estate Owned by the Bank. As well, it is also a way to make for the real estate agent to make a few extra bucks!
Before starting to do BPOs I would strongly suggest listening to the following podcast from the National Association of Realtors and reading the following report as well! The following is the link for the report and podcast In it contains vital information on LIABILITIES. Before starting to do BPOs I would strongly suggest speaking to your broker. I would also suggest that you have all checks payable to your broker as real estate agents are not allowed to get paid directly for real estate services.
BPO Companies:
http://www.valuationsupportservices.com
Have fun doing those BPOs and please email me at psingh@rempower.com if you have any questions/concerns or to let me know how it goes!
Prabhjit Singh