What is a BPO?
I was asked by another Realtor not too long ago, "What is a BPO? I've heard of it, but I have no idea what it is." In hopes of helping fellow Realtors as well as any confused homeowners, I'll explain.
BPO stands for "Broker Price opinion". It's a fancier version of a CMA, only BPO's are done specifically for banks. What happens is that when a homeowner has stopped making their mortgage payments, the lender will hire an agent to perform a BPO on the property in question. Depending on the bank (and the property), a BPO can require photos to be taken of the exterior and/or interior of the home. The Realtor then submits these photos, along with their assessment of the property's current market value. It's the Realtor's job to perform a BPO to the best of their ability, which often means that they do market research on the property's neighborhood, perform a full CMA on the property and include that data in their findings, and even make assumptions on how much repairs would cost (if any are needed). Once the Realtor has all of this information, they submit it to the bank who requested it.
The point behind a BPO is sometimes as mysterious as the banks themselves these days. It would seem reasonable that the bank wants to know a property's market value, especially if the property will foreclose soon. Typically, the bank will try to sell the property for an amount higher than what the BPO came in at. This is known as a short sale - when the homeowner will do ANYTHING to sell it, but the bank has to approve of the sale of the home first. Short sales rarely sell at all and almost always result in foreclosure. Once the property is foreclosed, the listing price on it may be closer to the BPO amount, but it depends on several different things, including the lender, the market and how many mortgages are on the property.
Hope this information has helped, and maybe the next time that someone wonders what a BPO is, they'll stumble upon this blog!
What is a BPO?