What is a BPO? As it relates to a short sale in Orlando
BPO stands for Broker’s Price Opinion. The term Broker’s Price Opinion (BPO) is a method that a Real Estate Broker (or an agent acting on behalf of their employing broker) uses to estimate the value of a Real Estate property/house. The estimate of value is submitted in a BPO report (2-3 pages) that includes local Orlando Real Estate market information, neighborhood analysis, and (comps) properties that compare to the (subject) house that is being valued. This method of estimating a value has similarities to a Certified Market Analysis CMA and a residential Real Estate appraisal.
Performing a BPO, in the BPO industry, means that a Real Estate Professional (agent, broker, or appraiser) is requested by a financial institution to submit an estimate of value for a property in a BPO report for a fee. A financial institution may order a BPO for the following situations:
- home equity lines of credit
- home equity loans
- requests to remove PMI – Private Mortgage Insurance
- REO/Foreclosures/Short Sale
- Any other reason that a bank/lender needs to make a financial decision on a property
BPO Process
- A bank receives an application for a Home Equity Loan, Home Equity Line of Credit, request to remove PMI etc… The loan officer must determine the value of the home.
- The bank contacts a BPO Company for a BPO (they may order multiple BPOs for comparison) on the property in question. A due date is established for the BPO (usually within a week).
- The BPO Company maintains a list of Real Estate Professionals that perform BPOs. The BPO Company contacts a Real Estate Professional on their list to perform the BPO. The Real Estate Professional’s due date is a few days before the final BPO is due.
- The Real Estate Professional contacts the homeowner to schedule an inspection of the home or property (if an interior inspection is required).
- The Real Estate Professional physically inspects the home/property.
- The Real Estate Professional gathers Real Estate market information and compiles the information to determine a valuation.
- The Real Estate Professional submits the finished BPO to the BPO Company.
- The BPO Company conducts a quality review of the BPO.
- The BPO Company submits the final BPO to the Bank/Lender.
- The BPO Company pays the Real Estate Professional.
- The Bank/Lender pays the BPO Company.
- The Bank/Lender makes a financial decision based on the opinion of value contained in the BPO.
