What is a Broker Price Opinion?
When a bank or asset manager obtains a new foreclosed listing to sell, they immediately need to know the home’s value. Typically a bank will assign one to three agents to evaluate the approximate selling value of a home. These banks expect each agent to submit three comparable sold listings and three comparable active listings as well as an estimate of what the agent thinks the home will sell for.
A Broker Price Opinion is not as detailed as an appraisal and does not entail as much work. BPOs differ from Appraisals in a number of ways:
- Appraisals typically cost over $300. Most BPOs pay brokers between $50 and $100.
- Appraisals require detailed square footage measurements. BPOs rely on county assessors’ recorded measurements.
- Appraisals use a standard format recognized and used by lenders and mortgage professionals for precise property valuations. BPO’s are prepared in different formats and are used simply as decision making tools for asset managers of each bank.
- Appraisals are typically 15-20 pages long with detailed information on each aspect of a property. BPO’s are usually 2 pages long with information pertaining only to a final selling price.
Why Do Banks need Broker Price Opinions?
Asset managers and bank personnel make decisions on several properties every day. Reading through a lengthy 20 page appraisal and filtering out the critical information is a waste of their time. These asset managers need concise, financial documents that make their choices easier. That’s why BPOs are so critical to their job. In addition, a BPO saves the bank over $200 per property compared with a standard appraisal. That money adds up quickly and saves the bank thousands and thousands of dollars a year.
Another reason BPOs are preferred by banks is that the turnaround time is much quicker than appraisals. BPOs can usually be performed by agents in under 48 hours. Many appraisers visit the property within 48 hours, but then require another day or two to process the information and create the full report.
How Agents Can Become a BPO Agent
Once a real estate agent understands what a Broker Price Opinion is, they immediately want to learn how to become a BPO agent and start to process BPOs for banks. This is understandable since a good agent can make an extra $500 – $1,000 a month simply by signing up with banks and requesting BPO assignments.
The steps to become a BPO agent are fairly simple. The basic process takes about a week. Here is a summary of the basic steps:
- Obtain a list of BPO bank departments. Ensure your list has over 100 banks and asset managers.
- Register on each of these banks’ websites as a BPO agent. This process can take over 15 hours to register on all 100 websites, so schedule your time wisely.
- Follow up with the banks and asset managers to make it clear you want to process BPOs for banks and become one of their preferred agents.
- Once you receive your first assignment, do a fantastic job and go out of your way to ensure your client is happy. It only takes a couple of solid bank clients to keep you busy with a steady flow of Broker Price Opinion assignments.
As you start your quest to become a BPO agent it’s important that you never give up. Once you start to process BPOs for banks, your business will snowball quickly. Good luck!