What is A BPO?

A Guiding Force for Orange County’s Changing Market

“Passion and Commitment”

BPO’s—What is it?

I have written plenty in the past about BPOs but have never delved into it specifically.

A BPO means “Broker Price Opinion” and they are not appraisals nor should one get them confused with appraisals.

A BPO has a different purpose.

Some of the factors that a broker will consider when pricing a property include:

• The value of similar surrounding properties,
• Sales trends in the neighborhood,
• An estimate of any of the costs associated with getting the property ready for sale and/or the cost of any needed repairs.

It is important to note that a BPO is not the same as an appraisal and not as detailed.

It’s almost like being a “secret shopper”.

When we are submitting comparable for a list price (NOT value, we are also looking at a myriad of other items that may help or hurt with pricing and marketing of the home:

How is the home being marketed: Is there no lockbox or an uncooperative tenant hindering showings? Are there only 2 photos in the MLS? My BPO overview will point that out for the client.

Huge price reductions in a short amount of time. This is commonly seen in short sales. The house is priced too high. Then usually within 10 days after listing the property a price reduction is seen- usually below what the other comparable homes are selling or listed for.

The strategy should be a series of small price reductions over a longer period of time. Some mortgage clients ask for us to report listing history so no one is fooling no one with the huge price reduction in a short amount of time.

Subdivision activity- what is the lowest, median and highest price sold in the last 6months.

The financial client wants to see the whole picture of pricing in the area. There are some exceptions such as condition (fair to poor) and declining market.

Occupancy-this is huge because lienholders must protect their asset. If the home is vacant and appears to be deteriorating from BPO reports, the lienholder has every right to rekey the property for preservation.

MULTIPLE BPOs are ordered and most are exterior- no appointment – just drive by-

This is most common on first BPO’s ordered by the client.

A BPO obviously isn’t just about value or an appraisal- it’s about the bigger picture- making sure the listing is being marketed properly so the lienholder does not have any money left behind sitting on the table.

Many cases is also done to insure the property is in sound condition.

My typical Broker Price Opinion report includes:

• Price recommendation: “As Is” and “As Repaired” or “Completed”
• Describes repairs to make property marketable
• Ranking of property and neighborhood conditions
• Recent sales activity of neighborhood
• Standard order includes analysis and photos of three current listings and three recent sales of comparable properties.
• Extended order includes analysis and photos of six current listings and six recent sales of comparable properties


A summary is also given about surrounding areas, cities and overview of what the economic conditions are like. This may include unemployment in area, are there factors of value like close proximity to highway, railroads, power lines.

It is all part of what I call P.E.P.S.

• Political
• Economic
• Physical
• And
• Social factors that impact value



BPO process Example (this is one example of the many uses of BPOs)

1. A Wall Street investment firm decides to buy a portfolio of home loans as an investment (sometimes thousands of loans are in one deal).

2. The investment firm contacts my BPO department to perform BPOs on each of the properties in question (they may even order multiple BPOs on one property for comparison). A due date is established for the BPOs (usually within a week)

3. My BPO department maintains a list of Real Estate Professionals that perform BPOs. The BPO department locates a BPO practitioner that service the areas where the properties are located. The Real Estate Professionals; due date is a few days before the final BPOs are due.

4. Each Real Estate Professional contacts the respective homeowner of their assigned BPO to schedule an inspection of the home or property ( if an interior inspection is required).

5. The Real Estate Professionals physically inspect the homes/properties.

6. The Real Estate Professionals gather Real Estate market information and compile the information to determine a probable selling price- BPO.

7. The Real Estate Professionals submit their finished BPOs to the BPO company.

8. The BPO department conducts a quality review of each BPO.

9. The BPO department head (me) submits the final BPOs to the investment firm.

10. The investment firm makes a cumulative financial decision based on the opinion of price contained in each of the BPOs.


For more information contact:

John Hacker

You can reach John at
Jhackerleads@cox.net

His website is
www.letsgobuyahome.com