To the unfamiliar ear, a broker’s price opinion, or BPO, may sound like a complicated figure reached through numerous steps done by a real estate broker. The truth is that a BPO is actually reached through a very simple process, and many real estate brokers use Broker Price Opinion’s to supplement their incomes.
What is a BPO?
A BPO (Broker Price Opinion) is a very rough estimate of what a broker thinks a house might be worth. They’re often used by the bank when a home has been foreclosed or in other situations when the bank wants to know about how much the home is worth without getting a full appraisal. In most cases, a full appraisal has been done on the particular home at some point within the last several years anyway, so the bank has a rough idea of what the home is worth, but wants a broker’s opinion, typically after a family moves out or some other change has been made.
BPO’s are often a cheaper alternative than appraisals for banks. As a real estate agent you should take advantage of this fact!
How a Real Estate Broker Completes a BPO
While the name might sound complicated, the truth is not. When a real estate broker complets a BPO of a particular house, most of the time they simply drive by. This type of report is often referred to as a drive by BPO. They look at the house from the outside and make a determination based on that as to what the house might be worth. In some cases, the broker may get out of his or her car and actually assess the house a little more closely, but in most cases, they simply take a quick look.
The broker will look at things like the value of the properties around the home, the trends in sales occurring in the neighborhood, as well as any estimated costs of repairing the home or getting the home ready for sale. While a BPO sounds a lot like an appraisal, it is very different and much less in-depth than an appraisal, it is more comparable to a CMA.
Requirements
In order to perform BPOs, banks are looking for qualified real estate professionals with local market knowledge. Most of the time, a bank has a list of homes that require a BPO, and the brokers work on a “first come, first serve” basis. Essentially, the first realtor to accept the BPO order will be paid for the order as long as it is completed on time and to the clients quality control standards. It’s a great way to supplement income, especially for brokers who aren’t selling homes as often as they would like. In addition if you are interested in pursuing a career in REO’s, most clients will require experience working with BPO’s.
How Much Can a Real Estate Agent Make with BPOs?
With a long list of BPOs, a real estate agent could make anywhere from $3,000 to $7,000 extra a month doing BPOs. Depending upon the amount of work the real estate agent can handle, the numbers can vary a lot, but this is a good source of additional income for any real estate agent.
