Our Simple Step By Step BPO Guide

A Step By Step BPO Guide

So we have been doing this for a long time now. Its almost 5 years ago that we created our simple BPO filling software that allows you to easily enter the information and generate a pretty BPO form directly from your computer. We actually created this software for ourselves as we were practicing agents at the time and were doing a lot of BPO work. Many of the companies would send word documents or other pdf forms and we needed a quicker way to be able to fill them out and more importantly not have to start from scratch each time. We created the BPO software and used it internally for a long time until we realized that other people may be interested. We released the software and to our surprise we have overwhelming response. People loved it but even more shocking was the amount of people just getting started. We kept getting asked for a step by step BPO guide. People wanted something that walked them through the process of generating a BPO. They wanted the details of how to do a bpo. So we actually wrote and entire book on it that you can get here.

However you may not want to spend any money and you want the streamlined Step By Step BPO Guide so here we go.

Step 1 Obtain Subject Info – Step By Step BPO Guide

The first step in completing your BPO is gathering the information about the subject. You can generally obtain all the subject information about the property from the MLS or tax records and property appraisers site. Gathering all of this information ahead of time will make completing the subject information that much easier. Remember that a lot of the information about the subject is actually generalized information about the market and the neighborhood. You will want to gather all the information you can about the property ahead of time. Remember to follow along step by step.

Step 2 Pull Comps – Step By Step BPO Guide

One of the most important steps of the step by step BPO guide is pulling comparable properties. Almost all BPOs require you to show 3 comparable sold properties and 3 comparable listed properties. These are referred to as comparables. These properties should be as close to the subject property as possible in every form. Bed/Bath counts, square footage, location, view etc. You also will want to search for properties that are closest to the subject property. Start your search with exact matching criteria and then loosen your search requirements if you are unable to find results. For a more detailed breakdown of how to pull comps you can view this post.

Step 3 Make Adjustments – Step By Step BPO Guide

Now that you have your comparable properties, the next part of your step to step bpo guide is to make adjustments to the values of these properties. Making adjustments requires adding or subtracting amounts of money to the comparable properties to make them even to the subject. You have heard the expression of comparing apples to apples. If your subject property has a basement but the comparable does not, clearly the comparable is inferior. You would need to add some money to the sale price or list price of the comparable to make it equivalent to the subject. You can use the following Acronyms to help and remember you are always making price adjustments to the comparables and not the subject.

CIA – Comparable Inferior Add

CBS – Comparable Superior Subtract

Step 4 Summarize – Step By Step BPO Guide

The last step of our streamlined step by step BPO guide is to summarize your information. Remember that the reader of your BPO report is located far away and may have never seen the property. You need to paint an appropriate picture for them of the area, the subject property, the competition and any other factors that may not be easily visible from a far. You are the real estate professional and summarizing all of the data to come up with a final value is your expertise. Make sure you can defend your value with the data and don’t be afraid to stand by your number. If you have a gut feeling that the price should be x then make sure your data supports it.

Our Detailed Step By Step BPO Guide

If you are looking for a more comprehensive Step By Step BPO Guide where we actually discuss every section and in depth how to complete a BPO then we recommend you take a look at our Complete Guide to BPOs. As an added benefit we provide you with a free list of over 250 BPO companies who may have work to give.

What is a BPO? Looking For An Explanation

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What is a BPO?

The term BPO is often heard in relation to foreclosures and distressed properties, but many individuals don’t know exactly what it means. What is a BPO, or broker’s price opinion? A BPO is used by banks to determine the approximate value of a home or property, especially when it’s in foreclosure or distressed. However, it’s different from an appraisal for several different reasons. Here is some information on exactly what a BPO is and how it’s used. Wikipedia defines it a little different. What is a BPO? Wikipedia says its the process hired sales agents use to determine a selling price of real estate.

Broker’s Price Opinion

What is a BPO? Its a valuation of a property. Rather than an in-depth appraisal from a real estate professional, a BPO is a less involved, faster approximation regarding the value of a home or property. Banks often order BPOs from real estate professionals when they just need an estimate of how much a property is worth and when they want to get it back quickly. BPOs can be completed in just a few days whereas an in-depth appraisal could take several weeks.

How a BPO is Performed

What is a BPO and How are they performed? There are a few different types of broker’s price opinions, including an external BPO and an internal BPO. The latter kind is used more often, and simply involves a real estate agent driving by the property to get a good look at the exterior. The professional would then compare the property to a few other comparable properties in order to determine the approximate worth of the home. Agents may look at paperwork that lists features of the home, such as the number of bedrooms, bathrooms and the previously measured square footage.

Internal BPOs

Its tough to generalize all BPOs when answering the simple question what is a bpo. There are actually different types of BPOs. An internal BPO is very similar to the external type, except that the agent actually goes into the home and may measure it or take a look at the features to determine whether the home is outdated, etc. Usually, an internal BPO is more involved and may be a more accurate reflection of the home’s worth.

What is a BPO and Why do Banks Order BPOs

Banks order BPOs over full-blown appraisals for several different reasons. First and foremost, it’s much more cost efficient for them. A traditional appraisal can cost several hundred dollars whereas a BPO rarely costs even a hundred. It also saves the bank time because BPOs come back faster than appraisals. They’re often used before a home is foreclosed on or if the home is going to be sold in a short sale. Banks are able to obtain BPOs from virtually any licensed real estate agent while appraisals must be done by specifically qualified individuals.

Overall, BPOs are beneficial for banks in a number of different ways. Many real estate agents have started performing BPOs on the side because it’s a great way to make an additional income, and they’re not very difficult to perform.

Looking for more in depth information? Below is an excerpt from our eBook How To Complete a BPO

What is a BPO from our eBook

BPO is an acronym for Broker Price Opinion. Broker Price Opinions are an easy way for a third party to get an objective opinion of value from a Real Estate Professional. A BPO typically requests multiple values from the individual performing the report, for example an as is and repaired value. A little confused? Still want to know what is a BPO? It is often commonplace to request an estimate of time required to sell a property when completing a BPO. BPO’s are most often completed for the present time, however, it is not out of the ordinary for a request for values on specific dates in the past. As the name BPO implies, Real Estate Professionals (brokers and/or agents) typically complete the reports. BPO’s are a quick and less expensive alternative to a full-blown appraisal.

Who Orders or Requests a BPO from our eBook

A BPO can be ordered by a wide array of people, however, the most common requestor of a BPO is the owner of a property or a party that has a vested interest in a property. Banks, Mortgage note holders and Mortgage Insurance Companies are the most common parties requesting BPO’s. Often times they have taken back a property through foreclosure and want to get an unbiased opinion of the current property value. Banks often order a BPO when reviewing proposed offers for short sales. A short sale is transaction where the bank agrees to sell the property for less then what is currently owed to them on the mortgage. If the bank believes that the mortgagor may default on their loan or that the cost to foreclose and then sell the home is greater than the loss of selling the home at the with the short sale value, the bank will typically accept a short sale. During the approval process the bank employs Real Estate Professionals to provide an independent third party opinion of the current market value to assist in negotiating an offer they have received on a home. The bank wants to ensure the offer is for at least a fair market value.

In addition to banks or note holders, there are often estate liquidations, bankruptcy valuations, divorce settlements and a myriad of other reasons that a property owner may want to receive a third party unbiased opinion of the market value of a home. A BPO is a commonly used simple tool to get this value.
With all of these potential sources of BPO business now is as good a time as any to get started performing for fee BPO’s.

What is a BPO vs Appraisal

You may wonder what is a BPO and what is the difference between an Appraisal? Why wouldn’t people just hire an appraiser to get a valuation of the property. Appraisals are the industry standard when underwriting new loans on purchases and refinances, but in light of the dramatic increase in mortgage defaults, BPOs have become extremely popular. The cost of a BPO can range depending on whether the property is Residential or commercial, whether it’s rural or easily accessible, and whether the Broker is doing an interior or exterior BPO. (More on that later) Regardless of the variations in costs of different types of BPOs, they are generally speaking far less expensive ranging from $40 – $300 or so based on the factors previously mentioned. Most appraisals will begin at $250 and can go as high as $5000 based on those same factors.

Appraisers are often guided by strict guidelines and state mandated rules that do make an appraisal more thorough and more regulated. Whether this results in a more accurate valuation or just a more regulated one is up for debate. Appraisals often take longer to complete and generally in the range of a week, BPOs are often ordered and returned in 3 to 4 days. With the increased cost and often longer deliver timeframes, Banks and other interested parties have started putting more focus on BPOs as opposed to Appraisals in many situations. Ordering a BPO often allows them to get a quick opinion of market value multiple times over the course of 6 months. Given the higher cost of an appraisal a BPO is often the best choice to keep an eye on the change in value and market conditions.

Are you still perplexed about exactly what is a BPO? Our complete step by step guide to Broker Price Opinions will help.

Broker Price Opinions Making More Income

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Broker Price Opinions as an Alternative Income Stream

Real estate professionals often experience dips in their pay, due to the ups and downs of the real estate market. As many are discovering, broker price opinions (BPOs) are an outstanding way to make extra money until the real estate market improves again. Fairly easy to complete, Broker Price Opinions or BPOs can provide real estate professionals with a steady stream of additional income.

What are Broker Price Opinions?

In some situations, such as potential foreclosures or short sales, a full valuation or appraisal isn’t needed, but a solid idea of the value of a home is. In comes the broker price opinion. A licensed real estate professional drives by the home and gathers information about it, such as previous sale data and the listings around the home, and uses that to formulate the value of the home. In most cases, the BPO or Broker Price Opinions also includes information regarding needed repairs and photographs of the home. Some real estate professionals may include photos of comparable listings nearby as well as the listing information and price.

The Two Types of Broker Price Opinions

There are two main types of Broker Price Opinions, including the interior Broker Price Opinions and the exterior Broker Price Opinions. With an interior Broker Price Opinion, the real estate professional will actually enter the home and may take measurements to include in their report. With an exterior BPO, it’s a simple drive by and process of gathering data. It takes much less time and effort than an interior BPO. Interior BPOs typically pay between $75 and $125 depending upon what is needed and where the property is located while the exterior BPOs typically pay between $55 and $75.

How Much Additional Income Is There to Be Made?

The amount of additional income a real estate professional can make is directly related to the number of Broker Price Opinions they can perform in a day or week’s time. Offers are sent to the real estate professional from asset management companies in care of bank or financial institution accounts.

The number of offers a professional gets will be related to their location and the needs of the financial institution at any given time. Most real estate professionals could expect to be given between 5 and 15 offers each week, which could add up to as much as $1875 per week. However, this is just an estimate of the potential offers and payouts and each professional may experience a different amount.

How to Get Broker Price Opinions Assignments

There are different asset management companies that lenders and financial institutions go to in order to secure real estate professionals for BPOs. Agents will often sign up with several of these asset management companies in order to receive several Broker Price Opinions throughout the week. Some companies require a small membership fee to receive offers. We offer a free list of over 250 Broke Price Opinions companies here.

BPOs are a wonderful additional income source for real estate professionals and this can be extremely beneficial when the local real estate market is down.

Learn How to Complete a BPO

Interior BPO and Exterior BPO

Interior BPO or Exterior BPO

Understanding an Interior BPO and an Exterior BPO

Real estate agents can potentially make extra income by performing BPOs (broker price opinions). While it might not be your dream job, it is a relatively easy way to make money, and in this economy and with this housing market, anything helps. By understanding more about BPOs, real estate agents can determine whether they are interested in pursuing BPO work.

When Is an Interior BPO or Exterior BPO Needed?

Banks that find themselves in need of a quick estimate of the value of a home will order a BPO. This may be because they’re trying to determine whether to accept a short sale or because the home is close to going into foreclosure. They’re typically used when a bank feels as though a full appraisal isn’t necessary, although there are different kinds of BPOs. Bankruptcy proceedings and a few other legal procedures can sometimes also call for a BPO. If you are just getting started it is probably best to concentrate on BPO’s from banks as they are the most plentiful.

Exterior BPO

The less work intensive of the BPO types are exterior BPO’s. Agents will only be required to take exterior photos, sometimes including an address verification and street scene. The idea is to determine the value of the home based on the property style, how old it is, and what kind of home it is. Also to make sure there is no major damage to the property that is visible from the exterior. Information that might be included on this type of BPO can include whether or not the home is occupied, how many rooms are in the home, the shape the land and home is in, and how the home compares to the nearby properties. Some lenders will ask for specific information as well, that should be included on the BPO.

Interior BPO

Another type of BPO is the interior BPO. With this type, the agent will actually need to enter the home. In some cases, the home will be occupied, so the agent will need to set up an appointment with the occupants in order to gain access. Similar information will need to be written down, including the shape the property is in on the inside, whether there are any damages that are visibly noticeable, and any other information the lender specifically asks for.

The external BPO should take about an hour while the internal BPO doesn’t take much longer than that. The typical payment for this kind of work is between $50 and $90. By obtaining a few of these each day, an agent can make great supplemental income and if they are able to receive enough orders even possibly fully support themselves. Performing BPOS’s is often a first step in becoming an REO broker, so if you are interested in listing REO properties, performing fee BPO’s maybe the best way to learn the business.

In order to start doing BPOs, agents will need to sign up with asset management companies that assign these after getting orders from banks. You’re required to have a real estate license, local market knowledge and access to the MLS in the appropriate areas.

Looking for a Broker Price Opinion Form

Want to get started with a Free List of BPO Companies

How to Pull Comps for a BPO

In the world of real estate, agents and corporate property owners heavily rely on the Broker Price Opinion—or BPO—to aid them in their decision making processes. The phrase ‘pulling comps’ simply refers to the act of gathering comparable active and sold listings.

Why Pulling Comps for a BPO is Important

Most of the time, real estate agents and mortgage companies utilize a BPO in order to bypass having a property appraised. A BPO has become even more common as the number of foreclosures and short sales has increased. Ordering an appraisal is an expensive option that can take considerable time to complete, property owners are commonly turngin to real estate agents for broker price opinios. The broker price opinion is a formidable tool, and is often the fastest and least expensive way to determine a property’s value before putting it up for sale. However, the broker price opinion requires agents to gather a list of comparable properties to aid in making this decision. This is why it is important for agents to pull comps for a BPO.

The Information Comps Provide

When an agent gathers comps for a BPO, they are essentially locating properties that are within a certain pre-determined location, of roughly the same size, and that sold within a six month time frame. This information is used in the broker price opinion along with some very specific information about the property in question. The BPO reviews all of the information provided and comes up with a very realistic number; property owners are able to utilize this estimated price when putting a new property on the market.

How to Pull Comps for a BPO

Pulling comps for a BPO can be a bit difficult for newer agents, but the experts find it one of the simplest tasks they are faced with on a daily basis. The best real estate agents and mortgage companies use highly specialized broker price opinion tools; some even utilize a specific team of agents that are able to process the provided information more realistically. In some cases, agents are able to find out whether or not a BPO was utilized at some point in the property’s past. Much of the needed information may already be present in this case; it is simply up to the agent to determine the new value based upon inflation and current property value increases.

How the BPO Uses the Information

The broker price opinion tool or company gathers information that eventually leads to determining an appropriate property value—much like an appraisal. The main difference is that a broker price opinion is cheaper and quicker to obtain. Each locality and BPO company has specific guidelines as to what information is needed. Rural property assessment requires a different sort of information than an urban property assessment, for example. The BPO assesses the current values of nearby properties that have been sold within the last few months, the square footage of those properties, and their selling price. Agents pull comps for the BPO in order to provide an average idea of the properties in the area.

Pulling comps for a BPO is simple if the agent has access to tools that are designed for this reason. There are a number of tools available online to help them pull comps for a BPO, although some require an annual membership.

How to do a BPO – Broker Price Opinion

This is our Short Guide to How to Do a BPO but if you are looking for a more comprehensive book of How To Complete a BPO you may want to Click Here to See our Book

Wondering where to start and exactly how to do a BPO? When a lender, such as a bank or mortgage company, determines that a full appraisal of a property isn’t worth the time or money, a real estate broker will be ordered to perform a broker price opinion. A broker price opinion, often referred to as a BPO, is a method of appraisal in which a broker performs a visual inspection of a property to determine its estimated appraisal value. There are two types of broker price opinions; drive-by and internal.

Step 1 How to Do a BPO: Deciding the right BPO Form

Obtain the appropriate BPO forms from the lender or mortgage company. The same forms are used for drive-by and internal methods. Broker price opinion forms must be completed for legal purposes. A BPO will not legally be recognized without completed forms. Check here to see if we offer the BPO Forms you need. As each step is taken, record the information in the appropriate box.

Step 2 How to Do a BPO: Determine the Age and Style of the Property

Each piece of property is unique and falls into a category, which is used within the real estate industry. For instance, a single-floor home with no attic should be labeled as a “ranch” style property. No matter the type of property, record the number rooms on the BPO forms. Estimate the total number of rooms for a drive-by broker price opinion. Record the estimated age of the property as well.

Step 3 How to Do a BPO: Take Photographs of the Property

A minimum of two photographs must be taken of the outside of the property for a drive-by broker price opinion. Additional photographs may be taken but are not legally required. For an internal broker price opinion, take photographs of the exterior of the property as well as photos of each individual room. Photograph any damaged areas of the interior of the property. For both types of BPOs, write notes in regards to the visual appearance, including damage and cleanliness, on the forms. For an internal BPO only, record notes on the condition of each room. List any damages, the current amount of normal wear on items such as wood and carpet and describe any architectural flaws.

Step 4 How to Do a BPO: Take Measurements

Record the measurements of each room and write down the total amount of square footage for the entire property. If the property has a garage, driveway or parking lot, take measurements of these as well and record the square footage separately. Estimate the measurements for a drive-by broker price opinion.

Step 5 How to Do a BPO: Take Notes on Repairs Required and Maintenance of the Property

For internal broker price opinions only, take notes of the the necessary repairs to the property such as repairs to structural damage like broken roof tiles or damaged windows, the replacement of dirty carpet, damaged window screens or torn wallpaper. Take note of items that need to be resolved, such as removing any snow from the property and maintaining the lawn. Also if there is any trash or unneeded items that should be removed the property.

Step 6 How to Do a BPO: Compare the Property to Similar Properties

Since a BPO is the opinion of a real estate broker agent, a comparison between the property in question and those which are similar is required. Review the current market for at least 3 properties that are of the same size, age and style. Additionally, review properties on the same street and in the same neighborhood. Compare the properties and determine a fair market value for the home which is being inspected.

Step 7 How to Do a BPO: Complete the BPO Form

Record all of the necessary information on the BPO forms and sign the bottom of the documents, if required. Return the documents to the lender or mortgage company and submit the photographs of the property. Once the documents are filed, the lender or mortgage company will complete the process of authorizing the broker price opinion.

Although it is cheaper for lenders and mortgage companies to have a real estate broker perform a broker price opinion, the BPO is nearly as thorough as an actual appraisal. When completing a broker price opinion, follow the steps carefully or the inspection might not be considered valid.