Many financial institutions outsource certain services as cost saving practices. One of the outsourced services is the Brokers Price Opinion (BPO). The Real Estate BPO is a 2-3 page report that establishes the opinion of real estate brokers about the value of a property.
Who are real estate BPOs?
There are basically two groups of real estate BPO providers: a real estate BPO company and real estate professionals who independently complete BPOs on demand directly from financial clients. BPO Company – An independent company (or division of a finance company) that acts as a clearing house for financial institutions. As a temp agency, the company selects and qualifies the real estate professionals with whom they will partner to complete BPO. This is the general process:
Financial institution hires BPO company to complete this work. The company outsources the actual appraisal and report preparation to qualified real estate brokers. The company provides general supervision, completes quality assurance evaluations of submitted reports, and returns completed reports to the requesting client. Real Estate Professionals: They accept BPO jobs from different companies and / or independent financial institutions. BPO work can be an additional source of income or the broker’s only business income. To do a BPO job, one must be a current licensed real estate broker or licensed appraiser. In some states, it is illegal for a real estate broker to be compensated for completing a BPO. Check state regulations before taking certification courses and offering these services.
Who uses the BPO reports? Properties can be in foreclosure, short sale, or real estate (REO). Financial institutions use BPOs to determine the current value of a property. They are also used to determine the sale or purchase price of my4walls a mortgage loan portfolio and as part of refinancing a recent mortgage or establishing a home equity line of credit.
The BPO report includes:
Value of comparable properties in the area
Local and regional market information
Amount of repair or renovation required to make the property marketable. BPO Categories
There are basically two types of BPO reports:
Drive By BPO – Requires the real estate broker to pass through the property, but does not require the broker to get out of the car or into the home. The broker takes pictures and completes a Drive By BPO form. The average fee for a Drive By BPO is $ 50.00. Internal BPO: the broker must verify specific points of both the exterior and the interior of a property. Tasks can be similar to Drive By BPO, but there are often more requirements, including contacting a landlord who may be going through foreclosure or a tenant who has not been informed of the inspection appointment. The fee for an in-house BPO generally ranges from $ 100 to $ 175. In addition to the requirements of an internal BPO, the client can ask the broker to complete additional tasks including:
Re-key of locks
Snow removal / winterization
BPO activity can be somewhat cyclical, more profitable when foreclosures rise. Industry experts recommend that a BPO broker have good time management, tracking skills, and billing practices to protect and maintain profitability. The broker must also conduct each visit with the utmost care and diplomacy.