Purposes of Broker Price Opinions

Posted on December 10, 2011 by Tom

Broker Price Opinion reports are utilized for a variety of reasons.   The primary reason a BPO is ordered by a client surrounds the need for a sale value of a property.  This is often because the client (the individual who ordered the Broker Price Opinion) has a secured interest in the property or needs to make a financial decision on the property.

Some common purposes that Broker Price Opinions are used for include:

  • removing private mortgage insurance (PMI) payments from a loan payment
  • real estate investors buying bulk mortgage groups
  • properties going to foreclosure sale
  • short sale approvals
  • legal proceedings including divorce and estate settlements
  • reconciling appraisal values in foreclosure transactions

The Broker Price Opinion is a very useful tool to lenders, investors and servicers.  The information contained within the report can assist the holder in making significant decisions as they relate to direction on real estate properties.  The purposes and uses of these reports are as varied as the properties for which they are originated.

 

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Exterior and Interior Broker Price Opinions

Posted on December 9, 2011 by Tom

There are two prevelent types of Broker Price Opinion reports:  exterior and interior.  The difference in the reports is whether or not the reviewer has access to the interior of the property.  Each client has different requirements for both types of reports.

The exterior broker price opinion (BPO) is sometimes referred to as a drive-by report.  The exterior broker price opinion is one in which the reviewer takes photos and does the inspection without trespassing on the subject property.  The photos are taken from the agents vehicle or from the curbside of public property.

An interior broker price opinion (BPO) report is compiled from an interior inspection of the subject property.  The reviewer agent or broker gains access to the property and physically inspects all areas of the property.  The reporter will take photos of each room and ascribe a condition to the property for the selection of comparables.   The report is more indepth as it contains more exposure to the details of the property.

Again, it is important to note that each client’s requirements are different as they relate to Broker Price Opinion reports.  Generally, an interior Broker Price Opinion report includes all of the items on a exterior report plus additional information.  The goal of both reports is to evaluate a subject property against generally equal comparable properties in the subject market to determine a potential sale price.

 

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Contents of a Broker Price Opinion

Posted on December 8, 2011 by Tom

Most Broker Price Opinion reports contain specific sections.  The broker or agent attempts to complete these details as accurately as possible in accordance with the client’s guidelines.  The typical sections of Broker Price Opinion report are:

  • Preparer details – this section describes who is preparing the report, the client and affiliated contact information
  • General market conditions – details regarding the market area, number of sold properties, job conditions and details on how long properties are generally on the market
  • Subject marketability – this section covers in general how the subject properties compares to the local neighborhood
  • Competitive closed sales – compares the subject property to other properties that have sold within a specific time frame
  • Marketing strategy - this section covers any repairs that are needed for the property and the most likely buyer of the property
  • Competitive listings – this section identifies several properties that are on the market that are similar to the subject property
  • Market value – this section defines how much the agent or broker believes the property will sell for within a certain time frame
  • Comments – the comments section is utilized to add context to the report and cover any condition issues, special circumstances or other details

These sections are examples of sections that could be included in a Broker Price Opinion (BPO) report.  Each client that orders reports has specific needs and requirements.  All Broker Price Opinion (BPO) reports are unique in content.

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