What is a BPO? Short Sale Specialist Explains BPO Do’s & Don’ts

People involved in short sales and even loan officers and Realtors who haven’t dealt with them may ask themselves, what does BPO stand for? The quick answer is Broker’s Price Opinion. The bank and its investors who are considering taking a loss on a short sale won’t take the sellers’ or the Realtor’s word on the best price for the property. As such, the BPO is something like the bank getting a second opinion from another (supposedly independent) Realtor. The bank will then use this value as a factor when considering the short sale application. It’s important to make sure that the bank does an “Interior BPO” because sometimes the bank will use an automated, computer-generated value that is often much higher than the real-world price. At times, it seems that automated values from banks are often nothing more than wishful thinking on the part of the bank trying to recoup its lost funds. If you’d like to just get a feel for what properties in your area are selling for, please visit our Portland Homes For Sale page for housing market data and the latest real estate listings sorted by city and zip code.

More About The BPO: What To Expect During The Short Sale Process

Sometimes, home owners will want to make repairs on the property and spruce things up to try and give a best foot forward approach to the BPO value but this may not always work in the best interests of the home owner. For example, if you staged the property, made repairs and did everything you could to try and get a higher BPO value then consequently the bank may reject your short sale because it appears that the house is worth more than it really is. Conversely, a lower BPO value will make the bank more likely to approve of a short sale offer.

Factors To Getting a BPO Value You Need To Get A Short Sale Approved

While I can’t offer legal advice, I can say that clients who have been quick to point out the property’s flaws to the bank often find the bank much more agreeable. At which point the bank may enthusiastically agree to a price that they would have rejected otherwise. As such, on successful short sales home owners point out material defects such as water damage, zoning or anything else bad about the house (because you can bet that buyers will be carefully weighing the pros and cons as well). If your house does have serious flaws, get bids from contractors to get the BPO agent to take the cost of the new roof off the value, because potential buyers won’t pay full price for a home needing expensive repairs.

When The BPO Goes Wrong: How To Recover

Sometimes, the BPO agent will simply come back at an impossibly high value (which is not what you want but there are ways around it too). Work with your Short Sale Specialist Listing Agent to find out why the price came back high to see if you can address the issue and perhaps get the bank to reconsider its valuation. Some BPO agents simply price things high because perhaps they aren’t as neutral as they appear; a BPO agent may want to keep prices in that neighborhood high to protect his own properties or to help another client’s listing to look better. At other times, the BPO agent may wish to influence events such that if the short sale fails, they will get the foreclosure listing from the bank. At other times, the house just looks better on paper than in reality. The BPO agent may have seen the home that sold down the road with similar features but neglect to account for the fact that your home is near a busy intersection and will fetch a lower price as a result. Often, the worst case scenario on a BPO is that the high value simply comes and goes with no offers (provided you don’t have a looming foreclosure auction date). The BPO will expire in around 90 days at which point you can often learn why the BPO came back high before and address these issues with the new BPO Agent.

Lastly, you may also find that the bank or its investors require a full appraisal for the property rather than a simple BPO. These in-depth appraisals make it even more important to communicate to the appraiser what the condition of the property is and whether or not it is in good enough condition to pass buyer financing guidelines. If the home needs extensive repairs and is sold a a cash-only fixer, make sure the appraiser takes that into account.

If you need help from a team of short sale specialists in the Portland or its suburbs make sure you call us immediately to put our experience on your side.

Best Regards,

Richard Lockwood
Real Estate Broker
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