Just to add some personal experience and plain english...
Bene's that are foreclosing, such as Fannie/Freddie/Indy Mac hire contract agents to flip the properties for them after the foreclosure sale has reverted to the bene and become an REO (Real Estate Owned <read:by the bank>.
These agents typically get 1.5% of the sale price when listing the property, and CAN double end it. The benefit weighed against the small commish earned is that the contract agent gets more of these REO's than he knows what to do with, and makes a decent living.
In order to come up with a sales amount of the property, the contract agent or "broker" does his evaluation, called a Broker's Price Opinion or BPO. They also recommend costs of rehab, and manage the rehab for the bene right up until sale.
In my experience, a BPO is waaaay to exhaustive, and although I perform due diligence before sale, if I had to do a BPO on every property before sale, I'd never make it to the auction. It's total overkill. A BPO is for the protection of and justification of the bank and the bank's price of sale and rehab. They have to document all of these non-performing assets on thier books.
This is the short of it. Hope this helps. -MakoShark
BPO (broker's price opinion) is a cost effective means for a foreclosing lender to evaluate a property. It isn't as comprehensive (or costly) as a certified appraisal performed by a licensed real estate appraiser, but it can be a good indicator of value.
The downside to a mortgagee's reliance upon a BPO is this: real estate brokers often exaggerate a property's value in an effort to gain an REO listing...
If the REO department obtains two BPO's from competing brokers, they'll probably favor the broker who projects a higher sales price.... since it's incumbant upon the REO department to maximize their net recovery of a non performing asset.
That's why I always try to perform an appraisal review on any property I seek to facilitate a short sale acquisition. In A Short Sale Primer I describe how I contested a certified appraisal, and had the appraiser adjust his opinion of value downward by $50,000... making the numbers work for my deal. [ Edited by TheShortSalePro on Date 08/08/2003 ]
I will be getting my Brokers license very soon. I am in CA. Anyone else out there doing BPO's for extra cash to pay for the wifes toys? Anyone know where I can "enlist," for doing BPO's ? Is this something I have to offer to clients locally? I think this would also be a great lesson to learn the MLS more in depth. The concept so far as I see it is kind of being a High School Teacher operating under an "emergency teaching credential." Per se. I say this because I would be paid less than a licensed appraiser, and not hold that license. Just as a teacher with just a B.S. or B.A.
If you're thinking about doing BPO's on a fee basis (as opposed to doing a BPO in anticipation of getting a listing and collecting a listing commission when it sells), I suggest you find out if there are any requirements/prohibitions from CA RE Dept and/or the CA Board of Certified Appraisers. Here in PA, the Board of Certified Appraisers has taken the position that RE licensees are not permitted to do BPO's for a fee.
You can email / PM me and I can tell you some companies to sign up with. We do around 100 BPOs per month for around $38 - $50 each. THIS IS HARD WORK AND IS LIKE A FULL TIME JOB so don't take it lightly but yes, it is a nice source of extra income. You do need your real estate license, though, and in our state you need a letter from your Broker stating it is ok for the company to pay me directly vs. paying the broker.
Brokers Price Opinion. If you need anymore terms, click on Tools on your MyTCI page.
BPO is used when the lender needs to know the current value of the home.
This is typically done during a short sale.
Hope This Helps!
Mrs. Meltzer
Just to add some personal experience and plain english...
.
Bene's that are foreclosing, such as Fannie/Freddie/Indy Mac hire contract agents to flip the properties for them after the foreclosure sale has reverted to the bene and become an REO (Real Estate Owned <read:by the bank>
These agents typically get 1.5% of the sale price when listing the property, and CAN double end it. The benefit weighed against the small commish earned is that the contract agent gets more of these REO's than he knows what to do with, and makes a decent living.
In order to come up with a sales amount of the property, the contract agent or "broker" does his evaluation, called a Broker's Price Opinion or BPO. They also recommend costs of rehab, and manage the rehab for the bene right up until sale.
In my experience, a BPO is waaaay to exhaustive, and although I perform due diligence before sale, if I had to do a BPO on every property before sale, I'd never make it to the auction. It's total overkill. A BPO is for the protection of and justification of the bank and the bank's price of sale and rehab. They have to document all of these non-performing assets on thier books.
This is the short of it. Hope this helps. -MakoShark
BPO (broker's price opinion) is a cost effective means for a foreclosing lender to evaluate a property. It isn't as comprehensive (or costly) as a certified appraisal performed by a licensed real estate appraiser, but it can be a good indicator of value.
The downside to a mortgagee's reliance upon a BPO is this: real estate brokers often exaggerate a property's value in an effort to gain an REO listing...
If the REO department obtains two BPO's from competing brokers, they'll probably favor the broker who projects a higher sales price.... since it's incumbant upon the REO department to maximize their net recovery of a non performing asset.
That's why I always try to perform an appraisal review on any property I seek to facilitate a short sale acquisition. In A Short Sale Primer I describe how I contested a certified appraisal, and had the appraiser adjust his opinion of value downward by $50,000... making the numbers work for my deal. [ Edited by TheShortSalePro on Date 08/08/2003 ]
I will be getting my Brokers license very soon. I am in CA. Anyone else out there doing BPO's for extra cash to pay for the wifes toys? Anyone know where I can "enlist," for doing BPO's ? Is this something I have to offer to clients locally? I think this would also be a great lesson to learn the MLS more in depth. The concept so far as I see it is kind of being a High School Teacher operating under an "emergency teaching credential." Per se. I say this because I would be paid less than a licensed appraiser, and not hold that license. Just as a teacher with just a B.S. or B.A.
Any advice or comments appreciated. Thanks, Jason
Jason,
If you're thinking about doing BPO's on a fee basis (as opposed to doing a BPO in anticipation of getting a listing and collecting a listing commission when it sells), I suggest you find out if there are any requirements/prohibitions from CA RE Dept and/or the CA Board of Certified Appraisers. Here in PA, the Board of Certified Appraisers has taken the position that RE licensees are not permitted to do BPO's for a fee.
You can email / PM me and I can tell you some companies to sign up with. We do around 100 BPOs per month for around $38 - $50 each. THIS IS HARD WORK AND IS LIKE A FULL TIME JOB so don't take it lightly but yes, it is a nice source of extra income. You do need your real estate license, though, and in our state you need a letter from your Broker stating it is ok for the company to pay me directly vs. paying the broker.