How do you handle the BPO?
I’ve seen some interesting blog posts over the last few days that discuss how mortgage lenders participating in short sales determine the value of a property.
First off, so that it doesn’t seem like I am speaking a foreign tongue, I am going to provide a little dictionary definition for novice short sale agents. The bank determines the value of the property using something called a “B.P.O.” which stands for Broker Price Opinion.
To determine this value, the mortgage lender hires a licensed real estate agent. Agents are paid anywhere from $50 to $100 for this service. The service usually requires the agent to visit the property and to provide the lien holder with three ACTIVE and three SOLD listings (within the last 60-90 days) in order to determine the value of the subject property.
In contrast with the BPO, a buyer—when purchasing a property—obtains an appraisal from a licensed appraiser who does a significantly more complete and thorough analysis of the property and the comparable sold properties in the area. Because the appraisal is more thorough than the BPO and because it is completed by a licensed appraiser, the cost for this is greater—usually beginning at over $300.00.
In determining whether the short sale transaction will be approved, the results of the BPO are one of the most significant components of the short sale package—and the one over which the listing agent has the least control. After all, a listing agent can control what items are sent to the bank, when they are sent, and where they are sent. However, the listing agent cannot control the price determination made in the BPO.
If an agent comes from another area of the city in order to prepare the BPO, he or she may not have all the latest information about problems and issues that may be occurring with the subject property or in the subject neighborhood. Additionally, agents who make an appointment to view the property in order to prepare the BPO and are unable to obtain access probably get pretty darn frustrated. After all, if you drove 20 miles to view a property and the key was not in the lockbox or there was no one at the property to open the door, you would be frustrated as well!
Here’s what you need to do.
As short sale listing agents, I always say that our role is to be available to open the door for the BPO and to be available to answer any questions and provide any information as needed. This is a vital component of the short sale transaction. The BPO is ultimately returned to the bank and whether or not the short sale offer is accepted is based (in large part) on the results of that BPO.
So, if you are a lazy listing agent who has little interest in your deal closing successfully, that’s cool. Don’t go to meet the agent preparing the BPO. But, if you want to be a super successful short sale listing agent and see more closings than ever before, get out of bed and go meet the agent at the door!
It may be a little harder to get up early this week (because the time just changed), but if you attend the BPO, it’ll make your short sale transaction go sailing along quite smoothly.