The BPO: The Link that Ties the Entire Short Sale Together

You've certainly heard the term "BPO" if you've been researching short sales. You may be wondering what those 3 little letters stand for, but have been too afriad to ask or didn't want to look stupid. It's o.k. You don't have to worry any more. This fantastic HUB will fully explain the BPO and how it plays a role in the short sale process.

BPO stands for Broker's Price Opinion. It's a process similar to that of an appraisal where a licensed Realtor gives their opinion of value on the property. The assigned Realtor vsits the property, takes photos and then researches comparable sales in the area to determine the market value of the subject property.

There are different types of BPO's. The most common are interior BPO's and drive by BPO's. There is greter detail in the interior BPO, as the agent is required to go inside the property to identify any repairs, or disfunctional charachterisitcs of the property. Then, they list this information on the bank's BPO form, along with 3 comparable properties that are on the market , and 3 comparable properties that have sold within the last 6 - 12 months. FInally, the Realtor gives their recommendation of what the property would sell for in a 30 day "quick" sale.

There are several important elements of the short sale and how the bank determines what they will accept as a final purchase price.  The BPO does play a very big (if not the biggest) role in determining that amount.  Remember that the banks are nationwide, and they have no idea what condition, location, or situation that the house is in. The only thing that they can rely on is the help of professionals who are familiar with the market and can offer their advice.

You should always (and I mean always) make it a point to be at the property when the BPO agent is there. Bring the BPO agent some of your own research, showing him/her your own comparable sales and actives to help him determine the value.  ALso be sure to let him know that the hosue is in foreclosure, and that this is a short sale.  You shoud also bring a copy of the purchase and sale agreement, so that he will see what your target purchase price is.  Also, walk around the property with the BPO agent and point out every single little repair that you can find.  If you have an estimate of repairs, be sure to bring them to the BPO appointment, as well.

Once the BPO has been completed by the BPO agent, they will email or fax it to the bank/lender who requested it. The BPO will be presented and the offer to purchase the property will be considered. The bank will call the contact person on the file within 3 to 5 days afer the BPO has been received by the bank. The bank will typically accept 70% - 80% of the BPO value. If the offer to purchase the property was not close to that, then the negotiations will begin.