Word of The Week: BPO
Oh, the wacky world of real estate always love to confuse people with acronyms anonymous.
However, that’s why I’m here to help clear the confusion for you.
BPO simply stands for Broker’s Price Opinion.
This is when a Real Estate Broker (or agent) analyzes the neighborhood and give a price opinion on a particular house’s value. This is slightly different than a Comparative Market Analysis (CMA) or an Appraisal which are used to determine values in other cases.
A BPO is generally used by banks when they are preparing to list a Bank-Owned Property for sale, or they are pressed with approving a Short Sale.
What goes into a BPO?
A BPO consists of at least 3 recently sold properties, and 3 active listings currently on the market. The goal of the BPO is to give the bank a good estimate of the current market value of a home. There are exterior and interior BPOs, which can sometime take into account any repairs and updates that need to be made for the home.
If the bank is looking at approving a Short Sale, this BPO is the main determining factor for whether they will say yes or no to the lower price.
A low BPO can ruin a Short Sale deal, and frustrate buyer, seller, and eventually the bank. If you are thinking about making an offer on a Short Sale listing, keep updated through your Realtor on whether the BPO has been completed and what the value came back at.
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It would be great on short sales if they always disclosed on the MLS if the BPO has been done or not.
Thanks for your post Steve. Great info!