BPO or Broker Price Opinion Definition and Process

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Definition: BPO is an acronym used extensively for a "Broker Price Opinion." While we do CMA's, or Comparative Market Analysis, for our real estate clients, BPO's are different.

A lender, bank or loss mitigation company my have homeowners with delinquent mortgage payments. In the period before foreclosure, the lender will pay a real estate broker to complete a BPO on the property. Usually the lender has their own form and criteria for how the valuation will be verified.

When a homeowner reaches a specified number of days past due on their mortgage payments, the lender or their asset manager will begin a process to check on the home and its condition in case they will need to foreclose and sell it.  They often contact a real estate agent or broker qualified to do a quick valuation or inspection of the property.

There are organizations that have formed to train and register brokers in Broker Price Opinion procedures.  NABPOP, the National Association of Broker Price Opinion Professionals, is one of these.  Many lenders locate local BPO professionals through these organizations.  Since many home mortgages are issued by national companies, they do not have feet on the ground everywhere.  They need to locate a local real estate professional.  Local brokers are needed because:

  • They know the local market conditions.
  • They have current local home price data.
  • They can find the property easily because they're working the area.

    There are two types of BPOs.  Because the lender or asset manager has no idea of the situation of the homeowner, they are careful in some cases to not alert them to this first process step.

    The Drive-by BPO

    This is as the name implies, a drive-by.  The broker is not tasked with getting into the home, only with driving by and trying to assess the condition from the outside.

     If they are reasonably certain that there is nobody home, they may get out and look over fences or through windows.

    Of course, in this situation the valuation will at best be broad estimates of value, as too much about the property's condition inside and out is still unknown.  If the homeowner has abandoned it, the agent may see evidence of that, such as tagged electric or gas meters.  If so, they note that on the BPO form and will likely be tasked to return and do an interior BPO.

    The Interior BPO

    This is more like the process an agent would go through with a homeowner to list their home.  They gain access and can do a thorough walk-through to see the condition and features of the home.  They can then do a more thorough valuation.  

    The broker/agent submits the BPO on forms required by the lender or asset manager.  The estimate of value is used by the lender to determine their exposure to loss based on the amount owed on the mortgage.

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