BROKER'S PRICE OPINION

By
Real Estate Agent with OC ShortSale Arena

The Broker's price opinion (BPO) is the central point in a short sale evaluation. In most markets, prices are trending downward. The banks and lenders only have one way to determine whether they should sell the home now at a loss or hold it and sell it on their own. This is called the 'BPO', or "Broker's Price Opinion. It's basically a very fancy CMA.

Remember, the BPO is not based in any way on what the seller OWES.

The banks are not in business of owning Real Estate. They are in business for lending money for others to own real estate. With that being said, the banks do not make foolish business decisions. The bank would rather take a small loss now rather than a larger one later. It's simply a business decision.

The manner in which the lenders detemine whether they should accept an offer, reject the offer or counter it is all based on the BPO. With the BPO taking such a critical role in whether the deal will get approved or not, this suggests that the Agents 'price' the house correctly using a few standard formulas. Always try to compare Apples to Apples: three sold comps and three active comps. The bank will do a BPO without feelings, care, thoughts: do not try to humanize the BPO. The bank only cares about the numbers. When you do your BPO think like the bank. This provides you with the opportunity to price the property correctly.

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Rainmaker
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Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate
Ezra:  Taking the human approach is oftentimes just what gets the listing agent, and the seller, into hot water.  Yes, the banks don't humanize selling the home.  And, if we can, we the listing agents... although we need to be empathetic... we need to show that "the market" determines what the homes will sell for, and "the market" really doesn't care about the "human" situation of the seller.  It's cold... but it's realistic.  A good post... thanks for sharing.
Apr 18, 2008 12:34 AM #1
Rainmaker
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Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate
Ezra:  I just noticed that this is your first post.  Welcome to Active Rain.  You did pretty darn well for a first post... but I read your profile, and it sounds like you have some pretty good real estate experience.  Again... welcome !
Apr 18, 2008 12:36 AM #2
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Brad Andersohn
Zillow - Nat'l Outreach Mgr & Dir. of Zillow Academy - Fairfield, CA
ActiveBrad 707.646.1876
Hello Ezra,

I see this is your first post on Active Rain.  Congratulations!!  I just wanted to welcome you to a fantastic Real Estate Industry Network!  Welcome aboard, I hope you'll continue to Blog, and invite others.  

I’ve added a link to a post called, “NEW MEMBERS – Start Here” that will hopefully get you up and running with the least amount of effort, and also help you to navigate around Active Rain more efficiently.

I hope you'll find this to be a useful post in helping you get started. 

Again, welcome to Active Rain, the best place to start, and have a Blogging experience!

Good Luck to you and your business!  B-)
Apr 18, 2008 12:37 AM #3
Rainer
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Bo Buchanan
Blue60.com - Oswego, IL
Blue60.com Directory, For Real Estate Pronulls
I often find the lenders narrow restrictions actually hinder putting together an accurate price opinion.  I'm just going to rant for a minute ;)  It's called a Brokers Price OPINION.  I recently did a BPO for a home that was in nasty condition!  And the broker wouldn't accept my price because I couldn't find an comparably sold property.  So I had to adjust my BPO up by $10k.  In my opinion, it was too high.  As a matter of fact - I think I'll blog about it!
Apr 18, 2008 02:28 AM #4
Rainmaker
630,071
Don Rogers
Keller Williams Realty Chesterfield - O'Fallon, MO
Realtor, Broker, CDPE, GRI, OnullFallon MO & St Charles County MO homes

Ezra, Thank you for the post.  The bank wants the opinion of the realtor(r) as to the value of the property and when I do them that is what they get and it is always apples to apples.  Welcome to AR and as other have said good first post. :-)

Don R.

Apr 18, 2008 04:13 AM #5
Rainer
60,711
Dorene Shirley
The Mortgage & Property Connection - Campbell, CA
Silicon Valley Real Estate

Ezra - Welcome to the Rain, make sure that you browse the site and become familiar with everything this site has to offer.  The more you browse the more you will learn.  I have found this site to be really helpful to me.  If you have any questions, please don't hesitate to email me, I will do whatever I can to help.

http://www.doreneshirley.com/

Apr 18, 2008 06:54 AM #6
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Renée Burrows
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate - Las Vegas, NV
Las Vegas Real Estate Broker - www.urLVhome.com
I do think that sometimes the third party companies try to humanize it with things that are not possible with "clarification requests".  Some seem to be in denial on the true value of a property.
Apr 18, 2008 08:07 AM #7
Rainmaker
893,958
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Ezra, I think you captured the essence of doing a good BPO. BPO's are something that shouldn't be taken lightly when putting them together for the bank, relo company, etc. Thanks for sharing.

Good Post!

Apr 18, 2008 08:22 AM #8
Rainmaker
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Keith Elliott Jr
KEIRE Realty Group - Manassas, VA
Principal Broker/Owner

Hello Ezra,

Welcome to Active Rain and congrats on your first post! The opportunities to learn and network are incredible here. Best of luck to ya!

-Keith

Apr 18, 2008 11:11 PM #9
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Rainer
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Ezra Sturgis

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