Real estate brokers are given an order to do a BPO by the lender, mortgage company, or loss mitigation company. The broker does either a drive-by BPO or an internal BPO in most cases. However, that’s slowly changing, as the appraisers don’t want to do BPOs anyway, as the work doesn’t pay enough. Some real estate agents who are barely hanging on, though, are happy to make $75 to $150 or so to go out and fill out the lenders’ form for valuation of a property. But collecting a fee may not be the only motivation for a real estate agent to work on broker price opinions. Some brokers want to do BPOs because it gives them an opportunity to list the property. Broker price opinions may also be a great way for real estate brokers to keep a track of possible foreclosures about to hit the market as well as the condition of the homes. That could give them a competitive edge. However, many states have strict conflict of interest rules governing broker price opinions. For example, if a broker gets requested for a BPO but the property is listed or is under contract through another broker at their real estate agency, it may trigger a conflict of interest, according to rules in Maine.
When Is a Broker Price Opinion Used?
Lenders and mortgage companies might use a broker price opinion for many reasons including saving on time and cost. Lenders may also use BPOs to evaluate homes without involving the occupants of the home. That could occur in certain specific circumstances such as foreclosures or in homes where the lender may want to consider a refinance or mortgage forbearance agreement.
Types of Broker Price Opinions
By far, two major types of broker price opinions are used by national lenders and loss mitigation companies:
Drive-By BPO
A drive-by BPO is a common tool for lenders in foreclosure and refinance situations. If the property is occupied, the lender may not want to alarm the borrower or create an antagonistic situation with the real estate person. Sometimes the agent will arrive to do a drive-by BPO only to find the property abandoned. They would then call the company ordering the BPO to see if they want to convert it.
Internal BPO
The more thorough type of BPO, the internal broker price opinion, requires a great deal more in the way of information, valuation work, and photos. It is important to follow the instructions of the lender and take care to fill in the forms properly if you want to get paid. Also, photos should be taken as the instructions direct. If they want front, rear, and side views, make sure you get them all.
