What Does A BPO Entail?

[Robin Anderson]

Probably a stupid 'NEWBIE' question:

I understand that some AMC's have products they offer from title specialists, realtors, home inspectors as well as appraisers. They list BPO as a product. What does that mean exactly to an appraiser if he chooses to complete one? Is there any kind of inspection, drive-by or picture? A special form involved?

I don't know, but it sounds like an opinion of value which for an appraiser means completion of a USPAP compliant form. Is it maybe a shortcut value that lenders use? This is what I suspect, and I don't see why any appraiser might do this kind of work with the liabilty involved for little bitty money.

Why am I asking? A realtor asked me the other day if I did BPO's. Like she expected me to be doing them. Am I off base here?

Thanks!
A Registered Appraiser

 

[Bill Rose]

Broker Price Opinion?

 

[Kimberly Osborn]

A google search turned up BPO forms, broker price opinion. I did see some a la mode appraiser sites that hit on the search for BPO's....

Yet another one of the zillion forms that the mentor said are there, you may never use but you need to know about. :blink:

 

[Chris Colston]

There are two versions of the Broker Price Opinion form, one for Freddie Mac, the other for Fannie Mae.

The Freddir Mac form asks for a "Value Estimation" of Probable Sale Price AS IS and AS REPAIRED expressed in Marketing times of 90, 120 and 180 days. It also asks that the appraiser or broker indicate if the property should be listed AS IS or AS REPAIRED. The form states you are to attach Interior and Exterior photos of the subject. There is a second page wher you list competitive listings and closed sales and rate the various line items as S = SUPERIOR and E = EQUAL and I = INFERIOR.

Since the form asks for a Value Estimation I consider it an appraisal and must include all of the appropriate USPAP addenda and create a work a file.

Some states have declared that appraisers may not do BPOs unless they are also Real Estate Brokers and are signing as Real Estate Brokers.

I've attached a PDF copy of the FREDDIE MAC form. In my next post (unless some one beats me to it) I'll attached the FANNIE MAE form.

 

[Richard Carlsen]

Broker Price Opinion

An ingenious device for skirting the laws and obfuscating rules about having an appraisal on a loan.

A quasi-appraisal most often used as validation for equity loans.

Supposedly used by lenders to get a value for a repo house that is about to or was just taken back but in fact used where ever they can get away with it.

A product that requires too much time and effort for the fee and requires no other qualification than the practitioners performing the BPO have a real estate license and be above room temperature.

Not one of your normal appraisal forms used by licensed appraisers.

 

[Chris Colston]

The FANNIE MAE form is a bit more detailed than the FREDDIE MAC form. The Competitive Closed Sales are on the first page and this form wants dollar adjustments. It asks for a Marketing Strategy of AS IS, MINIMUM LENDER REQUIRED REPAIRS or AS REPAIRED and also has a place for repair estimates. This form also asks for a specific market value and suggested list price. This form does not require any photos. Because it asks for a value, it is in my opinion, an appraisal and all of the appropriate USPAP addenda must be attached and a work file be created.

Since there are two distinct forms, you would have to know which secondary lender was going to be buying the loan in order to know which form to use.

You will also want to check with your mentor and state board to find out if these forms are worth the documentation headache they present and if they are legal in your state.

I've attached the FANNIE MAE form.

BTW..these forms are found in most of the good appraisal software programs.

And a further note, I don't do BPOs even though I am a Realtor Broker.

 

[Robin Anderson]

Chris,

Thanks so much for your input and the pdf files. You confirmed what I thought...don't do them.

R

 

[Farm Gal]

A BPO is something that my Realtor mother in law can and does perform for the legitimate purpose of acquiring listings.

She DOES attempt to screen for legitimate requests.

~~~~~~~~~

A BPO was what was produced when I the homeonwer DEMANDED to see the 'appraisal' which I paid for when my residential property was 'appraised' for the purpose of securing a residential loan several years back. it was no surprise that the 'appraisal fee' generated a half page report signed by a Realtor.

Realtors and sales agents who are not memebrs of the national Realtor organization are (in many states) performing illegal acts when they produce BPO's for the purpose of residential lending: it depends on the applicable state law.

~~~~~~~~~~

As Chris mentioned, a BPO IS an appraisal and if performed by an appraiser must comply with USPAP (no mean feat of using BPO forms)... and if in a mandatory state is _not_ permtted to be used for lending valaution purposes.

(nice new bod Chris, Coming across a leetle stronger these days, power dress and all )

 

[Caterina Platt]

Robin,

It's already sounding like you have the head (and nose) for this business. Welcome!

 

[Elliott]

Grasshopper,
Do you really want to do BPO's ?
While realtors put down 3
comps with no analysis, and
viola they have a figure, you
are held to a higher standard
and must collect, verify support, and
analyze.

BPOs pay stinky too.

Tell me your answer Grasshopper
then there will be the next lesson.

elliott