Real estate agents perform all the required documentation for the bpo then they input the figures into an automated form that asks for 30, 60 and 90 day values. A value is then presented to the bank that is actually about 15 percent lower than the fair market value of the property. Why is this done? So the bank can move the property quicker.

But many real estate agents will confirm that they use newer documented values than they are supposed to use. If the automated form asks for 90 day comparisons many real estate agents will input 30 day values. Banking institutions know how the broker price opinion is formulated. It’s no surprise and they welcome a low-priced home that will sell quickly. In fact, agents who routinely provide low-ball values and off load homes within 30 days will get a load of business from the banking institution.

A certified appraiser will be requested by the financer to ensure their interest is secure. They want to make sure the home is not overpriced. So if the asking price comes in undervalued then it’s surely to entice the buyer and pacify the financer. It looks like a great deal the buyer is getting.

Broker price opinions and the real estate agents making money with them know this is an easy money game. To get the listings and keep the business coming in you support low values and a 30day liquidated price. What does this mean to the buyer? All-in-all it can mean a good deal to jump on if you have a good real estate agent on your side to point out deficiencies in the home. So buyers beware; it’s up to you to determine all the other characteristics of the reo property and whether you need to negotiate on the price.

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Lenders understand that individuals cannot finance a home if that property is selling for more than it is worth. The financer will always require a certified appraisal to secure their interest in that property. But people become skeptical about broker price opinions and reo’s that are completed quickly, fast and in a hurry to appease the loss mitigation department.

The majority of BPO’s are based on the liquidated value of a property; most of the listed reo’s are purposely under valued, so that they sell quickly. Banks have been known to hire those companies that fall in line with their own philosophy to move properties quickly.

REO’s have already cost the bank thousands of lost revenue so you can expect they want an appraised value as close to the original worth as possible but they also keep in mind that a low-ball price will entice a buyer.

Will a drive-by bpo be sufficient for your needs? Will other considerations be contemplated about the property to get close to fair market value? A broker price opinion is only a general idea of what that agent believes the home is worth. They may pull documents on homes that have sold in that neighborhood and base their price on a comparison without ever completing a through check of the home. Nothing else is considered like damages to foundation, the roof or the characteristics of the interior.

Broker price opinions and reo’s are heavily used, especially now that banks are overshadowed with long listings of foreclosed properties. But many of the actual “fair market values” are not fair at all.

This is where your real estate agent becomes a sought after commodity. The agent will be able to negotiate a fair price and document why previous broker price opinions may not be justified. Just the comparisons of homes in 90, 60 and 30 day listings combined with a good appraisal will provide clear justification if you’re questioning the price.

Just remember, when dealing with REO’s you’ll have to rely on your real estate agent to provide lots of documentation and the timing to process this venture will be very frustrating. Always question broker price opinions especially for reo’s.

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The lender requires many documents and exhaustive information regarding the marketable value of the home. A broker price opinion probably will not suffice for the type of in-depth information you will want to present. Remember, this is not a foreclosed property so the process will be much different.

To begin a short sale process you must investigate and find the person in charge of accepting these types of offers. Many times this is the most frustrating experience; start with the loss mitigation department or even call their foreclosure department and start asking questions there.

The lender will generally hire a real estate agency to handle the evaluations and they will want to gather as much information as possible if they are going to accept a lower asking price. The lender will want price comparisons; market analysis for the last 90 days and community trends including the number of homes that have gone into foreclosure in that neighborhood.

Now of course, various banking institutions will perform this procedure differently and some will choose a bpo because of the price but if this is acceptable to them the buyer should get a certified appraisal to ensure the broker price opinions is justified.

A short sale definitely saves the lender the expense of moving forward with the foreclosure process so if you can gather enough information on your own to entice the lender to accept your offer they might jump at it quickly; and this all depends upon the information you collect.

Just keep in mind a broker price opinion is unrealistic and favors the lender when dealing with short sales.

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The list has overwhelmingly grown for bank owned properties, more commonly known as real estate owned, or REO properties. These foreclosures have multiplied way beyond what the banks were prepared for and now banks are looking to off load the homes while keeping expenses down. So they’ve turned to using an exterior broker price opinion to develop a fair market value to price these homes.

What is an exterior broker price opinion? It’s an opinion conducted by a licensed real estate agent or broker of the home’s value. It’s by no means all-encompassing; for the purpose of selling these reo foreclosed homes it only provides a snap-shot view of what the home *may* be worth. It doesn’t take into consideration the intricacies of interior effects. The licensed realtor or broker performs a drive-by and using their professional experience and knowledge they produce a price for the bank. This price is what they believe the bank should sell the property for and what the bank could reasonably receive in its current condition.

Why would banks want to use this method when it’s not based upon a true well-thought out cost analysis? This is because it’s much cheaper for banks to pay up to $50 per home instead of paying for a certified appraisal which could cost about $200 per home. Banks have already lost money on non-payment of mortgages and the entire foreclosure process so now it comes down to getting these reo properties off of their books.

However, can the home buyer count on the exterior broker price opinion as a fair opinion? Not always.

Take into consideration that the banks want to recoup as much money as possible. An exterior broker price opinion doesn’t really get a full picture of the foreclosed home’s worth. No structural considerations have been introduced when you rely on the exterior broker price opinion. This is why many investors who purchase a reo property submit a new offer and try to renegotiate the selling price.

For new real estate investors looking to purchase a reo property it’s not something to dive into lightly without the benefit of professional knowledge. If you’re relying on exterior broker price opinion for a market value of an reo property you should perform your own investigation to ensure you’re getting the home’s true value.

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