How to complete a Broker Price Opinion

If you're in real estate right now, you know how much more erratic making a living is these days. Many real estate agents have turned to completing BPOs on the side or even full-time to make steady income between real estate closings. After helping and managing for one of the largest BPO teams in the country and personally completely and/or training others on completing close to 8000 total BPOs, I know what the BPO companies are looking for, what questions to ask them, and how to read "special instructions" correctly so you get more BPOs. The first step is getting your foot in the door, the second...well that's keeping the work coming.

Please don't take this the wrong way, but to be blunt about it, please don't think you can do a BPO simply because you've done CMAs (comparative market analysis) and have been in real estate for 20 years. If you think that, you are very much mistaken and will put more opinion into your BPOs than is desired. It is called a "BROKER PRICE OPINION" but in actuality, they're looking for 5% opinion backed by 95% facts and statistics. I have trained dozens of real estate agents all across the United States and I think 3 out of 70 really knew what they were doing and all of them still learned from me. My experience and the person who trained me combined with my training style is why I've been able to help so many step into the BPO world.

The BPO system usually works like this: banks hire asset companies or BPO companies to handle the completion of BPOs. The asset companies and BPO companies then in turn seek out real estate agents to complete these reports in and around where they live or work. These companies are always actively reporting back to the banks (at least every 24 hours) on the progress. Your report needs to be clear and comprehend-able by someone who is not familiar to your market. For example, I always tell my students that the Quality Control (QC) department that reviews BPOs is not always familiar with the city you live in and does not know what home values are doing, what the crime rates are, and why you broke the basic BPO and valuation rules. The rule of thumb is: if you break a rule explain WHY you had to break it. Rest assured the QC department will double check this to make sure you didn't just throw 6 comps together or make up the information.

Here are the steps to completing a BPO:

1. READ THE INSTRUCTIONS. Even if you've completed HUNDREDS of BPOs, I hope you know to take time to read the instructions. They will tell you when it's due (if earlier than normal), how the pictures should be taken (if different from normal) - this is commonly the case with large BPO companies that have different clients, and guidelines for the comps you can use (how old the comps may be, what the variance in values can be between comps, how far the comps can be away from your subject property, etc). Most mistakes for completing BPOs can be avoided here simply by reading and following the directions.

2. Log into your MLS and pull the subject property to see if it's listed (Active, Backup, Pending, Under contract, Temporarily Off), to look at prior listings (sold, expired, withdrawn), read the listing remarks and view pictures (if any) and pull up the tax records to review the spec on the house.

3. Drive out to take your pictures. Be sure again to review which photos you need to take. Usually it's 3-8 for exteriors and 14+ for interiors and usually the bank DOES NOT want the homeowner to know you're completing a BPO (watch my videos to find out why and the other applications of BPOs besides for short sales and REOs). I recommend taking the pictures from inside your car if it's an exterior "drive-by" report but remember that you cannot have any part of your car in the pictures so that means roll the window down and stick the camera out - AND don't take pictures through the front windshield. If your pictures don't pass the QC department, they will send you back out in order for you to get paid. I go over all the common mistakes for BPO picture taking in my two photo videos. If the property is listed and/or was listed in the last 12 months, listing information is usually needed. If it is an interior inspection, it is usually very common for you to meet the listing agent. Most will give you comps. If at all possible, DO NOT TAKE THEM or take them and kindly throw them away without a glance. DO NOT allow them to persuade or influence the value of the report. By doing so, you could be placing yourself on the infamous BPO/REO black list (which would prevent you from getting future BPOs, REOs, and even prevent your OFFERS for buyers on short sales and REOs from being accepted). The same result could occur if you falsify information on a report. Typos are fine, making information up is not.

4. Pull comps. Start within the subdivision, builder tract, or neighborhood of the subject. These are the comps that are most like the subject. Remember to select them within the allowed variances: 1. price, 2. finished square footage, 3. lot size, 4. close date, 5. bedroom/bathroom counts, etc. If your subject has a basement and/or finished below grade square feet (commonly called GLA - gross living area), then you'll need to try to bracket for that too. If at all possible you want to start with your SOLD comps. These are the best indication of value, then you select your ACTIVE/LISTING comps. Your sold and active comps should be all within the same price range. Like my teacher told me: you're painting a picture for the bank (and putting your name to it) so make sure you report makes sense and would stand up to scrutiny 10 years down the road.

5. Comment on your report to tie it together. If you had to break ANY of the basic BPO rules, make comments. This does two things for you: 1st, it shows you know what you're doing to the OC department and 2nd, it makes the "picture" you paint that much clearer with why you did certain things. The BPO companies and asset companies have an internal grading system and "kickbacks" (reports that don't pass QC) brings your personal rating down and that will affect if you get more work. Don't rely on the automatic software that detects errors for the online platform BPO systems. Even if an error does not come up, you should comment on anything out of the ordinary, IF THE PROPERTY IS UNDERVALUED, and if you broke any of the BPO rules and guidelines.

6. Follow up with your contact at these companies after completion to ask for more work.

*****BY REQUEST, I WILL BE RE-MAKING AND UPDATING ALL MY VIDEOS IN THE FOLLOWING WEEKS - May 3, 2012*****

More Training Videos Will Be Coming Soon, so Bookmark this page and visit weekly for updates!

The truth is, there are just over 100 BPO companies and only so much BPO business out there. Why would you buy a list claiming 400 companies when there are FREE lists with the 100 BPO companies that make up 99% of the business out there.

Here are two FREE list I found:

BPO Access List

Nicole Ocean's FREE BPO Companies List

Valuation Vision, has a new BPOMerge product as reported by YAHOO and DSNEWS. This California based company has a great business model and product. And that is why you should visit a> and be a BPO agent.

The DSNews Story can be found here.

Veros Real Estate Solutions is a company providing valuation products. This company may or may not have a network of real estate professionals.

EMortgageLogic is a great company to sign up for because the word on the street is that they have a steady flow of work...but beware that you have to respond quickly to get orders.

The company I used to provide BPOs for: LPS and LSI are always getting huge order drops and another great company to sign up for - BUT they only take agents who have prior BPO experience.

THIS COMPANY IS FOR APPRAISER ONLY - Distressed Property Appraisal - Partner with InHouse
and get Appraisal work!

Infinity Valuation Services is expanding it's valuation services! ONLY apply if you meet their qualifications: at least 5 yrs in real estate, at least 2 yrs valuating distressed properties, at least $9 million in personal sales production.

Another one to sign up for: Summit Valuations.

Keys to success: WHEN YOU GET YOUR FIRST ORDER, DO IT SUPER FAST AND DO IT TO A VERY HIGH QUALITY. AND REPEAT.

Download the latest BPO Standards and Guidelines!

Tip of the Week: It is okay to ask questions to your management company/BPO company contact. Ask them what they want. Ask them about stats and how they'd like them calculated. Most times, they'll ask how YOU usually obtain these stats. If the say that, you use your best judgement to find the information on the MLS. They don't rate you on your calls and questions. They rate you on how quickly and accurately you final product is. Questions to ask yourself: Did you follow the basic BPO guidelines? Did you explain any report abnormalities? Did you explain any obvious exterior dampage (and also interior for interior BPOs).

Tip of the Week: Ask your companys how they grade you! Don't assume you know.

Tip of the Week: Know your market. The best way to do this is to know the inventory and know the values.

Top of the Week: Diverify your business. Default related business models are changing! REO inventories are down. Short sales are hot (for now) and BPOs have made a comeback but..what next? Are you thinking 3-5 years ahead to shift before the market does?

If you need help, comment with your troubles and I will comment back with FREE advice on how to break through into BPOs. The courses on this page as well as published books, certifications, and classes held by your local board all are great educational resources. Educate yourself and keep signing up and following up with the BPO companies. Again - don't pay for a list. See the two links above!

Picture: That's me jumping off a 70ft tower Rappelling Aussie style.

*****BY REQUEST, I WILL BE RE-MAKING AND UPDATING ALL MY VIDEOS IN THE FOLLOWING WEEKS - May 3, 2012*****

As the new videos are made, I will be taking down these old videos. Contact me to be on the updated list and I will email you a link to my new videos after upload.

Dear fellow real estate professionals,

I am making myself available 10-15 hours per week for consulting. If you are getting a few BPO orders, but are not getting the amount of work you'd like. I can help! I will only help one person per geographical area so not to have any conflict of interest. You must currently be getting work, you must have the basics down, and you must be willing to pay for consulting.

Areas covered:

1. Work Efficiency
2. How to selected the right comps within a few minutes
3. Quality Control and some factors that effect your "rating"
4. Goal Setting and time management.

It's my personal opinion that this segment of the real estate industry will for the most part die out in another 5-7 years. There will still be work, but at a smaller scale. I also work with my clients in establishing a plan B to be ready for the drop off in work. To inquire about my services, you can email me at felix.hung@gmail.com.

To your success!

Felix

This is the ONLY complete page I have found that offers you basic and advanced broker price opinion instructions and tips. Share this with anyone that is thinking about or is doing broker price opinions now. This will help them anywhere in the country.

*****BY REQUEST, I WILL BE RE-MAKING AND UPDATING ALL MY VIDEOS IN THE FOLLOWING WEEKS - May 3, 2012*****

As the new videos are made, I will be taking down these old videos. Contact me to be on the updated list and I will email you a link to my new videos after upload.

The investor that owns your mortgage wants to make sure they're selling the property at or close to fair market value. This is a valuation to help them have a good idea on market conditions and value of the property.

YES - but there are certain things you should know.

Do not do so to mislead or manipulate the BPO results.

Only give viable and verifiable information: Licensed Contractor quotes for repairs, MLS printout of price reductions, You can point out or tell the agent about the hardship (some care some don't) and definitely tell about any deferred maintenance or damage. THIS SAVES US TIME and we appreciate it. DO NOT GIVE US COMPS. Usually when agents do this...I can never use them because they don't know the BPO rules I need to follow. A BPO agent is graded on their work and will NOT just take your comps to save time and earn a check. If they want to receive future work, they will pull their own comps so you're wasting your time pulling these.

REMEMBER: These BPO agents are your colleagues and treat them with respect. What they like is for you to get them access ASAP and to volunteer verifiable information that they can use - NOT biased information for your selfish benefit.

THEY are day and night different - but even Realtors will confuse and interchange the two terms.

Both are home valuations, both follow accepted appraisal rules for variances but ONE is performed by a licensed appraiser while another is an OPINION from a licensed Realtor.

Lenders will order a BPO, an appraisal and sometimes BOTH for short sales. The most common valuation for short sales is a BPO. Sometimes when the property is more "unique" or more difficult to valuate, they will order an appraisal instead. And - I've had times where they have ordered BOTH. I find this is usually for high-end property and they want to ensure both independent valuations are within the same value range.

STOP doing this! This is selfish and a huge conflict of interest AND only helps you and not the market. I am hoping ALL asset companies take this away as an option. If you're an asset company and want to offer listings, you should do so only on properties that the agent didn't perform the BPO on. The good asset companies are offering their good BPO agents listing opportunities on listings in their area BUT not for listings where they previously performed the BPO. This avoid any conflict of interest. Most agents know this by NOW, but there are still agents out there who have been told IF they price the BPOs HIGH they'll receive the listing. The truth is - you'll probably never see a listing and you're screwing others over at the same time.

How long does a BPO take?

There is a lot of behind the scene things involved in the length of time it takes to complete a BPO. The lender orders the BPO - usually through a management company/BPO company. In turn, the management/BPO company will contract out the work to local "BPO experts" who meet their company criteria to complete BPOs. After the actual agent receive the BPO request, he/she will contact the listing agent, homeowner, or tenant for entry. The agent will then go out to the property to do a visual inspection and take pictures. He/she then completes the report (usually required to be turned in within 48 hours of the appointment). Once the management/BPO company gets the report, they take it through their Quality Control department to ensure they're giving their lender clients a good clear picture of value. If changes are needed they will communicate these issues with the BPO agent, finalize the report, then forward the report to the lender. This final process can take days or up to 2 weeks.

How can I make sure the BPO agent provides an accurate value?

You take the lockbox off and be the point of contact when the lender orders the BPO. Then you can meet him/her there to give them factual information to justify your pricing and value.