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Wondering where to start and exactly how to do a BPO? When a lender, such as a bank or mortgage company, determines that a full appraisal of a property isn’t worth the time or money, a real estate broker will be ordered to perform a broker price opinion. A broker price opinion, often referred to as a BPO, is a method of appraisal in which a broker performs a visual inspection of a property to determine its estimated appraisal value. There are two types of broker price opinions; drive-by and internal.
Step 1 How to Do a BPO: Deciding the right BPO Form
Obtain the appropriate BPO forms from the lender or mortgage company. The same forms are used for drive-by and internal methods. Broker price opinion forms must be completed for legal purposes. A BPO will not legally be recognized without completed forms. Check here to see if we offer the BPO Forms you need. As each step is taken, record the information in the appropriate box.
Step 2 How to Do a BPO: Determine the Age and Style of the Property
Each piece of property is unique and falls into a category, which is used within the real estate industry. For instance, a single-floor home with no attic should be labeled as a “ranch” style property. No matter the type of property, record the number rooms on the BPO forms. Estimate the total number of rooms for a drive-by broker price opinion. Record the estimated age of the property as well.
Step 3 How to Do a BPO: Take Photographs of the Property
A minimum of two photographs must be taken of the outside of the property for a drive-by broker price opinion. Additional photographs may be taken but are not legally required. For an internal broker price opinion, take photographs of the exterior of the property as well as photos of each individual room. Photograph any damaged areas of the interior of the property. For both types of BPOs, write notes in regards to the visual appearance, including damage and cleanliness, on the forms. For an internal BPO only, record notes on the condition of each room. List any damages, the current amount of normal wear on items such as wood and carpet and describe any architectural flaws.
Step 4 How to Do a BPO: Take Measurements
Record the measurements of each room and write down the total amount of square footage for the entire property. If the property has a garage, driveway or parking lot, take measurements of these as well and record the square footage separately. Estimate the measurements for a drive-by broker price opinion.
Step 5 How to Do a BPO: Take Notes on Repairs Required and Maintenance of the Property
For internal broker price opinions only, take notes of the the necessary repairs to the property such as repairs to structural damage like broken roof tiles or damaged windows, the replacement of dirty carpet, damaged window screens or torn wallpaper. Take note of items that need to be resolved, such as removing any snow from the property and maintaining the lawn. Also if there is any trash or unneeded items that should be removed the property.
Step 6 How to Do a BPO: Compare the Property to Similar Properties
Since a BPO is the opinion of a real estate broker agent, a comparison between the property in question and those which are similar is required. Review the current market for at least 3 properties that are of the same size, age and style. Additionally, review properties on the same street and in the same neighborhood. Compare the properties and determine a fair market value for the home which is being inspected.
Step 7 How to Do a BPO: Complete the BPO Form
Record all of the necessary information on the BPO forms and sign the bottom of the documents, if required. Return the documents to the lender or mortgage company and submit the photographs of the property. Once the documents are filed, the lender or mortgage company will complete the process of authorizing the broker price opinion.
Although it is cheaper for lenders and mortgage companies to have a real estate broker perform a broker price opinion, the BPO is nearly as thorough as an actual appraisal. When completing a broker price opinion, follow the steps carefully or the inspection might not be considered valid.