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Common Reasons Why BPO’s Are Used
Broker/Agent prepares a BPO:
- For a Seller when trying to gain a listing.
- For a Buyer wanting to purchase property.
This is better known in the industry as doing a “CMA” or a comparative market analysis. Keep in mind though that a ‘CMA’ should not be confused with a BPO or a Broker Price Opinion.
These are two very different reports even though they are used for similar purposes.
Due Diligence Measures on Appraisal Reports
- Used to Review the Quality of an Appraisal Report.
- Used as a Supplement to an Appraisal Report.
- As a means of ‘Quality Control.’
- Validating information on Appraisals.
- As an aid in Detecting Appraisal Fraud.
Many times numerous BPO’s are order on a property. As it goes through a process, BPO’s and even appraisals are used to help determine an opinion of “Recommended Property Price” as well as other important factors.
Loan Origination and More Reasons
• Used on loans less than $250,000 *
• Home Equity Loans *
• Home Equity Lines of Credit *
• Refinance loans
• Removal of Private Mortgage Insurance (PMI) * (as permitted by FIRREA, Financial Institutions Reform Recovery and Enforcement Act of 1989)
Lastly, a few more last reasons why BPO’s are used are:
Distressed Loans and More Reasons
- REO Properties
- Loan Modifications
- Short Sale situations
- Deed-in Lieu of Foreclosure
- Junior Lien Protection Plan
- Tax Liens
- Loss Mitigation
- Charging it off
- A Forbearance Plan
- Estate issues
- Portfolio Acquisition of Performing loans
- Portfolio Valuation in a Secondary market
Just as there are cycles when selling real estate, there are also cycles in what type of BPO’s are used most commonly. When I first started out doing BPO’s in Sept of 2006, I was completing a lot of BPO’s on properties that were ordered because of: refinances, HELOC, PMI removal and not foreclosure. Just as this cycle changed in recent years it will cycle back around and the volume will also adjust over time.
If you are just now getting into the BPO business, in all honesty you are coming in on the tail end of things, but there are still lots of opportunities!
Real estate professionals that incorporate proven, trusted systems to help them excel and thrive in this sometimes precarious industry, should prove to have staying power over time.
Learn more about everything you need to know to get started doing BPO’s right here.