Broker Price Opinion Home Appraisal Guide

When the amount owed to the bank is negotiated at a lower price it is called a short sale. Many pre-foreclosures are are opting for this option to avoid foreclosure. Real estate agents will tell home buyers and sellers that the bank must approve the lower price through their loss mitigation department. Lenders want to sell distressed properties as quickly as possible but sometimes the process can take literally months to complete.

Short Sale Negotiation with Bank

Getting the bank to accept the short sale is a tall order simply because they have to agree to take less money for what is owed on the mortgage. If the home is upside down in value meaning the mortgage amount is higher than the homes value.

Lenders of banks sometimes take weeks or even months to respond to an initial request once a offer is made on the property. Listing agents need to be competent and make sure all the details are covered in the file where a short sale hardship letter will be required, as well as comparable sales. This is where a broker price opinion will come in handy for getting the home appraisal.

How to work with a short sale negotiator

Studies show that there may be several negotiators to deal with for one particular home, also things such as real estate commissions may be lost if a listing agent does not find out if the offer submitted is feasible or if the bank has done short sales in the past. All agreements must be in writing, it is important to keep the name of the person you talked with as well as the date and time of the conversation. Short sales will eventually close with persistence. Stick to a timeline and follow up repeatedly.

The seller will need to prepare a financial package, that will include such things as a Letter of authorization, giving permission for the REO listing agent to discuss your finances., HUD-1 or preliminary net sheet as well as a completed financial statement, along with the seller's hardship letter and two years of tax returns, two years of W 2 with recent payroll stubs, or last two months of bank statements. After that is done you will need a comparative market analysis or list of recent comparable sales.

Lenders will order a BPO or appraisal which can take from 30 to 60 days. To have success during the short sale process you will need have good communication with the seller's mortgage lender's and once you send them a Release or Authorization to Release Information you will be able to find out whether a short sale is possible along with the information needed to complete the process. It is important to note the sellers financial difficulties and provide the mortgage lender with pay stubs, copies of medical bills, checking account statements or other documents such as the sellers credit report.

Broker Price Opinion Home Appraisal

After the financial package and hardship letter is received the mortgage lender will order a broker's price opinion to find out what the property is actually worth to do this the value of comparable properties in the same neighborhood are used along with the general condition of the neighborhood, as well as the condition of the specific property in relation to neighboring houses in the current market. It turns out that the lower the broker's price opinion, the more likely the mortgage lender will approve a short sale.

Will Broker price opinions in short sales cause mortgage fraud ?

Studies show that new rules governing short sales will allow lenders ten days to respond to short sale offers. This will give sellers over $1,000 moving allowance that does not have to be repaid. By lenders and investors receiving incentives it will allow for short sales to trade easier in the housing market because the government program will use broker price opinions instead of appraisals in short sales.

The reason behind this is that broker price opinions are estimated values of properties determined by real estate brokers so a BPO is more informal and can cost as little as $50 whereas appraisals can be as high as $500.

So the question stands are real estate agents properly trained to determine home values? some real estate appraisers seem to think that Broker price options are likely to increase mortgage fraud. As you are probably aware real estate brokers are given an order to do a BPO by the lender, mortgage company or loss mitigation company so the broker does either a Drive By BPO or an Internal BPO.

A broker price opinion will consider a number of aspects such as the following in this chart:

If you are a realtor you will want to learn to list REO's, some of the best ways to get Real Estate Owned listings is to contact mortgage companies and ask questions. Develop relationships with Asset Managers in your area. As a new agent breaking into this industry can be challenging. Due to the tight knit group among those in the REO industry getting the answers you need may take a long time.

It is recommended to attend REO events and REOMAC is a national non-profit trade association for the mortgage default industry to network with mortgage lenders, servicers, attorneys, title representatives, asset management outsourcers, and real estate brokers for the knowledge you will need to succeed in this industry. The key is to get asset managers to send you assignments and share the BPOs and REO listings with you, Market yourself and setup a website.

Other options is to get short sale listings by contacting the loss mitigation department at banks, find out who they use for their asset management. The MLS will give you an idea of lender owned homes in your area and who is representing them.

Can you get REO listings from doing BPOs?

Some say you can because it will get you in touch with the real estate professionals handling the properties for the banks. This is because lenders will choose agents from BPO agents. Others have found success buy purchasing a membership to a REO listing service.

List of REO BPO Management companies

Equator Financial Solutions - Nationwide Foreclosed Home Listing is a Foreclosure Listing Service that provides the most versatile and comprehensive system available to manage and sell REO properties.


Asset Disposition Management - provides experienced asset managers to complete nationwide BPO & REO Listing services and pre-qualify all buyer prospects with the bank's loan products.