WHAT IS A B.P.O?

Question: My lender said that the offer of $360,000 on my house was too low because the realor hired by the bank to perform a BPO said it was worth $380,000. What is a BPO?

Answer: A BPO stands for Broker's Price Opinion. When a lender wants to know the market value of a home for that moment in time they will often hire a realtor ( or a company who hires realtors) to give them their opinion of what the current market will bear for the property in question. This is not a full appraisal but there are certain parameters that must be followed by the realtor. In general the parameters are:

3 active listings and 3 recently sold comps that are:

1. Within 1 mile of an urban property, 2 miles of a suburban property,and 20 miles of a rural property

2. Within 20% of the gross living area and lot size of the subject property

3. Within 10 years of the age of the property

4. Not a foreclosed or short sale property unless a lot of the neighborhood sales are distressed properties

These comps should bracket the subject property, that is they should be a little above and a little below in all parameters and ultimately in value.

By sticking to these parameters a value can be placed on the home.

Problems can arise when there are not enough active listings or sales in the previous 6 months of similar homes to make comparisons. When this happens the realtor needs to go outside the required parameters and then make adjustments. Most problems BPO's happen during this adjustment time.

If your BPO comes in at a price that seems off the wall, the listing realtor can do his/her own or hire an appraiser to justify what they think is market value. Of course, it is ultimately the bank or their investor's decision, so they can listen to reason or not.

If you have any other questions about short sales please ask!

Marcy Moyer

Keller Williams Realty

650-619-9285

www.marcymoyer.com

marcy@marcymoyer.com

D.R.E,  01191194

Marcy Moyer Keller Williams Realty Palo Alto, Ca. Specialist in Trust and Probate Sales