I was recently contacted by a company to do a BPO (Broker Price Opinion). A BPO helps the bank determine the price of the home. Usually they are trying to determine the price because the homeowner applied for a loan modification, short sale or is going into foreclosure. The most common BPO is called a driveby. It is where you drive by the house, take picture of the front, side, address and of the street sign. While doing this you need to assess if the house is occupied or vacant and any damage that can be seen from the road. In theory this sounds like an easy task, right?
I’ve done many BPO’s but this had to be one of the worst ones. Typically, something that takes me 30 minutes to 1 hour took me 3 days to complete. I did everything I needed to do, go to the house, take photos and submit 3 “active” comparable listings and 3 “sold” comparable listings. This house was a one level, 2 bedroom, 1 bath log home with 684 sq. ft. and no comparables nearby (bank requires max 5 miles radius). After finding nothing, I did some extra work and expanded my search to 40 miles to get good comparables. I submitted what I thought was a fair market value of the home before repairs ($50k-$60k) and after repairs ($70k-80k).
Lo and behold, the bank Continue reading