“BPO” stands for “Broker Price Opinion.” It is a report for the given value of a property, that a real estate agent will give to a lender to determine what to do with a property where they have a loan. And it is just what it sounds like, an opinion! All they do is quickly glance at the recent solds in the neighborhood, and go to the house to take pictures(they are at the property no longer than 10 minutes – a time frame that no buyer would feel comfortable making a solid offer in, given that it is not enough time to do any due diligence on a property to see what it has/needs.

Without going into too much detail here, let me just tell you I met both an appraiser and a BPO agent at a property yesterday, on a property valued somewhere in the  $2 million range. Because I met both the agent doing the BPO, and the appraiser, the property will close because they have a keen understanding of what is really going on, since I took the time to enlighten them. Can you imagine if I just left it up to the opinion of the two people who had spent no more than a couple of hours looking at the subject property?!(and in cases of cheaper house, taken no more than maybe 20 minutes analyzing the value!)

And then this morning I met another BPO agent on another property we are doing a deal on, valued around only $100,000. The property probably would have came back to the bank with a broker price opinion at $130,000 or more if I hadn’t been there to meet the agent, in addition to sending her comps and letting her know the listing history prior to her arriving at the property. I also took the time to make sure she actually looked at all of the systems in the house and pointed out needed repairs. Had I not been there the agent would have not seen any of the needed repairs or structural issues to the house. These things have a significant impact to the buyer and many agents fail to realize they have two ends of each short sale transaction to work, not just the buyer, but the bank too!

If you were to ask a room full of real estate agents what the biggest factor is in the success of a short sale transaction, I would presume you would hear dozens of different answers. Answers ranging from how severe the homeowners hardship is, to how much money in retirement accounts the homeowner has, to whether or not the person that is on the loan actually ever lived in the house or was just a cosigner, or the most common…”who is the bank?” I would like to think one or two agents would get it right, but would be surprised to hear much more than that. While these factors do play a role in the short sale settlement, they are not THE most important factor.

The answer is simple, and it only contains three letters: BPO. The BPO is the hinge of the entire short sale. If you have a high BPO you are probably not going to close your short sale, unless that is of course, if you can get another BPO ordered and have enough time to go through that process. I have seen more short sales go to foreclosure because the BPO was not addressed properly then any other reason for short sale transactions not closing.

It takes approximately 10 minutes to comp a property(look up current home sales) and send that email to the agent who is processing the BPO, prior to them arriving at the property. It takes usually no more than an hour to drive to the property, meet the agent there, and then tell them where your offer is and the listing history,  shake their hand and walk away. Sometimes you may leave the property feeling like you are going to get a high-value, and sometimes it will be the opposite, where you will leave feeling energized and know that you are going to have a slam dunk deal when the bank finds out they are getting more money out of the transaction after their closing costs then the true value of the property.

Setting up properly and processing the BPO correctly as the listing agent will be the deciding factor in 90% of short sales. I don’t care what the hardship is or how much excess cash the seller has, or even how much assets they have or none of that. I care what the value is and what the net is to the lender. Since I do have control over these things, contrary to popular opinion, I close consistently the short sales I take on.

It’s not rocket science.. Influence what you have control over. This is no different than anything else in the real estate business or for that matter, life.

To inquire about referring Joshua Gayman a short sale in the Arizona area or for assistance with negotiating a short sale of your self or for a client, or if you are a homeowner and another state just looking for guidance and true counsel, give me a call – I’d love to chat!

-Joshua Gayman