I have been a REO broker for almost five years now, but before I got into REO I was completing broker price opinions (BPOs) for banks. Broker price opinions help banks and other companies determine values on properties. When completing a BPO, there are certain guidelines that are expected to be met. Almost every BPO I do requires three sold and three active comparables and those comparables to be within certain guidelines of the subject property.
A BPO can be a great tool for a beginning or seasoned investor to determine values on properties. I can go into any town in the country and complete a BPO and come up with a somewhat accurate value. The trick in coming up with an accurate value on a BPO is making proper adjustments. Every house is different in some way and making accurate adjustments is how we calculate what those differences are worth monetarily. If you can complete an accurate BPO it can greatly increase your value accuracy.
Here are the typical guidelines that most banks and BPO companies require Real Estate agents to go by when completing a BPO
- Distance: All comps must be within 1 mile of the subject if it is in an urban or suburban neighborhood.
- Age: All comps must be within 10 years of subject, unless the home is over 50 years old. At that point the age brackets can be widened.
- Size/square Footage: Only above ground square footage is calculated in the square footage on a BPO. The square footage on the comps must be within 20% of the subject. Basement square footage and finish are calculated separately from above ground square.
- Property type: Comparable properties must be the same type as subject. Single family …read more