BPO is the acronym for Broker Price Opinion. BPO's are used within the mortgage lending industry to obtain summarized property appraisals. Broker Price Opinions are used to obtain an estimated value of real estate and are not as thorough as conventional appraisals.
BPO appraisals are often used when homeowners enter into mortgage refinancing or apply for a home equity line of credit (HELOC). BPO's are frequently used to obtain estimated property values of distressed properties such as foreclosure or short sale homes. They can also be used when borrowers obtain a loan modification to avoid foreclosure.
Broker Price Opinion appraisals are conducted by licensed real estate brokers. Brokers are hired by lending institutions to gather information about the property and the area where the real estate is located.
The BPO report includes approximate square footage of the home, number of rooms, property condition, lot size, and approximate age. In most cases, photos of the home are included with the report.
Depending on the circumstances, mortgage lenders can request either a Drive by BPO or Internal BPO report. Drive by BPO literally means the broker drives by the property to gather information. They assess the property from the outside and do not enter the home. This is particularly useful in cases of foreclosure and eliminates the need for the broker to have direct contact with the homeowner.
Drive by BPOs allows real estate brokers the opportunity to gather information about the locale of the property such as compliance with zoning laws and homeowner association regulations.
When brokers engage in Internal BPOs, they must enter the house to conduct an inspection. Internal BPOs are commonly used when homeowners are attempting to refinance mortgages, obtain loan modifications or applying for an extended line of credit.
Internal BPOs require more extensive information than Drive by BPOs. The broker must take measurements of each room and thoroughly review the condition of the home. Brokers inspect the condition of ceilings, walls, flooring, countertops, sinks, tubs and toilets, and assess heating and air conditioning units to ensure they are working properly. Brokers are also required to examine external features including roofs, siding, fencing, hot tubs and swimming pools.
Internal BPO reports are used when banks require detailed assessments of property condition. Drive by BPO is used when mortgage lenders require an estimate of property value. Both appraisals allow lenders to compare the actual property value against the mortgage note balance to determine if borrowers qualify for additional lending using the home as collateral.
If you are facing foreclosure or attempting to obtain short sale approval or loan modification, we invite you to browse our real estate article library. Here you will find a variety of articles ranging from foreclosure prevention to bankruptcy and obtaining home mortgages to refinancing.
Published on September 08, 2009 at 02:27 AM
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