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BPO: What does it Mean?

BPO stands for Broker Price Opinion; a tool used by mortgage lenders to obtain property appraisals. BPOs are an economical way for banks to obtain an estimated property value on distressed properties such as foreclosures or short sales.

It is important to note a BPO is not the same as a traditional property appraisal. Instead, real estate brokers visit the property and submit a valuation report to bank's loss mitigation department. Doing so can eliminate potential problems caused by uncooperative tenants or homeowners

BPOs are also used when lenders provide home equity lines of credit (HELOC). Banks need to obtain a property value to ensure they are not over-extending the value of collateral. Since the real estate is used to back the first and second mortgage note, lenders need to obtain a Broker Price Opinion to determine the amount of money they can loan to the borrower.

Two types of BPOs are available – Drive by BPO and Internal BPO. Drive by BPOs are just what they sound like. A real estate broker must drive by the property to gather information about the property and the area where it is located.

The BPO report includes information regarding the approximate square footage, number of rooms, type of property, lot size, approximate age, property condition, and whether the property conforms to zoning ordinances. The real estate broker usually takes photos of the property to include with the final report.

Internal BPOs require the broker to enter the home and conduct an inspection. Lenders generally request Internal Broker Price Opinions when homeowners are attempting to refinance their mortgage note.

Internal BPOs are also used to determine the property value of pre-foreclosure homes. This report allows lenders to compare the Borrowers mortgage balance to the current value of the property. In essence, the BPO is a valuable asset in that it assists lenders in determining solutions to help the Borrower stop foreclosure.

We invite you to learn more about BPOs in our BPO article library. Here you will find informative articles on a wide range of topics including foreclosure, short sales, bankruptcy and much more!