Caroline Bianchi's Blog
BPO stands for ‘broker price opinion.' It is associated with short sales and foreclosures. BPO involves a process that is almost the same as real estate appraisal but not as complicated. Banks and companies usually hire the services of a real estate broker to prepare an opinion of value for a particular real estate. The representative of the broker, who is a real estate agent, will compare a least three similar properties and arrives at a range of values, and then make some adjustments — the overall analysis results is an opinion of the market value.
A BPO may be controversial if the agent preparing it is not experienced enough especially when it comes to appraisal techniques. Also, BPO costs less than a full-blown appraisal.
Types of BPOs
There are two standard types of BPO: interior and a drive-by. The interior BPO has to do with assessing and taking pictures of the home interiors while a drive-by BPO involves the exterior of the home. In some cases, the agent may not inspect the home exterior personally and may depend on the pictures of the home's exterior posted on an MLS website. Also, the drive-by BPO does not involve the inspection of the home interior.
Who Needs a BPO?
In most cases, a financial institution orders a broker price opinion and not an individual. Below are some of the uses of BPO. A Broker price opinion is used to settle the estate of a homeowner that has passed away. It will help you decide if a foreclosure or a short sale is ideal considering the value as compared to the debt amount. It also offers a more recent value amount whenever you choose to sell mortgages on the secondary market. BPO helps homeowners to determine the amount of equity in their homes to see if they qualify for exemption from private mortgage insurance requirements.
Why Banks Order BPOs
The two reasons why banks order BPOs are as follows:
- They order a BPO for a house in foreclosure that is about to REO homes of bank inventory
- Banks also order a BPO for a short sale
Banks might request a BPO from two different real estate companies to get an estimate for a range of values. This method helps the bank to avoid the inaccurate BPO values by dishonest agents.
When you want to sell or buy a property, knowing its value is essential. For sellers, especially, there are higher chances that your home won't outperform other listings if they are of low value. The listing price of a home can even change after an appraisal of its value. Here are some crucial factors that can affect the value of your home:
Where your home sits plays a vital role in evaluating the selling price of a home. Your house may have all the things you need, but appraisals consider more factors to place a value on it. For your home to be of a maximum value, it must be close to quality local schools, shopping, entertainment, and recreational centers. Added to that, an abundance of employment opportunities, proximity to highways and public transit can improve a home's value.
The estimated market value of a home is also dependent on the home size. Bargains are often carried out based on price per square foot. For instance, if you list your home for $100,000 and it has 2000 square feet of living space, the price per square foot would be $50. Apart from that, houses with more livable space offer luxury, ample space for parking, and probably some bonus areas have higher values than houses without those. The number of full bedrooms and bathrooms a home contains also matter to the potential asking price. More beds and baths mean a higher value for your home.
Newer homes tend to have higher values than older ones because of many factors. In a new house, some parts are less likely to break down. Plumbing and electrical work, for example, are still fresh, up to code, and with adequate warranties. Most buyers don't want to spend extra on fixing major systems after acquiring a home. In newer houses, a new roof with a guarantee of at least ten years means that the buyer won't need to spend on replacing the roof anytime soon.
Who says older homes can't have high values too? When you upgrade the appliances in your home to the latest versions, the value of your home climbs. Including new technologies like smart thermostats will not only raise your home's worth, but it will also help you cut costs and make your home more efficient.
The local market
Even when your home meets other requirements, influence from your local real estate market can affect your home's value. If your home is in a location where the buyers' offering bids for homes outrank the number of listings, chances are you'll sell your home for more because it is a seller's market.
Talking to a local real estate agent will help you list your home closest to the market realities in your area and ensure you get the best possible price for your house.
Unless you are a real estate professional, you're probably not an expert in buying or selling houses. There are so many legal complications and webs that may occur whenever one is in the real estate market, and to help sort through the complications here are some common mistakes made by first time sellers and how to avoid them.
First, the most common mistake is that most first time sellers treat the selling process itself as a DIY project when it is not. As stated above, there are so many legal implications of selling and buying a property. There are real estate contracts that need to get addressed. There are appraisals and costs associated with the valuation of the property. Some inspections must get done long before putting the house on the market and giving it a price. There is a lot of documentation requirement that making a mistake can cost an owner a lot of money.
Do not be in a situation like this. Hire a real estate agent who has the license to handle real property matters for you.
Second, there are also mistakes that can come with setting the price. First time sellers, who do not know how to get the market, often give a high asking price without consideration of a possible appraisal or valuation. A real estate professional knows that the secret to getting the amount you want is not always in the asking price but the marketing. How is it done? Only real estate agents have a flair for this trade secret.
Third, first time sellers are somewhat stubborn alone than with an agent. They are unwilling to negotiate the terms of the escrow and believe that there will be more potential buyers along the way. Some sellers are reluctant to settle the terms even if the buyer is already giving them more than the asking price. With the help of a real estate professional, it is easier to see which deals are good and which are not.
Finally, some sellers fail to see the value of being patient and giving other parties some time.
Now that you know some of these mistakes, it will be easier to avoid them. It may be tempting to take some shortcuts when you are excited about selling your house, but keep in mind that while you can try some alternatives, only professionals can do it without the repercussions of amateur mistakes. Contact a real estate professional today to help you sell your home today.
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