Broker Price Opinions – Mixing the Good with the Bad

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Look what was in my email inbox the other day:

Melissa Zavala, I am contacting you to check if you are interested in doing a CMA in the following ZIP code…

The ZIP code was 100 miles from my office, so I politely declined.

But, this curious request got me to thinking about the state of Broker Price Opinions. In the wild world of short sales, sometimes the BPOs come in very high, and other times they come in very low. It’s not surprising that the results are so disparate (yes, that’s a real word), especially if some yokel like me was doing the CMA for an area miles and miles from home.

When the BPO finally gets into the short sale lien holder’s hands, that’s when the bank makes their counter offer to the short sale buyer. Recently, I had an offer of over $300,000 and the bank made the counter offer at $195,000. I thought I was going crazy until I contacted bank supervisors and learned that the BPO came back at $195,000—despite the fact that the listing agent and buyers firmly believe that the property is worth over $300,000. Talk about a poor BPO.

Can you imagine the impact of this poor BPO and possible subsequent short sale closing on the local housing market in that area? How will it impact the comparables? How will it impact the neighbors’ ability to sell their homes at $300,000?

On the flip side of the coin, I’ve got three or four short sales under my auspices where I have had to submit value appeals because the BPOs came in too high. Again, this is likely due to the fact that the BPO agent was unfamiliar with the property or the surrounding area.

What can be done to resolve this problem?

Although it would be difficult to verify with certainty that the agent doing the BPO actually arrives at the property and makes a visual inspection, perhaps BPO agents could be required to upload signed and dated interior and exterior photos.

Second, banks ought to hire agents within a five-mile radius of the property in order to assure that the BPO agent actually has a clue about the real value of properties in the area.

Attending to those issues may go a long way towards assuring that our housing market be the best that it can be—even in these tough times. So, next time you are asked to do a BPO, consider the impact that your work will have on the future of the housing market.


  1. John Hagy

    Just got off the phone with a broker friend of mine whom does a lot of BPOs. He is in the Riverside/San Bernardino, CA market area where a large majority of listings are short sales. He notified me of a BPO assignment that he just received from FannieMae. One of the requirements is that he COULD NOT USE ANY SHORT SALES FOR COMPS. How’s that for government attempting to maipulate the market!?

    John Hagy
    Real Estate Broker

    • Melissa Zavala

      John: I wonder if he means ‘active listings’ for the short sales. That would make sense to me since I could list a short sale for any price that I wanted to (even one dollar). It doesn’t mean that the bank agrees to the price. For closed sales, they ought to take short sales, REOs and traditional sales into account.

  2. Angelo Garcia

    Do you know anybody who can teach me how to do BPO in Los Angeles Area,(90005) doing a CMA is not good anymore. On all my short sales I’m asking the seller to pay for a full appraisal ( $300 to $325) just to get ready in case the lender comes back… Then I ask the selling agent and buyer to cover the cost…

    • Melissa Zavala

      A BPO is pretty much an appraisal done by an agent. So, if you looked at an appraisal from an old/closed transaction, you could conduct your own BPO off of that form. With respect to appraisals on short sales, I think that it’s a good idea to tell buyers and sellers that they may need to pay for an independent appraisal if the bank does not agree to the offer price. However, I’m not sure that doing so upfront is necessarily to your advantage. I guess it would depend upon the transaction. Each one is so unique.


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