In my areas of Sparta, Hamburg, Vernon, Wantage, Frankford, etc., more and more homeowners are having difficulty paying the mortgage. Once a homeowner is several months late, the mortgage company/bank starts to consider its options. Some options will keep the owner in the home by modifying the loan; some will mean the owner must list the home for sale.
When a distressed property needs to be evaluated by the bank, one or more Broker Price Opinions are normally requested - very often through a third-party, outsourced vendor. BPOs are not as detailed as an appraisal. A BPO is a quick assessment by a real-estate agent that gives the bank an idea of what the home could sell for within the next 90 - 120 days. It is based primarily on MLS listings of similar properties in the same neighborhood.
I have done countless BPOs around Sussex County. I view BPOs as a discussion of list price with a potential seller, albeit one who is far away and has never seen the property. I am that bank's local real estate agent for the sake of a price opinion. (While my experience has been localized, I do BPOs for the same vendors and same banks that get them done across the U.S. Hopefully, my opinions and expertise might help someone elsewhere.)
Here are the main reasons I've been hired to do BPOs in Sussex, Morris and Passaic Counties:
- A homeowner is late and the bank is weighing its options - perhaps deciding whether to foreclose or consider a work out;
- The owners have no means of remaining in the home and have listed or are prepared to list it for sale, have had some hardship and are asking the bank to consider a Short Sale;
- Potential buyers have put in a written offer and the bank needs to evaluate it based on today's market conditions;
- Foreclosure has occurred. The property is now an REO and the new owner (the bank) needs to set a price for the sale of the home.
Reason 1 is the type I like least. These owners are usually unaware that the bank is having a BPO done. (The mortgage documents specify the rights of the bank to inspect the property under prescribed conditions.) This will always be an exterior or drive-by BPO for which I need to get my outside photos very, very discretely and be prepared for some unpleasantness if the owners drive down the street and spot me... Too, these home are not currently listed for sale, so there is no MLS listing with current interior photos. My research will take much longer.
With the other 3 reasons, the sellers are typically supportive of the BPO. Many times I am hired to do an interior BPO. By appointment, I access the home and take interior & exterior pictures. Frequently, multiple BPOs are done on the same property within the same time frame. The current record for me is when I was in one Lake Mohawk home for sale at the same time 2 other agents were also taking their interior pictures! Triple opinions from real estate agents working for 3 different brokers but it was a very high-priced home. This indicates just how inexpensive a BPO is, but I'll return to that later.
Future posts will detail which BPOS I will agree to do, what information I provide, the stumbling blocks I've encountered, how listing agents view my BPOs and my compensation for these efforts.
Part 2: Pink Elephant BPOs based on a case in Sparta, NJ.
