When it comes to real estate, there is a whole new language that is often used. One term that is frequently used is that of a ?short sale?. When considering a short sale, your real estate agent may refer to a BPO. This refers to a valuation of a home, not by an appraiser, but by another real estate agent. The term stands for ?Broker Price Opinion.?
In a nutshell, a BPO is a valuation that is based on other sales in the area. It can return a valuation that is actually below what an appraiser would determine, this is because an appraiser uses a much broader set of data to come to a valuation. If you are considering a short sale home purchase, then a BPO can either be really good news, or bad news.
When banks are considering whether or not to accept a short sale, a big part of their decision is based on the price offered compared to the BPO. If the offer is equal to or greater than the BPO, then the short sale will most likely be approved. From a buyer?s perspective, a full appraisal may return a much higher valuation ? this means the buyer has found a real bargain. From the lender?s perspective, they may be selling for less than current market value, but when costs of a full appraisal and/or foreclosure are taken into account, a sale based on BPO makes better financial sense. More so in today?s market considering how long foreclosed properties take to sell.
The bad news, of course, is when an offer on a home listed for a short sale is less than a BPO. Even though a full appraisal may show that the BPO is overpriced, lenders are reluctant to accept that offer. Short sales can take a long time to complete, and in the past, home values have fallen below offers made before a lender has accepted the offer ? that?s a risk that a buyer takes when negotiating on a short sale. Find a short sale with a low BPO, and you?ll be on to a real bargain ? however, you may then need to outbid other buyers.
Related posts:
- Understanding Real Estate Appraisals
- What Is Real Estate Appraisal?
- E-Signatures And Real Estate Contracts
- Washington DC Amongst The Fastest Moving Real Estate Markets
- How Much Is Your Real Estate Worth?
Source: http://www.realestatebriefings.com/the-market/what-is-a-real-estate-bpo/
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