Why Lenders Need BPOs Performed on Their Foreclosed Homes

When a lender or asset manager receives a new foreclosed home to sell, they need to quickly know the property's value. Typically a lender will find one to three agents to evaluate the estimated selling value of the property. These lenders expect each agent to submit three comparable sold homes and three comparable active homes as well as an estimate of what the home will sell for.

A BPO is not as detailed or exact as an appraisal and does not entail as much work. BPOs differ from official appraisals in a number of different ways:
- Appraisals typically cost more than $320. Most BPOs cost between $50 and $100.
- Appraisals require exact square footage measurements. BPOs rely on county assessors' measurements.
- Appraisals use a standard industry format used by lenders and mortgage professionals for exact property valuations. BPOs are prepared in various formats and are used simply as decision making devices for asset managers of each lender.
- Appraisals are typically 15-30 pages long with details on each aspect of a home. BPOs are usually 2 pages in length with information pertaining only to a final sales price.

Why Do Lenders need BPOs?

Asset managers and lender employees make decisions on several homes every day. Reading through a long 20 page appraisal and filtering out the vital information is a waste of their time. These asset managers need concise, financial devices that make their choices easy. That's why BPOs are so crucial to their job.

In addition, a BPO saves the lender over $200 per home compared with a standard appraisal. That money adds up and saves the lender thousands and thousands of dollars each year.

Another reason BPOs are preferred by lenders is that the preparation time is much faster than appraisals. BPOs can usually be completed by agents in less than 48 hours. Many appraisers visit the home within 48 hours, but then require another day or two to process the information and create the full report.

How Agents Can Become a BPO Agent

Once a real estate agent learns what a BPO is, they immediately want to learn how to become a BPO agent and start to process BPOs for lenders. A good agent can make an extra $500 - $1,500 a month simply by registering with lenders and requesting BPO assignments.

The steps to become a BPO agent are simple. The basic process for registering with a bank takes about a week. Here is a summary of the basic steps you'll need to take:

- Find a list of BPO lender departments. Make sure your list has over 100 lenders and asset managers.
- Register on each of these banks' websites as a BPO agent. This can take over 20 hours to register on all 100 websites, so schedule your time accordingly.
- Follow up with the lenders and asset managers to make it clear you want to process BPOs for lenders and become one of their preferred BPO agents.
- Once you receive your first BPO assignment, do a great job and go out of your way to make certain your client is thrilled with your work. It only takes a couple of solid lender clients to keep you busy with a steady stream of BPO assignments.

As you begin your quest to become a BPO agent it's critical that you never give up. Once you start to process BPOs for lenders, your real estate business will quickly pickup steam. Good luck!

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