BPO is an acronym which stands for Broker Price Opinion. It is basically an appraisal completed by a real estate broker, although it’s not permitted to be called an appraisal per the Uniform Standards of Professional Appraisal Practice (USPAP); nevertheless, it serves the same purpose. Lenders order BPO’s on short sales because the cost is much less than an appraisal. A BPO costs the lender maybe $150 whereas an appraisal would be closer to $400. The BPO agent spends a whopping five minutes at the house and the value that they report becomes gospel to the shorting lender.
This can be a scary thought because a short sale, from beginning to end, may take 3-4 months if it goes smoothly and 6 or more months is not uncommon. The entire transaction hinges on the value that the lender assigns the property in that five minutes the BPO agent spends at the house. Which brings me back to the title of this article: How Important is the BPO on a Short Sale? Very, very important. The value that is assigned will determine whether your short sale successfully closes or gets flushed down the foreclosure toilet.