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Many people question broker price opinions when purchasing reo’s and foreclosures. These opinions are just what the term infers, “opinions”. Bank policies will differ on the matter and some banks purposely under value to sell quickly while other banks want their bpos to conform to a price that will get them as much money back as possible.

Lenders understand that individuals cannot finance a home if that property is selling for more than it is worth. The financer will always require a certified appraisal to secure their interest in that property. But people become skeptical about broker price opinions and reo’s that are completed quickly, fast and in a hurry to appease the loss mitigation department.

The majority of BPO’s are based on the liquidated value of a property; most of the listed reo’s are purposely under valued, so that they sell quickly. Banks have been known to hire those companies that fall in line with their own philosophy to move properties quickly.

REO’s have already cost the bank thousands of lost revenue so you can expect they want an appraised value as close to the original worth as possible but they also keep in mind that a low-ball price will entice a buyer.

Will a drive-by bpo be sufficient for your needs? Will other considerations be contemplated about the property to get close to fair market value? A broker price opinion is only a general idea of what that agent believes the home is worth. They may pull documents on homes that have sold in that neighborhood and base their price on a comparison without ever completing a through check of the home. Nothing else is considered like damages to foundation, the roof or the characteristics of the interior.

Broker price opinions and reo’s are heavily used, especially now that banks are overshadowed with long listings of foreclosed properties. But many of the actual “fair market values” are not fair at all.

This is where your real estate agent becomes a sought after commodity. The agent will be able to negotiate a fair price and document why previous broker price opinions may not be justified. Just the comparisons of homes in 90, 60 and 30 day listings combined with a good appraisal will provide clear justification if you’re questioning the price.

Just remember, when dealing with REO’s you’ll have to rely on your real estate agent to provide lots of documentation and the timing to process this venture will be very frustrating. Always question broker price opinions especially for reo’s.