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How to Get Started with Broker Price Opinion?

 

To be eligible for a BPO (Broker Price Opinion), you must be a licensed real estate professional. Real estate agents can do BPO; however, they need to talk to their brokers first. This article will discuss how to get started with BPOs, types of BPO, steps involved, and other details.

 

Starting a BPO (Broker Price Opinion) business requires a real estate broker license/agent and E&O insurance. First, do a little research to find out the BPO companies in the area of preference and make a list. Then, collect all the documents to sign up with BPO companies.

 

However, if you are a newbie in the field, understanding different aspects of the job becomes crucial. The following article will cover everything you will need to get started.

 

How to Get Started with a Broker Price Opinion Business?

  • Get a Real Estate Broker License: If you are already a licensed real estate professional, you can skip to the next step. Requirements for the license vary across states. So you should check the same before submitting your application. Besides the educational qualifications and other conditions, knowledge of your local real estate zone would be a plus. While brokers are the preferred contact points, you can settle commission terms with a real estate broker and get BPO jobs as an agent.
  • Pick Your Neighborhood: The key to gaining success with BPO service is knowing the area well. So, it would be best if you start by picking a neighborhood that you are well-versed in. Another factor you can consider here is the distance and travel cost. If you can find a familiar area near your place, you can save both time and money on to-and-fro travels.
  • Get Access to the Area’s MLS Records:  Make sure you have MLS access in your desired neighborhood (this depends upon your state and county). You need MLS access to pull comps in the community, and if necessary, send the details to the BPO company. We consider it a mistake to accept BPOs outside your MLS access area. You may extend to a different location within your state, but it will add to the cost of maintaining the MLS.
  • Prepare Your Documents: After getting a copy of your license, E&O insurance, W-9 form, referral letter (in some cases), and access to MLS records, you should start gathering all the documents you will need. 
  • Sign Up with BPO Companies:  Back to some more clerical work, you need to apply for BPO companies to sign up and start applying for the same. If you need help in signing up with BPO companies, we can help you do that.
  • Wait for Your First Job: Usually, BPO companies work with agents/brokers who already have established a relationship with their organization. From time to time, they look for new agents. The real estate market highly influences BPO in your neighborhood. The number of short sales and foreclosures may increase the number.
  • Complete Orders and Build Experience: Usually, a BPO company needs you to fill a form online on their website when they contact you. Next, you should focus on building a good experience with every job you get and improving your rating with that company. And it’s only a matter of time before you will be on their list of preferred brokers for several BPO companies and asset management companies.
  • Create Your Rating and Reputation: If getting your first job seems challenging, maintaining the flow is a true challenge. For this, you need to deliver accurate and timely BPOs every single time. Quality performance will get you a positive vendor rating and help you maintain it for a long time. And with a good reputation, you can start getting more jobs with time.

 

Would you like to know a few more facts about BPO?

 

Types of Broker Price Opinion

BPOs are divided into two categories, namely internal and external. Both differ over the details of evaluation and time involved to complete the report.

  • Internal BPO: As the name suggests, an agent evaluates a home from inside to create a Broker Price Opinion. It involves spending time assessing the features and measurements of a home from within. Tasks include analyzing the condition, measuring rooms, and verifying the number of rooms such as bathrooms, bedrooms, etc.
  • External BPO: This job doesn’t require a professional to enter a home. A broker needs to collect exterior information about a property by taking pictures of the property from outside. Although less accurate, external BPOs or drive-by BPOs are more common than internal BPOs.

 

The Process of Completing a Broker Price Opinion

For a BPO determination, an agent uses comparable homes (also known as real estate comps). The process is quite similar to how an executive completes a comparative market analysis (CMA). Besides, other factors that a broker includes in the report are:

  • Property’s size
  • Home’s age
  • The neighborhood
  • Property’s condition
  • Zoning requirements

Based on the analysis of these factors, the broker creates a BPO (Broker Price Opinion) and provides the details to the asking party with a form.

Here’s what every BPO should contain:

  • Pictures of the Property:  Pictures are taken by the agent, depending on the type of BPO. Since interior BPOs involve more time, analysis, and work, they carry a higher price tag than the external BPOs.
  • Three Real Estate Comps: The broker should include details of three comparable properties in the form. There should be three similar properties already sold and three comparable listed properties on sale. It helps justify your opinion with a comparative analysis of similar properties.
  • Details of the Concerned Property: The broker needs to find and enter several subject property details in the form. Details include property type, location, condition, square footage, number of rooms, and available amenities like pool, bath den. etc.
  • Your Justification of the Opinion: Here, you will need to put in extensive comments explaining how you finalized your price opinion. It can include a description of the property, comps used, the market, and the neighborhood.
  • Adjustments to Comps: You might not find precisely similar properties on sale or recently sold when selecting a comp. In such a case, you can choose similar comps with a few extra or fewer features. Then, you can make adjustments to their values for the differences. For example, if the comp contains a pool or bath but your subject property doesn’t, you can reduce an equivalent amount from the comp’s cost.
  • Public Records or MLS Sheets: Some BPO companies need to ensure the authenticity of values a broker enters. For this, they ask the professional to include public records information or MLS sheets.

 

Market Value Assessment Approaches

Determining a fair market value is the core purpose, and comparison with similar property sales is the most common approach. While this aptly applies to homes and residential properties, there are other approaches for commercial buildings. For commercial properties, a broker follows an income-based path. It includes using income the property produces to derive its value combined with the land value. Moreover, for deteriorated properties, the cost of repair is considered to determine the value.

 

How Much Time One BPO Takes?

This factor significantly depends on your performance and experience.

There are six steps involved in completing a BPO assignment:

  1. Research – pulling comps (approx. 30 minutes).
  2. Data entry (approx. 1 hour).
  3. Photo uploads (approx. 15 minutes).
  4. Submission (approx. 15 minutes).
  5. Taking pictures (approx. 5 minutes) plus travel time.
  6. Corrections/clarification/kickbacks (as necessary).

 

How Much do Real Estate Agents Get Paid for BPOs?

Do you remember? We mentioned that the BPO service is a part of the listing service a real estate agency offers. Thus, there’s practically no extra cost associated with the job. Don’t worry! When taking the assignment from a BPO company or a financial institute, they pay you for your time and effort.

 

To start with, one usually gets a minimum of $40 for the job, while some try not to settle below $40-$50. And when the property lies far enough, you can charge extra for travel time and fuel expenses. Typically, such jobs may get you as high as $70-$100 and even higher per assignment.

Now, considering the potential of how much you can earn in a month, the limit varies drastically from one broker to another. 

 

Because it takes 2-3 hours to complete a BPO per hour, if you can do 2-3 BPOs per day and end up making $120 per day, you make approx. $3600 every month. Cool uh! But that’s just a hypothetical value. You can get much more or fewer jobs per month based on your availability, experience, and credibility.

 

Keep an Eye on the State Regulations Concerning BPOs

Regulations concerning Broker Price Opinions aren’t uniform as each state can have a different rule. For instance, a particular state might allow BPOs only as a competitive listing price opinion. However, another state might allow a broader range of applications, including tax appeal as well. Thus, it is essential to go through the regulations applicable to the area you are willing to serve.

 

In addition, you can also check for regulations for the area your subject property falls into before accepting an assignment. A quick check with what the BPO job requires from you and what rules allow can help you play safe always.

 

What About NABPOP?

Getting NABPOP certification is NOT MANDATORY. It is just a non-profit organization that educates, trains, and certifies people who want to pursue a career in the BPO industry. But, yes, you can become a member of their community and get support and advocacy whenever needed.

 

Conclusion

Much like any other career stream, starting with Broker Price Opinion also requires learning the concepts first. You should also know the types, approaches, and regulations to perform better. And earning a high reputation in the real estate market can unlock potential earning opportunities by doing BPO assignments.