The Drive by BPO

The Drive by BPO Is a Bit More Than the Name Implies

Real estate concept - businessman signs
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When mortgage borrowers fall behind on their payments, lenders may hire a real estate professional to take a look at the home to determine its current condition and let the lender know of potential issues if they must file foreclosure proceedings.  Sometimes things never go past the BPO, but often the process advances through foreclosure and sale of the property.

Real estate professionals who do BPOs have a couple of motivations.  Some just like the income from the BPO, though it's usually under $100 each.  The other motivation is in getting into a situation where they're first in line to get the listing to sell the home once the foreclosure is completed.  They are already communicating with the lender, and they have a head start on their process of valuation.  The trick is to be as accurate as possible in doing the BPO.  If later when listing the property the suggested listing price is too far off from the BPO, the lender may decide to use another professional.

The lenders and companies that hire real estate brokers to do BPOs, or Broker Price Opinions, have very specific requirements. Don't assume form the name, that a "Drive By" BPO will involve only a couple of photos from the car and a short form with information about what you saw.

The forms used by lenders and loss mitigation companies vary greatly in how they are laid out and the information they require for a Drive By BPO. However, examination of even the shortest of forms with the least required information reveals a minimum of the following form fields and requirements:

  • Broker information.
  • Location
  • Neighborhood
  • Conformity to neighborhood and zoning.
  • Property type, style, approximate age.
  • Visual condition of all individual exterior features.
  • Whether it looks occupied.
  • Parking.
  • Lot size.
  • Estimated square feet.
  • Estimated room count.
  • Comments
  • Three recent sold comparables with info.
  • Three currently listed comparable properties.
  • Two photos.

As you can see, there is a large amount of information to be gathered and transmitted. And this was the simplest of the forms I found, with the least amount of required information and only two photos. Note that some companies require you to get out of the car and photo all sides of the home as well.  The lender isn't going to pay if their form isn't completed with every box filled in.

Depending on whether it's a drive-by BPO or one where the home is entered, the lender obviously wants some warning of the situation they face if they foreclose and must sell the home  Often they are using an asset management firm for this process, and their job is to gather accurate info and help the lender to minimize their losses if they go to foreclosure and sale.  The best real estate professional for this BPO process is one who is very detailed and doesn't mind paperwork and bureaucracy.

As many drive-by BPOs pay only $50, a real estate professional would really need to have their systems in place for efficient performance. Otherwise, profitability would be non-existent or tiny. However, in urban areas, real estate brokers who specialize in this market can stay quite busy and book a nice income stream.