| The Importance of Being Accurate and Complete | | | | sold comps. |
| If you're already an REO agent or want to become | | | | Example: 4,000 sq. ft. + 4,500 sq. ft. + 4000 sq. ft. = |
| one, there's one important thing you have to do to | | | | 12,500 sq. ft. |
| receive a continuous stream of REO listing | | | | Step #3: Now, divide the total combined sales price of |
| assignments and BPO orders. And that's to strive to | | | | all three by the total square footage of all three. |
| submit on time, every time, a 100% accurate and | | | | Example: 2,570,000 from Step #1 divided by 12,500 |
| complete BPO (Broker Price Opinion). | | | | from Step #2 = 206. This determines your average |
| For those of you unaware of what a BPO is, it's a tool | | | | price per square foot in the area: $206. |
| used by lenders and mortgage companies to value | | | | Step #4: Determine your adjustment value by |
| properties in situations where they believe the | | | | multiplying that average price by.25. Example: $206 |
| expense and delay of an appraisal is not necessary - | | | | x.25 = $51. |
| BPO's are used extensively on foreclosures. REO | | | | So $51 is the amount you would use to adjust for the |
| agents and brokers are assigned to do them by the | | | | variance in square feet between the subject property |
| lender or asset management company, and it's also a | | | | you're doing the BPO on and your comps. |
| common entryway to actually being awarded REO | | | | Here's how you use that number. Let's say the |
| properties to sell. | | | | difference in square feet between the subject |
| Doing an accurate BPO can be tricky and difficult, | | | | property and the comp is 500 sq. feet in this particular |
| however, when you adjust the price of the foreclosed | | | | scenario. That means you multiply that 500 by $51 - |
| property against active and sold comparable | | | | which equals $25,500. That is your adjustment figure. |
| properties in the gross living area. This is one of the | | | | So if the comp is bigger, you would make a negative |
| first things the asset manager or the quality control | | | | adjustment by subtracting the $25,500. If it's smaller, |
| manager is going to review when they're auditing your | | | | then you make a positive adjustment and add $25,500. |
| BPO. | | | | Keep in mind that you are trying to "equalize" the |
| If your adjustments aren't consistent and on the | | | | indicated value. Let's continue working with the $51 per |
| money, then you'll be asked to do it all over again - and | | | | square foot adjustment figure we calculated above. |
| your quality control score will suffer. There's a way to | | | | Let's say your comp is 3,800 sq. ft. and, again, your |
| avoid that unfortunate situation - by using the formula | | | | subject property is 4000 sq. ft. The difference is 200 |
| below to accurately calculate the adjustment. | | | | sq. ft. We multiply that by the $51 and raise the |
| Step #1: Add the sales price of all three of your sold | | | | indicated value of it by $10,200. |
| comparables: For example, $900,000 + $870,000 + | | | | By making this adjustment, we are saying that if the |
| $800,000 = $2,570,000 | | | | comp were 200 sq. ft. larger (equal in size to our |
| Step #2: Add up the square feet (above ground - do | | | | subject), that it would have sold for $10,200 more than |
| not include the basement, if there is one) of all three | | | | it actually did sell for. |