What is a retro BPO? (Also known as retroactive BPO or historical BPO)
The term “retro” makes a lot of people think back to the 70’s. For real estate agents doing BPO, “Retro” has a completely different meaning.
Simply put, a retro BPO is a broker’s price opinion (BPO) that asks the real estate agent to give his opinion on the value of a property on a specific date in the past. It may seem strange, but it is a useful tool that will be explained in this article.
Here’s an example of how a Retro BPO works: A bank or lender needs to know how much a property was worth on 7/3/2006. They don’t want to know the value of the property today, they want to know the value as of 3/7/2006. The real estate agent needs to access their MLS program and search for comparable sales from that time period. The real estate agent will state that TODAY is 3/7/2006. For most broker pricing opinions, the lender wants an agent to go back in time, up to 6 months for comparable sales. With a retro BPO, the agent will look back 0 to 6 months from the retroactive date, in this case July 3, 2006. The real estate agent will look at comparable sales from 3/1/2006 to 7 / 3/2006 in this example.
Sales of before 3/1/2006 probably needs more explanation as to why the agent had to go back so far to get comparable sales. Also, any comparable sale dated after 03/07/2006 will be rejected because they fall after the given retroactive date.
Super simplicity
Carrying out a Retro BPO is very simple. Photographs are not normally required. The real estate agent will need to physically verify that the property is still standing, in most cases. The actual Retro BPO shape is also less complicated than a standard Interior BPO. This is because there are usually no competitive listings involved like in a normal Indoor BPO. Only 3 comparable sales, no photos. What could be more easy?
What is the reason for a retro BPO? There are several reasons: Reason # 1 is to determine if fraud was committed (mortgage and / or appraisal fraud). Some other reasons include probate, divorce, bankruptcy, and insurance. In some cases, a bank will use it as a “checkpoint” to make sure its processes / procedures were followed.
Whatever the reason, retro BPOs serve an important purpose in today’s unstable real estate environment. For real estate agents looking for additional income, Retro BPO is a good way to go.
