I know that the legalities of BPOs varies from state to state - and I'm curious who all is using BPOs. Do lawyers use BPOs?
@Barbara E. Banks generally order BPOs when considering a short sale. In my opinion, BPO agents do a terrible job. They are often only paid about $50 so it is not worth their time to really examine a property. They'll drive by, look at some comps and come up with a value that is unrealistically high 90% of the time.
Most houses that need work look deceivingly reasonable from the outside. Since they often don't go inside and see the house is a wreck, their appraisal assumes it is in reasonable shape.
About 10% of the time the BPO will come back at a value that makes the bank willing to accept an investor offer.
Banks will order BPOS, as will loan servicers, attorneys, note companies, etc.
BPOs rely on agents who get paid little ($50-100) to do the work, so usually its half assed work. The best BPOs that are done you wont ever see, they are done by an agent who is trying to get more BPOs and possibly listings from a bank.
I've easily completed 700 BPOs in my lifetime, personally, all ordered by banks and loan service companies.
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