BPOs and the Thorough Inspection
The bank listing agreement may call for the broker/agent to give opinions of value (BPOs). A BPO is an in-depth analysis of a property’s value. Think of it as a mini-appraisal. To do one properly, the broker/agent needs to thoroughly investigate the property’s condition.
Some might suggest even more thoroughly than a broker/agent would do for a “regular” TDS inspection. When undertaking this analysis for the bank on value of the property, remember it is an analysis the bank is going to rely upon to set its sales price (a price that the bank – and broker – knows is less than the loan amount they foreclosed on, and needs to be as reasonably high as possible to minimize the bank’s loss).
So, inspect carefully.
But not too carefully. After all, whatever is found in this ‘thorough’ inspection must be disclosed on the agent’s TDS. “But wait,” you say, “banks are exempt from giving a TDS if it’s a foreclosure property.” And, right you are. Banks are exempt. The broker is NOT. So, that wonderfully thorough inspection you just did, the one necessary to assist the bank in determining true foreclosure market value, is the proverbial double-edged sword. Now, you must also disclose that very same information to a prospective buyer.
Don’t get caught in the trap of thinking, “I wasn’t the BPO broker/agent, so I don’t need to worry about that.” Once the BPO broker/agent has given that information to the bank, the bank has actual knowledge of the facts – and a bank MUST disclose information of which it has actual knowledge — material information affecting value. What’s “material” information? Anything that would impact a buyer’s decision to buy, and at what price.
Wasn’t that BPO information the very thing that was used to determine value? If it determines value, it affects value. Disclose it.