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CMA & BPO Flashcards

1
Q

BPO

A
  • “BPO is an acronym used extensively for “Broker Price Opinion”, which is an estimate of the probable selling price of a property generally done for a third party such as a lender” (National Association of Realtors, 2018, p. 13)
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2
Q

СМА

A

CMA, “Comparative Market Analysis, is also an opinion of a property’s price but done either for sellers to determine at what price they should list their property or for buyers to help them determine what price to offer”. (National Association of Realtors, 2018, p.13)

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3
Q

Multiple Uses of BPO

A
  • Investments: An investor may have numerous properties in a portfolio and may need to update the value of the portfolio.
  • Distressed Loans: Defaulted loans are the primary reason for performing a BPO for a lender. A lender may want to determine whether to do a loan modification or to proceed with a foreclosure
    *Legal: Such legal events as divorce, bankruptcy, and estate planning often benefit from a BPO
    *Removal of PMI: If a homeowner requests the removal of their PMI premium when they believe there is a 20% equity position in the property either they, or the lender, could request a CMA or BPO
    *HELOC: BPOs may be used to determine a home equity line of credit
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4
Q

BPO Elements

A
  • Market area info
  • Previous listing info
  • Value and market recommendations
  • Listing comparable
  • Sales comparable
  • Broker comments
  • Photos
  • Year built
  • Lot size
  • GLA
  • Land value
  • Bedrooms & baths
  • Garage
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5
Q

Elements of BPO & CMA

A
  • They include an inspection of the subject property
  • Neighborhood analysis
  • Local and Regional Market Information
  • Description of Comparable Properties
    BPOs and CMAs must be prepared by:
  • Licensed Real Estate Brokers
  • Licensed Agents
  • Sales Individuals
  • Registered/certified appraiser
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6
Q

Facts

A
  • Over 10 million BPOs are performed annually across the country
  • BPOs are vital information for decision making
  • BOs have become an essential part of valuable
    information for real estate industry
  • It also provides important information for lending purposes
  • For brokers and agents, “BPOS provide multiple professional and fiscal opportunities for growth and
    expansion” (National Association of Realtors, 2018, p. 13)
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7
Q

There are two types of BPOs

A
  • Exterior | Exterior Issues
  • Interior | Interior Issues
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8
Q

Exterior BPO

A
  • Broker Information
  • Location
  • Neighborhood
  • Conformity to neighborhood and zoning
  • Property type, style, approximate age
  • Visual condition of all individual exterior features

Exterior Issues:
* You can not be in the premises of the property
* How can you gain knowledge of the interior?

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9
Q

Interior BPO

A
  • All exterior requirements plus the following:
  • Individual room measurement
  • Overall square footage measurement
  • Inspection of interior features conditions
  • More thorough value adjustments in comparable
  • Individual photos of interior damage
  • Repair estimates
  • Cleaning or trash estimates
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10
Q

What is an Appraisal?

A
  • An estimate or opinion of value supported by analysis of relevant property data is called.
  • State and Federal are the levels where appraisals are
    regulated at
  • Appraisals MUST be done by licensed appraisers
  • Appraisals tend me more thorough that CMAs and BPOs
  • Appraisals are required for federally related loans
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11
Q

What are some examples of federally related loans?

A
  • Conventional
  • FHA
  • VA Loans
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12
Q

CMA

A
  • In CMA, the licensee researches and evaluates
    comparable properties that have recently been sold
  • СМА /BPO assists sellers and buyers in determining value
  • A Broker may charge a fee for the CMA/BPO, but should make it clear that it is not an appraisal
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13
Q

Determining Market Value

A
  • The Key to any successful property pricing strategy is to determine the property’s market value.
  • A common mistake made by home sellers and that is that they don’t hire a licensed real estate
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14
Q

Absorption Rates

A
  • The absorption rate is the rate at which available homes are sold in a specific real estate market
    during a given time period.
  • It is calculated by dividing the average number of sales per month by the total number of available
    homes.
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15
Q

Adjustments

A
  • This is the dollar value or percentage amount added to or subtracted from the sales price of a comparable property to arrive at an indicated value for the property being evaluated
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16
Q

Contribution

A
  • The appraisal principle that states that the worth of a particular component is measured by the amount it contributes to the value of the whole property, regardless of the actual cost of the component. The value of the component may be measured as the amount by which its absence would detract for the entire property value
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17
Q

Cost

A
  • The total spent to acquire or build. May or may not reflect value. Cost is historic and does not vary.
18
Q

Externalities

A
  • Property is affected either positively or negatively by
    influences outside the property lines
19
Q

Gross Living Area

A
  • Gross living area (GLA) is the total finished, habitable, above-grade space, measured along the building’s
    outside perimeter.
20
Q

Market Value

A

The most probable price a property, should sell for in a competitive and open market with each party acting prudently and knowledgeably and either being under and undue duress

21
Q

Neighborhood

A
  • This refers to a smaller, loosely defined geographical location within a larger city, town, or suburb. They often consist of social communities with considerable face to face interaction among their members. Neighborhoods are important because prices vary considerably in different neighborhoods.
22
Q

Outlier

A
  • Outliers are properties that, for reasons that are usually undetermined
  • It is sold for a price that is extremely high or low based on all other comparable.
23
Q

Price

A
  • An objective reality representing what a specific property sold for at a particular property in time, or what a property
24
Q

Progression

A

These properties will suffer from surrounding properties that are inferior.
* If the neighboring house is priced at a high value, it will naturally pull up the price of the lowest priced home in the neighborhood.

25
Q

Regression

A
  • Concept that a property will suffer from surrounding
    properties that are inferior.
  • This is one of the many reasons, owners who do many advancements in their properties will not be able to recoup their expenses by selling beyond the top of the area’s price range.
  • Even if the property is the most impressive property in the neighborhood, when selling it has to align with the comparable within the neighborhood.
26
Q

Sales Comparison Approach

A
  • This is one of the three approaches to value in appraisal theory (income and cost being the other two). * Value is based on a comparative analysis of recent sales prices of similar properties, after making adjustments for seller concession, time, and other difference in the properties
27
Q

Supply & Demand

A
  • This is the principle that they value of any good or service will rise as demand increases and supply decreases
  • This will continue to fall as demand decreases and supply increases
28
Q

CMA & BPO

A
  • Though a CMA and an appraisal can be used with comparable
  • PLEASE REMEMBER:ONLY APPRISALS CAN BE USED FOR LENDING PURPOSES
29
Q

CMA & BPO

A
  • BPO’s are requested when houses are in default.
  • In some cases it is requested for home equity loans or refinancing
30
Q

Internal BPO

A

The more through type of BPO, the internal broker price opinion, requires a significant amount of info, valuation work and images

31
Q

CMA & BPO

A
  • Lenders and mortgage companies might use a BPO for various reasons
  • Always remember to consult your broker with all questions
32
Q

BPO stands for:
A: Broker Price Opinion
B: Broker Price Objection
C: None Of The Above
D: All Of The Above

A

A: Broker Price Opinion

33
Q

CMA is?
A: Comparing Money Assessments
B: Comparative Market Analysis
C: None Of The Above
D: Both A & B

A

B: Comparative Market Analysis

34
Q

Which of the following situations can a BPO be used?
A: HELOC Review
B: Buyer’s Review
C: Broker’s Review
D: All Of The Above

A

A: HELOC Review

35
Q

Which of the following is a BPO element?
A: Market Area Info
B: Previous Listing Info
C: None Of The Above
D: Both A & B

A

D: Both A & B

36
Q

Which of the following is a BPO element?
A: Sales Comparable
B: Brokers Comments
C: None Of The Above
D: Both A & B

A

D: Both A & B

37
Q

Which of the following are the elements of both BPO & CMA?
A: Neighborhood Analysis
B: Local And Regional Market Information
C: None Of The Above
D: Both A & B

A

D: Both A & B

38
Q

BPOs and CMAs must be prepared by:
A: Licensed Real Estate Brokers
B: Buyer
C: The Seller
D: None Of The Above

A

A: Licensed Real Estate Brokers

39
Q

Appraisals MUST be done by licensed appraisers
A: True
B: False
C: Depends On The Situation
D: None Of The Above

A

A: True

40
Q

What are some examples of federally related loans?
A: VA Loans
B: Conventional Loans
C: FHA
D: All Of The Above

A

D: All Of The Above

41
Q

Property is affected either positively or negatively by influences outside the property lines
A: Externalities
B: BPOs
C: CMAs
D: Cost

A

A: Externalities

42
Q
A

Real Estate (52 decks)

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