While prospecting for REOs, it is not uncommon to find ones that are not listed with realtors. These unlisted properties could be great deals if the investor knew what the bank wanted and didn’t have to bid against other investors to buy it. The question becomes, “How can I buy an REO that is not yet listed?”
Generally speaking, all REOs will have to have some standard by which to price and sell them. The first line of determining this price is for the bank’s asset manager to get a local realtor to do a BPO (Brokers Price Opinion). Essentially this is an appraisal done by a licensed real estate agent or broker. These price opinions do not quite rise to the level of a professional appraiser’s analysis, but cost as little as 20% of the licensed appraiser’s report.
Armed with the BPO, and sometimes a second BPO, the asset manager uses a proprietary computer program to get a starting value to list the property. In smaller regional banks, he may decide to start the offering price at something close to the final judgment amount of the foreclosure. The response from perspective buyers will later determine how quickly the property is sold or reduced in price to make it more attractive to buyers.