Getting a non- or re-performing loan (NPL/RPL) off your books and freeing up available capital is a common practice for lending institutions today — especially those looking to rid themselves of service costs and improve their position so they can start buying and lending more.
But selling these loans can be challenging — agreeing with a purchaser to buy your pool requires a variety of things to happen first, most notably a supporting Broker Price Opinion (BPO) that accurately represents the anticipated sale price of the property in question.
- BPOs are All About Getting Accurate and Actionable Information
Accuracy is critical. While it would be ideal that a BPO come back with the highest anticipated sale price possible, the most important consideration is that it reflects an accurate representation of the property, and is delivered to you in a way that makes it easy for you to take action where necessary.
Meanwhile, potential buyers are performing their own due diligence. The problem with failing to address “red flag” loans (e.g. negative attributes of a property like fire damage or mold) is that conflicts are inevitable. And when conflicts arise, deals will falter.
- Why You Want Red Flags on Your BPO
No one wants red flags, but we all want actionable information. To keep deals on track, make sure you use a valuation partner that has a thorough Quality Control process – one that will catch problem loans before they can impact a sale.
Some of the best valuation providers will provide their clients with a complete pool report that floats “red flag” loans to the top, including summary comments on all issues. This type of report is valuable because it quickly points out the properties that may need your attention.
- The Importance of a Thorough QC Process
In order to swiftly sell your NPL/RPL loans, a thorough QC process is needed. This process involves all submitted reports being carefully reviewed against a set of comparable sales data points that include sale dates, location, style, age, condition, dwelling and lot size. And as mentioned above, a QC report should also include addendums detailing any red flags and how they may affect valuation and risk.
If your institution has concerns over the use of your current provider’s BPOs, Pro Teck offers a range of accurate solutions that can meet your needs. To learn more about Pro Teck’s full suite of real estate valuation products, click here to schedule a demo.