One Property. Two BPOs. One at $59,000. One at $149,900. WTF?

Hi folks. If you handle Short Sales then you know the importance of the BPO (Broker price opinion). Lenders heavily rely on the opinion of a neutral agent when it comes to placing a value on the short sale property. So it's important that the agent doing the BPO is accurate.

Of course we all know that this is not always the case. Some BPO agents are good at what they do and some suck.

Yesterday I was doing my weekly follow up on a Short Sale file. This particular Florida Short Sale has two liens on it so two BPOs were done last week. As usual when I speak to the lenders I "make nice" with my goal being to get as much information as I can about the file. I was able to get both lender representatives to give me the BPO values.

This particular property was placed on the market priced at $85,000 and a purchase price of $87,750 was negotiated. This purchase price was spot on with recent comparable property sales so I figured there would be no issue at with the BPOs.

Ok are you ready for this? The BPO for the 1st lien came in at $59,000. The BPO for the 2nd lien came in at.............$149,900!!!!!

Is that comical or what? One property. Two different values. How can there be a $90,000 difference from one BPO to another on a property only worth $87,000? Maybe lenders need to get smart and pay the extra cost to have a full blown appraisal done.

****If you want to learn how to dispute bad BPOs then be sure to join us for Short Sale Superstars Advanced Short Sale Training. We'd love to have you.

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Permalink Reply by Venancio Gonzalez on October 16, 2011 at 7:25pm

Unfortunately, paying for a full appraisal will not warranty an accurate price. I list REOs and one of the clients I work with pays for full appraisals after my initial BPOs and three of those appraisals have come way over my BPOs market value and of course they go with the appraiser value but guess what, after some time on the market and few price reductions two of these listings have sold very close to my suggested market value. Fortunately for me, the asset manager have been willing to work with me after seeing no activity and supplying accurate monthly reports. 

Permalink Reply by Jeff Payne on October 17, 2011 at 3:39am

I have experienced the same thing, especially with Bank of America REO.  They hire their own company to do appraisals and I suspect they tell them where the value should come in

Permalink Reply by Kevin Vitali on October 17, 2011 at 2:14am

One of my biggest frustrations with short sales is getting the bank to understand the value of the property.  I definitely try to meet all BPO agents and appraisers at the property to discuss where I have been with the property and where I am at now.  Also, if they are from out of the area discuss the differences in the neighborhoods.  Most are receptive to listening.

Permalink Reply by Kimberley Kelly on October 17, 2011 at 2:27am

I love the "remove the lockbox" trick.  Taking two off this morning..

Permalink Reply by Jesse Hammond on October 17, 2011 at 3:56am

I agree with Jackie. I actually have the agents pull the comps they used to price the property. Many of the BPO agents are lazy and will use your exact comps. However, when I see this there are usually two reasons 1) it is an agent that can't make it as a real estate agent so they are doing BPO's to make extra money or 2) they are agents from out of the area and they have no clue of the local market area. 

Permalink Reply by Mark Sawyer on October 18, 2011 at 6:03am

With the initial submission of the short sale package, I include a request that they order an appraisal with an REO addendum.  I have found that most BPO's are a waste of time and energy and do everything I can to thwart the practice.  Most BPO agents in our area are simply starving part time brokers who don't have enough imagination to make a living in a difficult market.  I have had BPO agents send their wives to take pictures and others who have not been actively licensed for years and still others from sixty miles from the community with no local knowledge or perspective whatsoever.  My policy is to check any agents credentials prior to setting an appointment for a BPO.  I refuse access to almost 60% of the BPO agents that contact me and 100% of those with a track record of REO listings and sales.

B of A and WF are using staff appraisers for many of their short sale properties and this can be a problem, too.  Recently, I had a short sale approved at $317K set to close 15 days from the date of the request for the staff appraiser.  I met the appraiser and interviewed her.  She had just been hired as a salaried staff appraiser after being out of the business for 11 years; this would be her first appraisal since reactivating her license.  In the interim she had been selling cookware at a well known department store.I provided her with a current full CMA for the subject property.  Her appraisal indicated a FMV of $410K!  I challenged the value based on her lack of recent experience and was fortunate to deal with a negotiator who agreed with me.  Another, case the staff appraiser had just moved to Colorado from Maryland and had only just received his Colorado Appraiser license.

 

There is no foolproof way to have accurate BPOs and Appraisals.  Most of the individuals performing these tasks depend on the lenders for their livelihood and will tell the lenders whatever they think the lenders want to hear.  Just be prepared and don't hesitate to deny access to anyone you feel will not serve your client's best interest.

 

Permalink Reply by DAVID REEVE on October 18, 2011 at 6:33am

I liked your thoughts on the idea of "realtors by day" bartender by night kind of folks that are out there.

But I particularly like the idea of refusing access to people that are not qualified to do the job!

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