My recent BPO from WaMu was a drive-by, they didn't check the inside of the home.
I've been told that the next one will also be a drive-by...they don't reveal when it will be done, and there's no appointment set because the BPO agent doesn't go inside the property.
Is this normal? How can I persuade the BPO if I can't meet the agent?
Agents say: We are not paid enough and price dictates quality.
My response: No one forces you to accept the $40. If you accept the order and fail to do your due diligence up to the ethical standards you were sworn to uphold, then you are a fraud and it will be only a matter time before your are out of the industry.
Agents say: Sometimes agents are doing BPOs to build a relationship with asset managers. I am friends with several large REO agents. Big REO agents all have one thing in common..... Quality of work and persistence.
I am a former agent and meet with my former colleagues to discuss the industry all the time. I often joke about all the agents I run into and how so many of them are doing BPOs thinking they can develop relationships with asset managers. That is an absolute JOKE! Everytime I hear an agent tell me this I nearly nearly rupture a vessel in my brain trying not to laugh. Are agents really this stupid? YES!
The industry has changed so much. Independent facilitators are dispatched to distribute leads to the agents. These facilitators have absolutely no direct contact with the loss mitigators and especially the asset managers.
It is even rarer that asset managers pick their own REO relationships. These decisions are made by executives many positions up from the lowly asset managers. The REO agents I know fly out and meet these executives and play golf, take them to Gentlemen's clubs, and steak dinners.
The agents that develop relationships with REO decision makers are ones that first work up the ranks on a team where the lead agent has developed these relationships.
If your a budding agent trying to get your foot in the REO door, stop doing BPOs from facilitators. Join successful REO teams and do high-quality responsible work.
If your doing BPOs to pay the bills, then DO YOUR JOB! Be reponsible and realize a bad BPO does no help the market. And stop telling everyone your doing BPOs to develop your REO career.
I have nothing against agents. We are all trying to do our jobs and make a buck.
Investors:
Look no further than the name Broker's Price Opinion with the keyword being opinion. Four weeks of night school a test and a few our of training and your opinion suddenly means something? I have never ever ever received a good BPO. I plan to get hosed on the BPO every single time. You should rely on influencing the BPO instead focus on trying to discredit it. This is done independently of the results using third party support. If the loss mitigator believes the BPO is inaccurate or provides misinformation, then they will be more likely to use your comps and support in place of the agents.
Example: A couple of months ago, I met a BPO agent at a property and gave her my handpicked comps (of distressed properties), a copy of a home inspection report, and repair estimates. I showed her how the previous owners had taken 3 bedroom 1 bath and concerted it into a 1 bedroom 1 bath. There was not one single comp with a 1/1 SFR in a five mile radius. I tried to tell her she will need to take similar sized properties ( 3/1) and reduce the cost to return it back.
Two weeks later I get a call from the lender telling me the BPO came back at $95K. Two of the sold comps were 4 bedroom 2 baths and one was a 3/2.
I pointed out to the negotiator the poor comparisons. I also pointed out the fact the agent lived two blocks away.
Well, I was able to negotiate a $66K PP and I am in the process of fixing and flipping.
The lesson I learned from this BPO is sometimes a horrible BPO does work.
I think the whole idea is for you not to influence the BPO or the Appraisal... it should be independent of any influence or persuasion. Part of the reason we are in the financial crisis as a nation is the "persuasion" of selfish greed.
BPOs are typically just drive bys, they aren't paid enough to get out of the car for more than a couple snap shots.
We should all be grateful for honest BPOs and Appraisals without selfish greed playing into the numbers, lest we go deeper into a national financial collapse. we are teetering here financially as a nation... it is a real dilemma. Good Luck! -- Dawn
Dawn, I am sorry but you are totally wrong. It does no one any good for someone to just "drive" by. To state that it is not worth the time and/or efforts, then do not perfrom BPO's. A "drive" by causes more harm than good.
H Mann,
Try to request for an interior. If the Lender will not, than you can always order an official appraisal and have the appraiser send an official copy to both you and the Lender. This might help in the matter. I have done this multiple times. It has worked and sometimes it did not.
Richard92011/Dawn,
I have to wholeheartedly agree with Crosswind. I had a homeowner loosing their home. It was a home in a gorgeous neighborhood and from the outside (drive by) looked GREAT. The bank did a drive by and failed to see the horrific condition of the inside. They came back to tell us that the home was worth $375,000 and that was the lowest they'd take. Our offer was $225,000
.
The house is listed at $265,000 right now and has been on the market 3.5 months.
If this bank had done a thorough BPO, the agent would have seen a true condition of the property, and seen the owners true hardship, then the TRUE value would have been reflected on the BPO.
They'll likely get an offer LESS than what we offered.
So much for an honest BPO.
We request all BPOs be interior bpo's when we submit a package.
smitnlit,
I think that your example is one that is happening all over the place. I have seen this happen in some any different locations and to this day, it still amazes me.
Here is my personal opinion:
The Lender(s) have every right to get as much money for the property as they can, but many factors are causing problems. If they are given correct info about the property, then the process "should" move forward. But with BPO's being performed in a less than professional manner, it causes problems for everyone involved.
Here is something I have noticed, and if I am wrong please fell free to let me know. Look at the agents that perform BPO's. Ever notice that the "top" Realtors are not doing them? Why? I think it is due to the fact that the "top" Realtors are busy actually closing properties. So this leaves the agents that "need" business. So, my questin: If you are in need of business, how well do you know the market? I have been told by a few agents that they perform BPO's because they need the money. Plain and simple.
Will things change anytime soon? I do not think they will. But we as investors can assist in cleaning up the situation. If you feel that property has been valued incorrectly, than do something about it. Ordering an appraisal does cost you money, but it should be worth the efforts.
I agree with that BPO agents are not paid enough, but they need to get out of the car and inspect the interior. I've had houses where the 4th bedroom was the dogs poop room. Hard to tell that from the inside of a car.
Most BPO agents are not familiar with a typical area, rehab costs, history of the property etc. These documents need to be provided to them to so they can properly evaluate a property. I had a property with two liens, the 2nd did an interior BPO (came in at $245K), the 1st did an exterior BPO (came in at $270K). The highest offer I could get was $240K after 60 days on market.
The agents need to get out of the car and inspect the interior.
if the agent is paid to do a drive by then that is what they are paid to do & what they will do. The banks must pay for an interior.
While it may be true that some agents do BPOs because they need money, more often than not they do them in the hopes of getting REO listings or they do nothing but list REOs and perform BPOs.
Often, the homeowner is not going to be glad to see you and as an agent you must take into serious consideration your security when doing a BPO. I have heard many horror stories of disgruntled homeowners confronting agents doing a drive by.
If the bank wants to pay for an interior, then the agent will do one. But if you are not paid, and thereby authorized to go onto the property, you will be trespassing. Often the BPO instructions specifically tell you to not go onto the property.
I did them for a while but have pretty much quit. Not worth the time for the small amount of money to me.
Sorry, but I have to address this: That is so wrong and unethical that is should be reported if found out. If your goal is not to correctly value the property, but to possibly ensure the future rights to list the property AFTER it has been foreclosed upon. WOW! So, the actual situation is not that a BPO is being perform, but the sole desire to assure the property will not be sold but be foreclosued upon, thusly "hoping" to get the REO listing.
I just sit here amazed!
Again CW is correct and again that VERY situation happened to the first short sale I ever got under contract. The BPO agent came out and told me she was pretty sure she'd get the listing. Well, whatdya know!! The BPO came in outrageous because she figured if it foreclosed the bank would list the property out there.
AGAIN another GOOD reason to MEET a BPO agent at the property.
Please do not read something into my statement that is not there. I did not say the agents are not correctly valuing the properties in the hope of this getting listings. As a matter of fact, incorrectly valuing the property will be a red flag causing the agent to not only get fewer BPO assignments but effectively eliminate any chance of being assigned a REO listing.
The agents do BPOs to start developing a relationship with the banks. Again, incorrectly valuing the property will be akin to the agent shooting themselves in the foot.
On another real estate agent forum I belong to with a HUGE BPO section, one of the biggest complaints is a bank that does not want to hear the truth about property values being less than what the bank thought.
I have seen this happen as well - I had a property GROSSLY over value over and over again ( by the same co) . After a long talk to the company I realized they do all the REO work in that area for that same bank???!!! I requested the lender use another co to do the value and they blatantly refused as they have a "relationship" with THAT co for all thier values. Their REO's too. Where's the logic in that?
No wonder the values were always too high . Ridiculous.
Anyway - OP - you can usually get an interior, but you may have to do a little work. I had one refuse to do anything but a drive by until I went in - photographed all damages, and provided contractor repair estimates. THEN they did order the interior.
Hi, I'd like to write a book about this mess! Lenders have been required for a long time to obtain an appraisal on REO/ORE. Little by little, I think a BPO was shown as being within 5% or so of an appraisal or actual sales and they became "acceptable". That was in a different market. The last BPO I had anything to do with, the agent (not a broker) had been in business for seven years, had been an english teacher and had no concept of two of the three approaches to value of real estate. She said she hardly got enough to pay for the gas to do BPOs and only did so as a means to get the listings.
Seems the banks want the cheapest way out to comply with requirements.
If you look at the requirements for an appraiser to provide their opinion, they are not to receive any other consideration or perform work on any condition or expectation of receiving any other compensation in connection with their opinion. Gee, I wonder why? A BPO is almost always done with the expectation of other consideration! IMO. Therefore, I consider any BPO as being nothing more than eye dressing for a loan file. My last deal began with a low ball offer compared to the BPO in file. I had the opportunity to basically cut out the listing agent and deal with the loss mitigator and told them it was a bogus figure, that my offer was not as bad as they thought. Let's have it appraised by a fee appraiser assigned by my bank and you talk to them!
My last comment is that I have known or worked with about a thousand Realtors. Only three come to mind who actually had the experience and knowledge to do an accurate appraisal, that's not counting the fee appraisers who were also Realtors. That's probably true everywhere. Now saying that to a Realtor may ruffel feathers, well, maybe you're in that .3%! Having a BPO done as a market sales analysis from the curb at 30 mph is rediculous. An even bigger problem is that many banks are actually lending on such work, if you could call it that. Investors need to be screaming bloody murder, not to the banks, but to the regulators and law makers. At least in these times there is an adminstration that might have an ear toward reality, while they are on the war path. My advice, ignor the BPO and justify your offer, unless of course, it's in your favor, LOL Bill
Only an appraiser can legally do an appraisal, a BPO is the bank wanting to do things in the cheapest way. REALTORs do CMAs or BPOs not appraisals unless they are also appraisers. There is a difference between the 3.
Copy and pasted my BPO disclaimer included in every BPO I did:
Even if there is any pre-printed verbiage to the contrary, this broker price opinion (BPO) is not an appraisal of the market value of the property. It is intended only for the benefit of the requesting party for the purpose of assisting the requesting party in deciding the listing, offering, sale, exchange, option, lease, or acquisition price of the real property and not for any other purpose, including, but not limited to, obtaining financing. If an appraisal is desired, the services of a licensed or certified appraiser must be obtained. BPO and Competitive Market Analysis (CMA) are services that SC licensed Brokerages can provide under SC Code 40-57-30.
If the bank or anyone else wants an appraisal, then they can pay an appraiser for one. But like I said I have pretty much quit, not worth the time for what they pay to me.
And arguing with the QA that the property is not worth what they want me to say it is also helped me make the decision to stop doing BPOs. The final straw was a 6000SF lake home on 3 acres. A hard property to comp anyway, but when you also add to the equation that lake sales were dead because we were in the middle of a drought with most docks sitting on the dry lake bed, it just made it worse. But they kept sending it back saying my value was too low. Over 12 months later it is still sitting on the market, $200K above what I told them it would take to sell it. I would love to be able to tell the QA "I told ya so!" If it would have sold at the price the bank wanted, then it would have done so in the previous 24 months it had been on the market.
Some agents do not have the balls to tell people the truth. Just because you want a property to worth more does not make it so. Or as some people have said the agent thinks they can get a listing by suggesting a higher value in the BPO. The agent is just shooting themselves in the foot by doing this. The agent does not realize the BPO mill/bank/AM grades them on suggested list price versus final sales price versus DOM. Or that more often than not more than one BPO will be done.
I'll see what happens with this.
I requested an internal BPO today for this reason: The county records show this property to be 3 bed & 2 bath with appx. 1600 square feet.
It's actually 2 bed & 2 bad, about 1050 sq. feet.
Let's see what they say.
Copy and pasted my BPO disclaimer included in every BPO I did:
Even if there is any pre-printed verbiage to the contrary, this broker price opinion (BPO) is not an appraisal of the market value of the property. It is intended only for the benefit of the requesting party for the purpose of assisting the requesting party in deciding the listing, offering, sale, exchange, option, lease, or acquisition price of the real property and not for any other purpose, including, but not limited to, obtaining financing. If an appraisal is desired, the services of a licensed or certified appraiser must be obtained. BPO and Competitive Market Analysis (CMA) are services that SC licensed Brokerages can provide under SC Code 40-57-30.
This disclaimer is really funny. It saly that the BPO was requested by the requesting party to figure out how much they should list the property for or offer for financing but is not an appraisal.
So therefore, no matter what I say you cant hold me to it, even if I put it in writing.!!!!!!!!
That leaves me with one question, Why is it not illegal to request a BPO when they apparently mean nothing!
I bring this out to point out that RE, financing, and apprasials are so closely tied together that there needs to be communication between all the parties.
All are experts in their area and find out things that the other ones could not know without that communication.
It is like the policy that the different branches of the intellegence community can not share their information with each other that led to the bombings of the World Trade Center.
There has to be some connection with all three, but no one area should control the other as was happening when the banks told the appraisers what they needed to appraisal to come in as in order to do the loan.
Not an easy task, but they can not be totally disconnected from each other which results in unrealistic figures (low or high) being used for something so important to so many people. That figure needs to be as correct as possible as it will make or break most people.
Jim,
I totally agree with your points. But here is the problem, the agents performing BPO's have other reasons for doing them. The most important reason, correctly valuing the property, is the lowest on the list. (As stated by a few other posters above.)
This is why, if the property is not correctly valued by the BPO, you must be prepared to pay for an appraisal.
Has anyone ever offered to list with the BPO agent if you are able to get the bank to do the short sale? I'm sure there is a very fine line there.
I always meet the BPO agent at the property and generally keep my mouth shut as we go through it unless there is something that he/she may not notice that needs to be pointed out. When done I tell them what I do, etc and if they see a property I might be interested in to give me a call. It's crossed my mind to say I might need an agent to list this for me if I get it but again I think there is a fine line there that I don't want to cross.
jawsette the disclaimer states and not for any other purpose, including, but not limited to, obtaining financing.. The disclaimer states pretty clearly what the BPO is intended for & that it is not an appraisal to be used for financing.
I am a firm believer of CYA, disclaimers, disclosure statements etc. In this business, whether you are an agent, investor or both, IMHO you should apply CYA at every opportunity :lol: .
I deal with BPO agents on the short sale and REO side regularly and will jump into this conversation.
People here need to understand that there are two "sections" (for lack of a better term) of BPO's.
One is when the homeowner still owns the home (short sale transaction) and the other is when the property is already an REO.
For the short sale scenario, the homeowner is often still in the home and a BPO agnet may not be able to gain access to the home. However, if the short sale scenario is working through an investor/flipper, often times the investor wants the interior BPO and makes it available by working with the homeowner and the bank. Other times, that is not the case.
In the REO area, the BPO is done right after the eviction so the BPO agent has every right to enter the property, is not tresspassing because the BANK owns the property and has provided them the means for access.
I think several people have mixed up the difference between stages of BPO's in this conversation and thus, much of what has been said is inaccurate.
This statement/opinion is also very wrong IMO. The nation's financial crisis was not due to greedy RE investors, was not due to "influcneced BPO's, or any other one simple reason. It was a factor of many different things and getting into that is not appropriate for this thread. The term "influencing the BPO agent" is often taken out of context. What it truely means is that the investor is providing REAL and ACTUAL data to the BPO agent. This includes, but not limited to, real comps in the subject property area, real data on the matrket condition, real data on teh condition of the home (the BPO agent does not have the time - due to lack of financial compensation as well as knowledge - to do full inspection of the house to determine if the roof is in good or bad condition, if the AC and furnace units are functioning, etc.) These items play a huge factor in the value of a home and by the investor providing this information to the BPO agent, he/she is assisting the BPO agent to do a proper and full job.While the term "influence" has a negative and potential unethical perception to it, in the case of the BPO scenario, it is not. It is simply providing the actual data to "ASSIST" the BPO agent.
Perhaps we all should change the terminology to avoid the misconception or perhaps all who just do not understand it, should read this thread.
:) Happy investing!
I have been doing BPO's for years and I am normally the person who does the 2nd opinion Interior BPO. I have been asked many times why my value is different than the exterior BPO performed by the soon to be list agent and all I can tell them is it is normally based on the interior condition. whether the condition is better or worse than the exterior BPO stated. I have had agents call me to tell me what they are trying to get out of the house but if the condition and market don't justify it I can't give them that price. I understand what some of you are saying about pricing it only to sell it but as the 2nd opinion agent I take the time to look at the whole picture even for the measly amount I'm getting.
You get what you pay for? or do you? All the folks whining when they bought homes way over their financial ability and now whining that a BPO is too high? Let me hand you a tissue as you put the keys in the ignition of your TAX PAYER PAID MERCEDES or your silicone boobs, yep, that's right, most the people that are upside down used their home to buy crap that they did not deserve and need and now the American "workers" are set to pay for it for years to come. For $42.00 you want a Agent to spend 4 to 6 hours working on a BPO? Get Real!! If you would like more information on BPOs or if you would like to get into that line of work...
www.kimclass.com is a site that I have no relationship with, she was in business years ago, not sure if she still is. It is easy to put people down for doing real work, while everyone else is out to make a quick buck. If you do not like a BPO, then use some of the money you are saving from not paying rent or your house payment and pay for your own darn appraisal!!! -- Dawn been there done that.
I think Will is right. The term assist works much better than influence. I've had quite a few agents THRILLED I was able to pull real data/comps (well not me but the listing agent) The listing agents who get how the process works are happy to provide the data for the BPO agent. Does it matter if THEY give it to the BPO agent or I do? I guess because I'm an "investor" or "flipper" there is that dark cloud something underhanded is going on.
Thanks for the correction! Shame on me. To err is human.
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