BPO's & Estimated / Fair Market Values on Notes

5 Replies

I have been fortunate enough to be in this here real estate game for over 25 years as well as have some basic experience in BPO's (several thousand over the last several years). Though I am brand new to the NOTES end of real estate I am blown away at the numbers these companies are coming in with as Fair Market Value. As recent as the last 8 days I've received tapes and am looking at these valuations shaking me head thinking "IS YOU STUPID?". Based on these crazy numbers I am even hesitant on submitting an offer as they will seem ridiculously low. But based on the comparable's they're not even close. I've also noticed pics of different properties than what is being advertised. Due diligence 101 has me scratching my head. Is this typical?

@Steven Perre
Great meeting you at DME.

Never trust a sellers BPO. I looked at one this past week that had a BPO of $350,000 but the House was listed last year for over 400 days at $75,000.

If there is a bid discrepancy like that I will call the seller and discuss it with them and bid off of my value. This is where having the relationship with the seller can help but 9/10 times they will see who bids highest and hope some newbie doesn’t do a BPO and buys it off their value.

sellers BPO's as you just learned are pretty wild...  not even sure where they get them unless its just automated off of tax records.. I really don't think you can buy notes based on any thing but a third party valuation you either pay for or is current.. or your own research..

Originally posted by @Jay Hinrichs :

sellers BPO's as you just learned are pretty wild...  not even sure where they get them unless its just automated off of tax records.. I really don't think you can buy notes based on any thing but a third party valuation you either pay for or is current.. or your own research..

 Some of them aren't real BPOs but AVMs, which is even worse.

To the original poster's question yes, you're entirely right, a lot of these values are bogus. I submit offers based on my number but I do write a note on why my number is lower. For example a recent one, there hadn't actually been a comp in the area in 3 years. Their BPO guy used ONE house that had been completely rehabbed 3 years ago to establish a 75k value when the house in as-is value was likely worth in the low 50s.

Honestly at this point, with notes, I'd rather be ultra selective and get no deals than buy into the frenzy and overpay for crappy notes.

@Patrick Desjardins   its why we pretty much control all process of our note business.. we don't waste a bunch of time on scouting or trying to figure out values and condition of property.. Kind of like turnkey for notes.. it helps keep our volume up so we are closing notes every week..

@Chris Seveney it was a pleasure meeting you too. The experience was invaluable. Looking forward to the next.

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