What price to request from BPO agent

Foreclosures, Short Sales, Tax Foreclosures
1

Folks,
Have the following data on an SS with countrywide.
I have an appraisal scheduled and will need to request the
price opinion to X dollars. I am trying to figure out what the
X will be to make the Bank Ok the deal.

The house is in good shape and nice location.

FMV based on comps = 320K
FMV based on Zillow - 345K
Repairs = 7K
Loan = 302k
My SS offer = 289k

I have 1 comp that was a bank repo. The repo was for a home
of a 100sqft more and based on the $/sqft, i see my candidate
to be 314k.

There are comparable homes listed for 360k, but are sitting in
the market.

a) Can i request the appraiser to get the opinion to say 305K and
will that be ok with the bank.??

b) Given the above numbers, i guess i could have made a lower
offer perhaps. If so, what could that low number have been
without jeopardizing the banks decision???

c)Now, what $ value should i request from the appraiser?

Thanks
Krish

2

I’ve heard of influencing an appraissal by pointing all the bad points in a property, but I’ve never heard of telling a BPO agent what the value should be. Have you actually done that before? Doesn’t sound right to me.

In my experience the bank uses the BPO to see if your offer is reasonable. If it’s close to your offer they may take it, if it’s much higher they probably won’t.

3

[i][b]a) Can i request the appraiser to get the opinion to say 305K and will that be ok with the bank.?? :shocked:

c)Now, what $ value should i request from the appraiser?[/b][/i] :shocked:

Is this a joke? :shocked:

I hope so cause, trying to influence the independent opinion of an appraiser could be construed as fraud.

You don’t request a value from an appraiser–again–it’s their job to provide an unbiased, independent appraisal.

Are there Number Hitters in the appraisal world? YES, and they’re coming under greater & greater scrutiny. They could feasibly lose their license, and their freedom.

Number Hitters & sweatshops are the reason I left mortgage lending appraising behind in 2003…they’ve ruined a once respectable profession. However, their days are numbered with trainee limits just around the corner, and prosecution a very real threat.

If I’ve stated it once…I’ve stated it a hundred times…sometimes I just can’t believe what I read here!

-Infowell

4

Hey Info,

If you close one eye, cock your head sideways, stick out your tongue and hop on one leg, it starts to make more sense! :wink:

Of course, then you get all of those strange looks.

Good to see that you’re still among the living!

Raj

5

I agree with infowell. There was an appraiser that gave the FMV for 10 properties I bought when the actual appraisal of the properties where more around $3k to $30k. The FMV for the properties were between $50k and $100k. This appraiser is now sitting in county jail.

The best way I have found to influence the BPO is to print the comps I want them to use. When I meet them for the inspection I give them all the comps I want used. Sometimes they will use the comps I give them and sometimes they won’t. But at least I give them a chance to be lazy.

6

Yep,
Did exactly that and got the valuation to the price point
that i needed.

-Krish

7

The best way I have found to influence the BPO is to print the comps I want them to use.

Quick lesson; a BPO (Broker’s Price Opinion) IS NOT an appraisal.

BPO’s are often performed by fledgling agents–possessing absolutely no valuation background.

An appraisal (in many states) is either performed by a state licensed, or state certified individual (licensing is being phased out).

When an appraiser trainee performs an appraisal…they’re required to be accompanied to the property, and supervised by a state licensed, or certified appraiser.

However, there’s an epidemic, and dirty–not so little–secret regarding appraiser trainees. Some larger appraisal firms (I label sweatshops) have a plethora of trainees they send into the field unsupervised. The state certified, or licensed appraisers signs their reports “did inspect” all day long as if they’ve inspected the subject property (one definition of “rubber stamping”). This problem has gone on for a very, very long time, and states are taking steps to curb this unethical, and illegal practice by limiting the number of trainees a certified, or licensed appraiser can oversee.

If you’re looking for a qualified, unbiased opinion of value from an ethical appraiser…you’d be well advised to check the appraiser’s driver’s license @ the door and make sure he/she is licensed and/or certified, and that they possess years (not weeks, or months) of experience…the problem’s really become that bad!

On the upside…everybody suddenly thinks they’re a valuation expert. Combine that with the advent of highly inaccurate DOT.CON valuation modules…and well, there’s plenty of opportunity to make some very serious money for those who truly know market value. It’s like sifting for needles in a haystack (cause most eggspurts tend to overprice their properties) but, once in a while…along comes a gem that’ll make you ten’s of thousand’s just on the purchase.

“Good to see that you’re still among the living!”

We’re buried (pun intended) with work. WA State’s one of the hottest markets in the country right now. Our relatively good jobs are attracting in-migration, and there’s been a real shortage of product for quite sometime now. The Seattle Times ran an article a couple weeks ago in which the Senior Economist for the NAR was quoted as saying, ‘home price appreciation in many areas of the Greater Puget Sound region could reach 30-40% over the next couple years.’

-Infowell

8

Good response Infowell.

Luckily not all BPOs are performed by inexperienced newbies. Most in my area are performed by experienced REO brokers. In my area of the world, lenders hardly ever order an appraisal. They would rather use the value given by an actual agent than appraiser. A BPO is on a different form that allows a lender to get a much better idea of the “disposition” issues with the property. An appraisal doesn’t tell the lender the whole story. Lenders do care about the value, but they also care about the potential marketing issues if they take the property back. This is what helps me get more SS deals approved than anything. What are the real issues with the property. Plus, most lenders can pay a lot less and have a rush BPO performed in just a couple of days, instead of weeks for an appraisal.

9

“Good response Infowell.”

Thank you Sir!

“Luckily not all BPOs are performed by inexperienced newbies.”

In the region in which I reside–BPO’s command a whopping $60 fee…not exactly a King’s ransom. Sixty GW’s doesn’t attract the cream-of-the-crop valuation experts. I don’t mean this to sound crass, but the Agents I see getting $60 BPO assignments–are being given the work because, they aren’t able to make a sufficient living listing & selling real estate, and need the additional income just to get by.

“In my area of the world, lenders hardly ever order an appraisal. They would rather use the value given by an actual agent than appraiser.”

Strange…in my region it’s not permissible for a lender to use a BPO for lending purposes. I thought that was true for federally related transactions as well, but must admit…I’m blissfully out of touch when it comes to appraising, and haven’t the desire to research the issue further.

I find it ironic, however, that lenders would rather use the services of an Agent over the expertise of an appraisal expert–trained solely in the field of valuation. No skin off my nose really–I’m dually licensed & qualified to perform both Certified Appraisals or BPO’s–although I no longer offer either service. It’s just that quality seems to be given a back seat to price lately. Also, it’s been my observation that lenders who’d shop appraisers for the lowest fee were likely to pad the bill–so they could stick a Benjamin or two in their own pockets (a practice & function of Appraisal Management Companies - AMC’s - in my view).

“A BPO is on a different form that allows a lender to get a much better idea of the “disposition” issues with the property. An appraisal doesn’t tell the lender the whole story. Lenders do care about the value, but they also care about the potential marketing issues if they take the property back.”

I’m going to have to respectfully disagree with the above comments as well, and the following is intended to let readers decide for themselves; A BPO–as I’ve previously stated–is often performed by newer agents. We must also consider that a percentage of the $60 fee would be split w/the Broker, or go to pay desk fees, etc.–further diminishing the amount to the Agent. BPO’s are typically one page & are often completed without the Agent ever having visited the property.

Appraisals on the other hand; should be performed via physical inspection of the subject property (anything less could result in major inaccuracies of the valuation, and explains why I refused ‘drive-by’ orders…way too much liability for me!). As an appraiser I not only performed a valuation service, but was expected to, and held accountable for; needed repairs & cost estimations, “as is” value, and/or “as repaired” value (way over the head of an typical Agent). And my reports averaged 15 pages–which tells a lender A WHOLE LOT more than a BPO. An appraiser is required to consider & comment on highest & best use issues (HBU), and analyze & comment on marketing conditions (recent past, present, and foreseeable future). An appraisal is a 100 times more concise than a BPO, and explains why (@ least some states) disallow them for lending purposes. Average Agents would recognize physical, functional, or external obsolescence if they tripped over it…much less analyze, and make adjustments for it.

“…most lenders can pay a lot less and have a rush BPO performed in just a couple of days, instead of weeks for an appraisal.”

I correspond with Appraisers all over the country, and now that the refi-market has been dead for sooooo long…most appraisers are reporting 2-3 day turn times. Also, lenders aren’t typically the one’s paying the appaisers fee…the cost is most often passed onto the consumer (this is how unethical lenders are able to pad the appaisers fee for their own benefit…not to insinuate all lenders do that).

Our last sale resulted in commissions of some $38,000, and we’ve generally 8-12 deals in the pipeline @ any given time. Ask yourselves; why would I drop everything to perform a BPO for a measly $60 fee w/a requested 2 day turn time?..I’d have to be out of my mind!

Appraisers are the valuation experts…Agents have an equally important, but drastically different role.

-Infowell

10
I don't mean this to sound crass, but the Agents I see getting $60 BPO assignments--are being given the work because, they aren't able to make a sufficient living listing & selling real estate, and need the additional income just to get by.

In my area, most are performed by experienced REO agents. Yes, I agree there are others like you stated.

Strange...in my region it's not permissible for a lender to use a BPO for lending purposes. I thought that was true for federally related transactions as well, but must admit...I'm blissfully out of touch when it comes to appraising, and haven't the desire to research the issue further.

I never said anything about lending purposes. I’m sorry, maybe using the term lender is confusing the topic. Maybe I should say REO companies or asset management companies or lenders Loss Mitigation depts. My example was a SS. I have never had a lender order an appraisal for a SS approval. They have always been BPOs.

I find it ironic, however, that lenders would rather use the services of an Agent over the expertise of an appraisal expert--trained solely in the field of valuation.

Not at all. Try to imagine your a manager in Wells Fargo LM dept. You’re trying to decide if you should authorize this SS or not. In front of you, you have a state licensed appraisal and a BPO. You will get some diiferent info from both forms. Granted all the factual data should be the same, but the BPO will tell the manager more about the marketability of the property. How fast and how much can we liquidate this asset if we decline this proposal and foreclose. I’ll promise the BPO from they are looking at is not 1 page. Lenders(LM dept) know that appraisers don’t sell real estate, the want opinions of value from people whose job it is to sell houses. Theres a big difference, these companies will tell you the same thing. I’ve had this conversation numerous times in the past with lenders.

I'm going to have to respectfully disagree with the above comments as well, and the following is intended to let readers decide for themselves; A BPO--as I've previously stated--is often performed by newer agents. We must also consider that a percentage of the $60 fee would be split w/the Broker, or go to pay desk fees, etc.--further diminishing the amount to the Agent. BPO's are typically one page & are often completed without the Agent ever having visited the property.

I also am trying to educate and let he readers decide for themselves. You keep stating that BPOs are oftern performed by newer agents, but this is not the exact case. I think the fee is irrelevant, I do some for $150. The honest truth is most agents (that are not REO agents) performing BPOs are trying to get their foot in the door with the REO companies by doing the BPOs in the first place.
BPO forms are definetly not typically 1 page. I wish. Most now are several pages. Actually, a lot of companies are now having us provide 4 sold and 4 active listings. They want tons of comments covering any and all aspects of the property. I never do any BPOs without visiting the property. Some don’t require pictures, but all the ones I do require a exterior visual at least. Lenders want to know the condition.

Appraisals on the other hand; should be performed via physical inspection of the subject property (anything less could result in major inaccuracies of the valuation, and explains why I refused 'drive-by' orders...way too much liability for me!). As an appraiser I not only performed a valuation service, but was expected to, and held accountable for; needed repairs & cost estimations, "as is" value, and/or "as repaired" value (way over the head of an typical Agent). And my reports averaged 15 pages--which tells a lender A WHOLE LOT more than a BPO. An appraiser is required to consider & comment on highest & best use issues (HBU), and analyze & comment on marketing conditions (recent past, present, and foreseeable future). An appraisal is a 100 times more concise than a BPO, and explains why (@ least some states) disallow them for lending purposes. Average Agents would recognize physical, functional, or external obsolescence if they tripped over it...much less analyze, and make adjustments for it.

You right, appraisals are definetley different than a BPO. CORRECT. Yes, they are more concise. And you nailed the average agent comment, most do not know what an obsolescence is. But I am not referring to “Lending Purposes” either. No lender in the country would allow a BPO to be used for a purchase, LOC, or a re-fi. I’m referring to pre-foreclosure and short sale values, and not for lending purposes. There is a major huge difference.
This topic was about a SS deal.

I correspond with Appraisers all over the country, and now that the refi-market has been dead for sooooo long...most appraisers are reporting 2-3 day turn times. Also, lenders aren't typically the one's paying the appaisers fee...the cost is most often passed onto the consumer (this is how unethical lenders are able to pad the appaisers fee for their own benefit...not to insinuate all lenders do that).

Once again, this is not the case in my area. Appraisers are slammed here and weeks out. This is why it’s hard to generalize RE. Its different depending on where you live.

I agree with your comments regarding appraisals. But in the REO world its a different ballgame. I do SS with all the major lenders, I have never had one of them order an actual appraisal, its always a BPO performed by an agent. Now maybe in another part of the country they require an appraisal instead, but I highly doubt it. Countrywide, Citifinacial, Wells Fargo in my area order BPOs in these situations. If a new home buyer is getting their loan through Countrywide, the Countrywide will order an appraisal from their “approved” state certified appraisers list.
Foreclosures are different.

One more true story… for the viewers
A company from Cali ordered an “interior BPO with photos” from me last week. The HO tells me the appraiser was out couple of days ago and said his house should be appraised around $220k. I didn’t say anything because I thought he was nuts or just drunk. Anyway, in my BPO report I explained to the lender the issues with reselling the asset if they foreclosed. My comments were negative do to many factors, location #1. Neighboring houses #2 which included no pride of ownership whatsoever. Basically, in our after Hurricane shocked market, this property would be difficult to sell in its current state. They called me a few days after my report was in to inquire more about my report. The main figure they were concerned with was the “as-is” quick sale 30 day value. The deal was the appraiser said something like $225k, I can’t rememeber exactly. I said no way you would ever recoop that money, buyers would never do it. The appraiser gave him comps on houses same size, age, construction but in much nicer neighborhoods. He says, " you outta see these pictures of these beautifully landscaped houses on the appraisal". I said you might comp it on paper like that, but you’ll never get that for it in our market. Now IMO, there had to be some issues with the buyer for this company to order a BPO as a backup to an appraisal. I now know he was trying to refinance to catch up his back payments.
My point is, there are diffenerent uses for why lenders order BPOs. It has nothing to do when the property is purchased either.

11

REO-

You cleared up a lot with that post (comes the dawn…not for mortgage purposes).

4 sales & 4 active listings in my opinion is excellent data for determining FMV. I’ve always felt valueing property strictly by analyzing sales was a little akin to driving down the Freeway while looking in the rearview mirror. It’s imperative one knows and understands marketing time, and competitive listings to properly value a property.

Thanks for the enlightenment!

-Infowell

12

sorry to bump such an old topic, but there is a lot of great info here, and I thought it deserved it.