Dangers of Broker Price Opinions, an article in April's Realtor Magazine,really caught my attention. I have been doing a fair amount of BPOs to pick up the slack after relocating last summer. It never entered my mind that they could be dangerous! There were some very thought provoking points made in the article, which originated from the NAR Legal Affairs podcast.
1. The first danger listed was Not Having a Policy. When I joined my office I went through a process with my broker about just that, and we did come to an agreement about how the BPO fees would be handled. Apparently, a BPO fact-finding group in Nevada found that in most cases real estate professionals were preparing and getting paid for BPOs without their brokers knowledge, and with no record keeping.
2. Using the wrong terminologywas the second danger mentioned. It points out that unlike appraisers, who determine property market value, Realtors preparing a BPO determine a recommended property price. We need to make sure that third parties aren't calling our BPOs a market valuation, which is the work of appraisers.
3. Breaking state laws. Reading this section spelled out some of the differences from state to state in what is allowed, with a caveat to investigate what's legal in your state. We did this as part of #1 above.
4. Being uninsured. Hmmmm. Now here is a question I don't know the answer to. A member of the Nevada BPO Taskforce, Pamela Kinkade said "Most brokers have no coverage for liability arising out of the purpose for which BPOs are being done." (Nevada has a BPO task force?) Note to self - Check my E&O policy.
There you have it. I think it is wise advice to those of us who are doing BPOs to make sure we are conducting that segment of our business with the same high level of ethics and record keeping that we do our other activities.
Janna Rankin Scharf provides a superior level of real estate services to home buyers and sellers in Coeur d'Alene and Kootenai County, Idaho. Visit www.JannaScharf.com to search for homes in the Coeur d'Alene MLS for anywhere in spectacular North Idaho.
Janna Rankin Scharf, AB, GRI, CSP, CNS, CLHMS 208.651.9700 NorthIdahoJanna@gmail.com
Janna Rankin Scharf provides a superior level of real estate services to home buyers and sellers in Coeur d'Alene and Kootenai County, Idaho. Visit www.JannaScharf.com to search for homes in the Coeur d'Alene MLS for anywhere in spectacular North Idaho.
No matter how grand or modest your real estate dreams may be, you can turn to me in confidence. Give me a call today and let me know what I can do to be of service to you!
Janna Rankin Scharf AB, GRI, CSP, CNS, CLHMS 208.651.9700
My broker does not allow us to do them, for many reasons. I actually think there are legal reasons, if my memory serves me correctly. However I can't quite put my finger on what it is. Enough people are doing them, and I know from past experience they are don't pay well and don't pay fast.
Andrea - I have one company that I work with primarily and they pay FAST! The check is in the mail the day I submit the order online! That is not the norm, I know. I don't enjoy them, it's a love/hate relationship! But they cover my expenses to do business, which really is a blessing while I kick my business into gear again! Because I am an associate broker in a state that has licensed sales associates, I was able to get around some of the rules that a sales associate wouldn't be able to.
I wonder why in the world our insurance would not cover us? I've not done a BPO in years...sounds like we need a class on how to stay out of trouble if doing them. Yikes!
Janna, you are lucky I have done so many BPO's I am about to do a Rant Post and expose a whole bunch that never paid me.....So the good news is at least there are some out there that do pay, now what is your conversion to REO listings?
Janna - There was a really interesting blog written by an ActiveRainer a few weeks back about BPOs. I wish I could remember who it was so I could put the link here. Anyway, she stated that she had worked with a bank that was using Zillow for their BPOs.
Great - I found it. It was on Andy Tolbert's blog. Here's the link:
http://andytolbert.activerain.com/post/986863/Please-Flag-this-under-Hilarity-Countrywide-Loss-Mit-uses-ZILLOW
I am a broker and we do have it covered in our policy book, do have insurance coverage, but I never heard it was not legal to have a market value so long as you are not calling it an appraisal. I'm going to be checking on that.
Hi Janna, Well, there IS always more to any story than meets the eye. I figured there was more coverage needed for listing REOs but BPOs... who would have figured that?
I rarely agree to do a BPO mostly because of the difficulty in getting PAID for the work.
Thanks for the heads up. I hate reading insurance polices.
The other thing is that the Appraisal Institute is having a fit. The believe that BPO's are simply appraisals by another name. A rose by any other name is still a rose. Personally, I think they have a point.