I came across a blog post by a fellow Rainer, Andy Tolbert of Sanford, FL. She was venting her frustration with BPOs and the agents who do them. For those of you who aren't familiar with the term BPO, it is a Broker's Price Opinion. Lenders will order one done on a property when the homeowner has defaulted and the foreclosure process begins. Also, BPOs are ordered when a lender is considering approving a short sale. I have done BPOs lately for a number of refinances and home equity loans.
My comment to her post was so lengthy that I decided to turn it into a post of my own. She brings up some VERY GOOD and VALID points. The reason it is so critical is that the outcome of so many homeowner's situations hinges on these Broker's Price Opinions. It is not something that I take lightly.
You can read Andy's post to understand her frustration. What follows is my response.
Andy, I have to say that I am not guilty of any of the crimes you are complaining about. Please don't lump us all into one big ball!
I work on line for "middleman" type companies, not directly with lenders. I can't imagine EVER receiving a REO listing based on any of the BPOs that I do. The criteria, and variances we are allowed, are so tight that I can't imagine ever being able to skew a price opinion high or low or in any way that isn't supported by the data. To respond to your points:
1. I am an associate broker and therefore don't need my broker to "sign off" on my work as I would if I were a sales associate. It is stated VERY CLEARLY on my orders that the inspections and work are to be done ONLY by the assigned agent. I wouldn't even THINK of doing it any other way. Maybe the difference is personal ethics...
2. Actually, they pay $75 to $125 depending on the property, inspection requirements and whether or not it's a rush.
4. Actually, I do live on planet earth. As I said above, the variances we are allowed are so tight that it forces us to use the closest comps in distance and within square footage. My orders always say to research the MLS and public records FIRST to make sure there are acceptable comps and if not, not to do the BPO. For example, if I slip in a perfect comp but it is outside a 5% variance in sq. ft., my BPO will be rejected. I can't give any value to an amenity, such as a barn and corrals, if I don't have sold comps with the same amenity. There is NO ROOM for subjectivity! I have never, NOT ONCE, felt like anyone was encouraging me to bring in a value high. Or low, for that matter.
Having said all that, I do understand your frustration. I don't doubt that you have run into problems. Unfortunately, there are a lot of agents running around out there willing to do anything to make a buck. And in the process, they cast a disparaging light on the rest of us. Also, having read the comment above, perhaps all companies are not as ethical as the ones I'm working for.
I subscribed to your blog, and I look forward to your short sale post next week!
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 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
BPO's are certainly a tricky subject. I know many agents who do them in an effort to get an REO listing and for the most part they are done ethically, I'm sure! I think it is exactly like you pointed out you can be ethical or not. Hopefully the folks that aren't will end up where they belong. Thanks Janna!
Janna, great response. I am sure there are tons of agents who are doing their jobs in respect to BPO's. My broker won't allow us to do them, which is fine by me. But, what I do know is that banks who send an agent from half way across the state should be flogged. And we can tell when the listing comes on. Almost all our foreclosures are out of town agents. And not the next town over.
Ah well, always a few bad apples... But you know, when we see something priced right, we know it was not only done right but that the bank listened.
The problem that the banks are creating for themselves are hefty by not having reliable local contacts. It also translates to our real estate market in a negative fashion that will linger on.
Great post.
I had to come back, I wanted to say that it almost seems like a regional problem. If all the good brokers and agents in a specific area refuse to do them, it can create problems like Andy was frustrated about. Good thing for your area that you agree to do them. Perhaps we should all rethink our position on them, those who don't do them, and it might help.