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BPO -vs- Appraisal

Discussion in 'General Appraisal Discussion' started by wickedness1, Nov 17, 2007.

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  1. wickedness1

    wickedness1 Senior Member

    0
    Jul 12, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Ohio
    Does the second market buy BPO's? I'm just trying to get a good grasp on why BPO's would be used by lenders instead of appraisals anyway.

    I would find it VERY interesting to know the percentage of foreclosed homes that had funds loaned off of BPO's instead of appraisals.

    Maybe I'm completely wrong & BPO's weren't used, but lenders are cheap so its likely, lol.


    Enlighten me please :):new_newbie:
     
  2. Workbox

    Workbox Elite Member

    2
    Mar 2, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    I think BPO have been used for "decisions", but as to make a loan? It may be part of the process with a compilation of other value data to make a decision. Makes you wonder why so many different sources are required to make decision. Can I say that they have been used for loan decisions, NO. But there have been many posts that would other wise say yes or maybe. We do know that "they", pending on who the lender/AMC is, they are used to data mine and to populate AVM's, in which, are still a process of a decision making, and from what many of have seen, AVM's are very questionable.
     
  3. Blueprint

    Blueprint Senior Member

    2
    Aug 25, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Oregon
    Is this a confirmation of reality?? Even if you knew that %, your perception of reality would still remain flawed.
     
    Last edited: Nov 17, 2007
  4. Workbox

    Workbox Elite Member

    2
    Mar 2, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    If any body has those statistics, along with AVM usage, please post.
     
  5. Walter Kirk

    Walter Kirk Senior Member

    11
    Jun 24, 2003
    Professional Status:
    Licensed Appraiser
    State:
    New Jersey
    BPO's are cheaper than appraisals, need I say more?
     
  6. Parker

    Parker Sophomore Member

    0
    Nov 3, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Nine times out of ten, a loan was made using an appraisal (AVM, Drive-by, or Full). The reasons why one appraisal product is used over another varies (loan risk usually drives the final decision). By the time a loan makes it to the Secondary market, it is 6 to 12 months since ‘funding’ (i.e., the borrower has the dough and the original lender is selling the loan – usually a package of loans). The Secondary Lender uses a number of options to check on the value of each individual loan (desk reviews, AVMs and BPO’s). Loans are never purchased at ‘face value’; the final purchase price is always negotiated. This happens at what is often called a “Tie-Out-Party”. A BPO, more often than not, is used for ‘problem’ loans. The lender is looking for an inexpensive way of having someone look at the property and report on its current marketability and value. If the value estimate is below the prior appraisal, then a lower value is offered at the ‘Tie-Out”. BPO’s are no better and no worst than most appraisals. Many ‘buyers’ of appraisal products argue that BPO’s are a better products because most BPO’s present three closed sales and three active listing.
     
  7. Michael Hinnant

    Michael Hinnant Sophomore Member

    0
    Nov 20, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Oregon
    bpo's probably aren't used to make loans. here's why. real estate agents do bpo's not appraisers. appraisers have e & o insurance and appraisals are the only thing the court recognizes as true value. so the bank can't really sue the real estate agent for fraudulent bpo's because they are not really appraisals. now here's the funny part. if an appraiser does a bpo then maybe they would use that because they can sue the appraisers e & o.
     
  8. TJSum

    TJSum Elite Member

    4
    Nov 12, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    Michael, I would agree, but what about AVM's, they can not sue them either, (or can they), and they use them for loans all the time...
     
  9. Joyce Potts

    Joyce Potts Elite Member

    11
    Feb 6, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    BPO's are not used for loans, as far as I know. They're being used the loan companies to establish the value they think they can get get when they take the property back in foreclosure. They don't need an appraisal for that, because it's not an FRT--for the most part.

    But give it time--jut like using Desktops and AVM's--give it time.
     
  10. Otis Key

    Otis Key Elite Member

    0
    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    Then you're living in a dream world - they are being used for loans. If you'll check, they don't even need an appraisal for a loan that don't exceed the a certain requirement.:shrug: On top of that - so many loans were made on comp checks.:sad:
     
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