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REO Appraisals vs BPOs

Discussion in 'General Appraisal Discussion' started by Deuce of Spades, Nov 8, 2008.

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  1. Deuce of Spades

    Deuce of Spades Member

    0
    Nov 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    We all know that lender's are getting BPOs done for REO properties and some of us are blessed with REO work. However, from reading other posts, it seems that the REO appraisals are slowing down a bit and BPOs are picking up speed.

    So, I am curious as to what lenders are still getting REO appraisals and which have moved to strictly BPOs. I have to really question some of the bank owned listings I have been seeing latley - they are dropping their pants! Is this a result of the lender just trying to move inventory at any cost? or miss information on the market?

    Ordering appraisals:

    Suntrust, IndyMac, Deustche Bank

    Just BPO's
    don't know, don't do them.....
     
  2. panappr

    panappr Senior Member

    5
    Dec 5, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Personally, I think many banks are responsible for the sharp declines in my area, with increasing inventories of REOs and banks accepting ridiculous short sale offers, I don't see how the average homeowner can compete right now. With the agents doing the REO BPOs to get potential listings, it is perpetuating itself. The liquidation will continue for some time. Can't anyone see the inherant conflicts of agents valuing their own listings?? An agent I know has a Countrywide REO account, which requires a BPO for every listing. Most list prices are granted based on this value???? Listings usually sell under 30 days, sometimes before prosessing???. Whats wrong with this picture?
     
  3. Deuce of Spades

    Deuce of Spades Member

    0
    Nov 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Wells Fargo?

    Wells Fargo seems to be giving them away in my market. Properties contracting in less than 20 days. Saw one today, 7 DTC. Little under priced or nervous bank? Anyone do REO work for Wells?
     
  4. ghrousseau

    ghrousseau Member

    0
    May 5, 2006
    Professional Status:
    Licensed Appraiser
    State:
    Virginia
    Well, all I can say is they are losing money left a right. I'm guessing that 80% of the REO purchase loans I review have appraisals with market values 10 to 15% higher then what the property sells for. The BPO's are costing the lenders money and either they don't know or don't care. The only properties I see selling consistantly at current market are the HUD owned properties that are using a M&M appraisal to set price.
     
  5. Wendy

    Wendy Senior Member

    0
    Feb 23, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    It's morphed into a self-perpetuating cycle:

    1) Market goes a bit stagnate with few sales in +/-30 days
    2) REO holders panic and take an BIG axe their prices.
    3) Bargain hunters rejoice and snatch up the properties.
    4) Non-REO sellers are forced to price at the new level in order to sell.
    5) 2-3 months (or less) go by and market is no longer excited by the last cut.
    6) REOs reduce and cycle starts again.

    We've been though a bunch of these 'round here. A new round of price whacking is over-due.

    I also have found that buyers are only interested in REOs at bargain basement prices regardless of condition. Since we have now reduced to 2003-2004 prices, that puts a great number of homeowners who would be sellers unable to compete.

    My worst REO markets have almost no "typical" sales due to this.
     
  6. Wendy

    Wendy Senior Member

    0
    Feb 23, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    It's rare that I even find an REO sale w/ more than 4 months marketing time. That is what is drivng the 2-3 month stair-step decline, IMHO.
     
  7. Verne Hebert

    Verne Hebert Senior Member

    0
    Feb 25, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Montana
    The rate at which banks buy money is in part a function of the ratio of REO properties to the books. It is likely a lot more expensive to carry REO than to dump them; an analysis would have to be done,,,,,and you bet it is, every morning.

    And I was thinking about REO BPO's this morning. This is not a fed related issue, if anyone, the banks are very cost concious. Why would you pay for an appraisal when you can pay for a BPO--in many markets the margin of error may be so great that it really doesnt matter.

    We have gone from irrational exuberance to hasty liquidation.

    I think we will see less and less REO's
     
  8. BaamBaam

    BaamBaam New Member

    0
    Feb 21, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Minnesota
    There is something a little wrong with banks having the listing realtor be the one to do the BPO. The realtors in many cases is looking to place the property in market at a price well below the market in the hopes to sale the property quickly, one to make the bank happy to see the property sale fast. But also that way the realter doesn't have to do much to sale it. In my market I too see REO properties sale quickly, and more and more I'm seeing that realtors are not even filling out half of the MLS information about the property. If banks are looking for more of an anticipated value say 120 days... like you see in many ERC appraisal... then they sould look at going the route. m2:
     
  9. 444nutman

    444nutman Senior Member

    23
    Jun 20, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    I just picked up a new REO client. My contact is an agent that currently has over a hundred REO properties. I called her to set up two appointments. I called the number on a Saturday and she answered her phone. We got to talking for a little while and she said she has been begging this company to use an appraiser. The new client got my number from another client. She said the BPO's she sees are crap. The realtor doing the BPO are asking her for directions, for comps and a repair list. She said a majority come in way too high and she ends up having to sit on the property because the realtors doing these have no idea how to price a BPO. She also told me the company was ordering 3 to 4 BPO's on a property and the values were so far apart they were having problems pricing the home. She then says you get what you pay for. She told me the agent was getting 50 bucks a BPO and just pumping them out and not taking time to understand the market. She restored my faith in realtors.
     
  10. jtinmichigan

    jtinmichigan Junior Member

    6
    Feb 7, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Michigan
    Just found a comp for an REO that I'm doing.
    Realtor did BPO and listed the property at $75k. (no idea if an appraisal was done in conjunction with this) Listing set on market 6 months then sold for $20k. Re listed 3 days later at $50k. Guess who bought the property for $20k?

    Man you guys are quick.......................................
     
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