Broker Price Opinions? - BPO's

[murray stroupe]

RE; You usually get what you pay for

Hi, I am starting my classes this June or Sept (depending on my money situation ) for both appraisal and real estate sales, but I have just heard about BPO's and am wondering what the vet's out there think about them? They are cheaper for mortgage company's ect. than to have a true appraisal, so why would they want an appraiser? I am guessing an appraiser is more reliable, but I guess I'm asking are BPO's used more and more over an appraiser?

Besides the cost factor, what situations do company's use a BPO over an appraiser and vice versa? Thank you.

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J Johnson;
That headline is why many banks/people, including me don't use them.

As far as an opinion of price, don't know why i should pay for that;
the ''real estate professionals'' i deal with do that for free. I get that first; then go to the bank, because have to pay for appraisal regardless of whether the loan goes thru. I am somewhat familiar with area i buy/sell in.

A bit funny , i saw a BPO , neatly typed,on a REALTORS desk ,$100 i think ;
always got those for free, but had to write it myself.

Don't ask for a BPO, asked REALTOR for reasonable estimate of price, to sell in a reasonable amount of time.

 

[Offshore]

Mr. Stroupe as a member of the general public or an investor, you should not be faulted for requesting a real estate value or opinion for the lowest price possible or for free. My gripe is that this is an appraiser’s forum and many of the ones promoting the free giveaways in here on a daily basis are loan officers, fee shop owners, trainees, etc., who claim to be appraisers. The overwhelming majority of true appraisers deplore the “free or cheap comp check game.” I realize this will anger the privileged ones in here and I will probably get a warning from one of the moderators or lose my membership but I no longer give a damn.

 

[JJohnson1985]

Ut oh, didn't mean to start a war :Eyecrazy: So Richard I think I see what you are saying, the appraisers who do things for free open pandora's box and set the precedant and the expectation in the eyes of those who use appraisal services that those things should be done for free, Mr. Stroupe for example. This in turn hurts others because the way appraisers earn their money is by those services. Am I correct?

 

[Vegan702]

I have never seen a BPO used for mortgage lending decisions but I guess they could be. To me if the investor wants to use a BPO then more power to them it is their money they are fronting. The ones I see from my wife are for 2 different companies for pre-foreclosure who will most likely be utilizing her company to list the property also so they are not for lending decisions.

I wouldn't throw out gross misrepresentations of majorities or minorities regarding comp checks. If that were true then there would not be all these phone calls, emails, faxes, etc. looking for values before ordering the appraisal. If that were true there would be days on end without me getting one of these items asking for that service. I would wager if you polled the mortgage lending side of the business they would answer overwhelmingly that most of the appraisers they use do in fact provide this service. This small group of people on this forum I don't think represent the majority of appraisers out there accurately. I would even wager that in this small group of appraisers on this forum who post regularly there are a lot of comp checkers in it.

 

[Vegan702]

Ut oh, didn't mean to start a war :Eyecrazy: So Richard I think I see what you are saying, the appraisers who do things for free open pandora's box and set the precedant and the expectation in the eyes of those who use appraisal services that those things should be done for free. This in turn hurts others because the way appraisers earn their money is by those services. Am I correct?

No, Richards stance if I may, is that no one should be providing comp checks whether legal and compliant at all, the issue is not whether to charge or not.

 

[Offshore]

JJohnson the war was already being waged. BPOs or CMAs produced by listing agents are a legitimate product to attempt to procure a listing from a homeowner. The problem is that same concept has morphed into the appraisal end by the straight commission mortgage broker segment of the lending industry.
With mortgage related appraisals somewhere, at some time, someone decided to provide a “free comp check” and that’s what opened Pandora’s box. I’ll go so far as to say that the comp check probably did not originate in Rhode Island. When it’s suggested that Pandora’s box be closed it is met with fierce resistance from those who profit from the sordid, current state of affairs. The used car salesman type of appraiser thrives like a fungus in this atmosphere.

 

[JJohnson1985]

JJohnson the war was already being waged. BPOs or CMAs produced by listing agents are a legitimate product to attempt to procure a listing from a homeowner. The problem is that same concept has morphed into the appraisal end by the straight commission mortgage broker segment of the lending industry.
With mortgage related appraisals somewhere, at some time, someone decided to provide a “free comp check” and that’s what opened Pandora’s box. I’ll go so far as to say that the comp check probably did not originate in Rhode Island. When it’s suggested that Pandora’s box be closed it is met with fierce resistance from those who profit from the sordid, current state of affairs. The used car salesman type of appraiser thrives like a fungus in this atmosphere.

Ok, so what I don't understand is how any appraiser can thrive doing free comp checks.

 

[Offshore]

Ok, so what I don't understand is how any appraiser can thrive doing free comp checks.

Typically a comp check is a staged assignment. Mortgage brokers request a comp check for a property, possibly several comp checks with several appraisers to seek the highest value. If the comp check value is high enough, mortgage broker then orders an appraisal. Since there is no fee in the initial stage, the fee is procured during the second stage in which a guaranteed value has often already been implied. For one shot deals the highest, fastest comp check usually gets the assignment. If this practice is performed in volume for commission only loan officers do you care to guess where the values will gravitate? True banks do not employ this tactic.

 

[Greenback]

I realize this will anger the privileged ones in here and I will probably get a warning from one of the moderators or lose my membership but I no longer give a damn.

I applaud you...
I hope you keep speaking your mind and heart.

 

[JJohnson1985]

Typically a comp check is a staged assignment. Mortgage brokers request a comp check for a property, possibly several comp checks with several appraisers to seek the highest value. If the comp check value is high enough, mortgage broker then orders an appraisal. Since there is no fee in the initial stage, the fee is procured during the second stage in which a guaranteed value has often already been implied. For one shot deals the highest, fastest comp check usually gets the assignment. If this practice is performed in volume for commission only loan officers do you care to guess where the values will gravitate? True banks do not employ this tactic.

Ok, I see. It's kind of like bidding on a job, the quote is free but if you get it then you get paid, and usually the best priced quote gets the job. That's a shame because instead of the number one priorities being the true value of a property, to protect the loaning institution, the person receiving the loan, and the appraiser's reputation, it turns onto the best number available game. An appraiser's work is an opinion on value, different appraisers will have different numbers. The loan office can choose a number to have a bigger loan which in turn creates more money spent on interest. The loan officer recieves more money for the higher loan amount. The appraiser, if not honest, is rewarded not for doing his/her job but to meet a higher value. Eventhough it is legal in some places, everyone must know how it can effect everyone, including those innocent people who are paying for a higher loan than what the property is truely worth, or in other words what the majority of appraisers would appraise the property at. Eventhough the loan companys risk losing money because of bankruptcy and forclosures ect., the individual still made his/her money so there is no loss to them, only reward. Thank you, I think I am starting to get the picture. If only the rules and laws would reward honest people, things would be better. Too bad there are unhonest ones who take advantage. I am not saying that I would but honestly I don't know who I would blame for the situation, the appraiser doing everything that he/she can legally to increase business, the loan officer trying to increase income and loan amounts, or the state governments for allowing it to go on, or even the Appraisal Board for not making uniform standards on this issue in the Uniform Standards of Professional Appraisal Practices. (I am just begining on USPAP, only on standards 1-10 so forgive me if there is, just assuming since there are different laws in different states making it legal or illegal) Man I have so much to learn :new_newbie: