BPO -vs- Appraisal

[AK_Grown]

OK, if that is nothing new, then why not get realtors out of the business?? Why not offer lenders a USPAP compliant form that looks and feels like a BPO, only is done strictly by appraisers?

I am new to this industry, only about 2 years under my belt, so please enlighten me!

:new_newbie:

 

[CANative]

Not all loans require an appraisal. But some lenders would like something in the file nevertheless. BPO's and AVM's probably fill that need.

 

[Richard Carlsen]

OK, if that is nothing new, then why not get Realtors out of the business?? Why not offer lenders a USPAP compliant form that looks and feels like a BPO, only is done strictly by appraisers?

I am new to this industry, only about 2 years under my belt, so please enlighten me!

OK, stand by because I will post some thoughts and observations and then let all hell will break loose.

Here are just four reasons why something like a USPAP compliant BPO is not being used by lenders:

1. Most appraisers consider it beneath their dignity or exalted station in life to generate an appraisal that looks like something a newly licensed real estate agent can do.

2. Most appraisers consider the fee offered insulting to their high station in life and not like what was paid in the "good old days."

3. They are so tied up with providing a value down to the nitty gritty n-th degree that they do not know how to provide something that will simply fulfill the clients needs that is less than perfection.

4. A significant number of appraisers are caught up in a very high opinion of their own self worth.

In short, most appraisers don't want to change what they are now doing to meet the needs of the market.

 

[AK_Grown]

In short, most appraisers don't want to change what they are now doing to meet the needs of the market. [/font]

This much is starting to become apparent to me... Thanks Richard!

 

[Stone]

Of course, one could argue that the changing needs of the market helped cause the mess so many are in right now.

 

[AK_Grown]

Duly noted, Stone... ah it's a sickly sweet mess we live and work in!

 

[hastalavista]

In short, most appraisers don't want to change what they are now doing to meet the needs of the market. [/font]

oh-oh... heresy and blasphemy!

Richard-

In seriousness, I agree with you to a large degree.
I personally think the percentage of appraisers who don't want to provide a market-driven service are in the minority.
The division we run into as a profession (IMNSHO) is this:

1. There is a group that holds nothing but the 1004 w/on-site inspection is acceptable. This is a knowledgeable group who knows that other products can be done, but they insist on using their own standards on what is and isn't appropriate. I agree with them using their own standards on what is appropriate for them (as we all should do assuming our standards meet or exceed the minimum); I obviously reject them trying to impose their standards on me.
2. There is a group that will provide non-1004 appraisals that are USPAP compliant. This too (I speculate) is not the majority group.
3. There is a group that really doesn't know what can or cannot be done in compliance with USPAP. I'd say this group is the majority. Some have a sincere desire to learn what is acceptable and make their own choices on how to proceed. Others are willing to break the rules.

USPAP is fairly clear on what can and cannot be done. I say "fairly" because there are always exceptions where it isn't clear.

Most of the arguments are not about what USPAP actually says, but what USPAP should have said or means to say.

 

[xmtpedprl]

Richard has made a lot of good points, but please understand that it's the actual *extent* of many BPO requests that make certain folks (such as myself) respond the way he's outlined.

Per my normal procedure, allow me to present a BPO 'offer' that some listing agent accepted. We get these all the time, as our clients offer the BPO's and their REO's to us by default. You all can decide if this is something that you'd accept for $45.00 to $65.00. Here are the conditions:

1.All comps must be w/in 10% of the subjects GLA or make EXTENSIVE COMMENTS to the effect.
2.All comps must be w/in 10% of the value you are giving to the subject or make EXTENSIVE COMMENTS to the effect.
3.The phrase Best Comps Used/Available is NOT an acceptable comment. 4.Client requires additional comments on subject such as interior info, neighborhood data, marketability in the area, etc. Please comment on any of these that would affect the value of the property.
5.Comps must be w/in 6 months if possible. If no comps are found, keep proximity close and go back 18 months. COMMENT EXTENSIVELY on how distant and how dated that you went in order to obtain these comps. 6.REOs are only to be used if area is REO driven and you must provide extensive comments to that effect.
7.In REO driven areas there must be 1 sold and 1 listed comp that are NON-REO.
8.Address verification is required on all orders. If unable to obtain address verification photo, please provide comments as to why you were not.
9.MLS is acceptable to use for comp photos; however if photo is not of a good quality, originals will need to be taken of comps.
10.For Interiors- Photos must be taken of ALL interior rooms
11.Estimate GLA if county records are incorrect or missing. Make extensive comments.
12.Photos must be clear and labeled correctly or must be replaced. 13.Provide itemized list of repairs and cost to cure.
14.All comparable sales/listings MUST be within subjects immediate market area. If comparables are unavailable within the subjects immediate market area (within 1 mile), please provide detailed comments regarding the lack of sales that are truly comparable to the subject property.
15. If there are no address numbers available anywhere on the property, an explanation indicating how you determined the correct property is needed. 16. INTERIOR PHOTOS OF ALL ROOMS AND ANY DAMAGES NOTED ARE REQUIRED. Please provide an itemized list of repairs and cost to cure estimates.


Now, a further consideration is your worth, as Richard mentioned. Yes, it's important. IF a BPO could be done at a cost that was commensurate with OUR total expenditures, sure that's Capitalism, and that's a good thing. However, it'll take you, an honest Appraiser, hours to do one of these things, even the easier versions of them. If you feel that you're worth $10.00 to $15.00 per hour, that's something you have to work out.

Remember, listing agents don't think the way we do, can't analyze the way we do, don't search the way we do, etc. The aren't operating with the same toll box we have, period. When they do these things they don't put one 10th of the effort into them that you will.

IMHO.

Dave...

 

[Richard Carlsen]

Per my normal procedure, allow me to present a BPO 'offer' that some listing agent accepted. We get these all the time, as our clients offer the BPO's and their REO's to us by default. You all can decide if this is something that you'd accept for $45.00 to $65.00. Here are the conditions:

1.All comps must be w/in 10% of the subjects GLA or make EXTENSIVE COMMENTS to the effect.
2.All comps must be w/in 10% of the value you are giving to the subject or make EXTENSIVE COMMENTS to the effect.
3.The phrase Best Comps Used/Available is NOT an acceptable comment. 4.Client requires additional comments on subject such as interior info, neighborhood data, marketability in the area, etc. Please comment on any of these that would affect the value of the property.
5.Comps must be w/in 6 months if possible. If no comps are found, keep proximity close and go back 18 months. COMMENT EXTENSIVELY on how distant and how dated that you went in order to obtain these comps. 6.REOs are only to be used if area is REO driven and you must provide extensive comments to that effect.
7.In REO driven areas there must be 1 sold and 1 listed comp that are NON-REO.
8.Address verification is required on all orders. If unable to obtain address verification photo, please provide comments as to why you were not.
9.MLS is acceptable to use for comp photos; however if photo is not of a good quality, originals will need to be taken of comps.
10.For Interiors- Photos must be taken of ALL interior rooms
11.Estimate GLA if county records are incorrect or missing. Make extensive comments.
12.Photos must be clear and labeled correctly or must be replaced. 13.Provide itemized list of repairs and cost to cure.
14.All comparable sales/listings MUST be within subjects immediate market area. If comparables are unavailable within the subjects immediate market area (within 1 mile), please provide detailed comments regarding the lack of sales that are truly comparable to the subject property.
15. If there are no address numbers available anywhere on the property, an explanation indicating how you determined the correct property is needed. 16. INTERIOR PHOTOS OF ALL ROOMS AND ANY DAMAGES NOTED ARE REQUIRED. Please provide an itemized list of repairs and cost to cure estimates.

Well, as my old mother used to tell me: Wish in one hand and spit in the other and see which gets fullest first.

The appraiser can do one of 3 things:

1. Accept the order and do it as requested.

2. Decline the order.

3. Go back to the client and try to renegotiate the fee based on what is expected.

Do one of the three and don't complain. As I remember, god did not let the children of Israel go into the promised land because the grumbled. Better be careful.

 

[xmtpedprl]

Richard,

As I recall the first thing they did once OUT of Egypt WAS "grumble!" Well, "murmur," anyway.

;^)

As for being careful, that's the whole point. License liability. For *what* are we responsible, and how to differentiate our 'hat' when doing a non-appraisal assignment that actually IS an appraisal BECAUSE you're offering a final opinion of value, you see.

Final opinion of value = Appraisal, all the time.

I don't have the answer, but can tell you this: Until I know there's no liability for me, and until I know that my efforts can be the equivalent of the lame effort of the listing agent with no risk to me, heck, there's no way I take those puppies.

You don't call a lawyer to write up an IOU for a couple of drinking buddies, one borrowing $25.00 from the other, and that's the equivalent here. You call a lawyer to do something serious. However, IF that BPO CAN come back to haunt me BECAUSE of who I am, then they better pay me well for that. If not, let someone else have that 'Sword of Damocles' hanging over their heads for a while, that's okay with me.

Dave...