BPO's And Cma's What Standard & Condxs

[Otis Key]

Janet - I don't think CMA/BPO's are going to die. In fact, I'm sure they are going to flourish and flourish even more than we can predict due to the fact that there are so many agents who want to make an extra buck here and there. Also, to be honest, most agents have no idea about NAR's Standard 11. I also think that if NAR would actually incorporate some of USPAP that there would be fewer problems with agents listing so many properties above market and then jumping up and down and screaming when honest appraisers come out and do an accurate reporting of the value. I even had the president of the local Board of Realtors overlist a property. He's been in real estate sales for years - owns his own company - didn't measure the house - sold it above market - I call him up asking for his CMA/BPO - had a hissy fit over me asking for that, after I had asked for the purchase agreement - the appraisal came in below purchase price - he called up screaming - "it is what it is" was my response - "you overstated the size and therefore if you had measured it in the first place, then your cma would have reflected what I did on the appraisal". This is no dumb or newbie agent. All he could see was a "willing seller and willing buyer" along with his commission. Funniest part - his CMA was exactly like Austin brought out. No definition of what value and no point in time for that presentation.

 

[Fred]

Austin

Here is what I learned from this thread:
1. Apparently BPO's and CMA's are the same thing.

You didn’t learn that me. I would look to see what something is and don’t jump to conclusions based on what it is called.

You are probably going to duck this again, but remember where you started.

I was talking with a local Realtor that does a lot of BPO's for a fee. I asked him what definition of MV they used.

I am still wondering where you came up with four years as a reasonable exposure time – or was this not market value?

Again, back in your first post, you wrote.

I asked if the price opinion was prospective, current, or historical.

Same question to you. When you did that four-year exposure time, was that prospective value? Did you discount that back to a present value?

On one hand, you are arguing about the absence of “strict” standards for others; and on the other hand stretching the defintion of market value like silly putty.

 

[xm39hnu]

Received this e-mail last week:

Dear Tracy Plante,

In this dynamic appraisal industry, many of our clients have requested that we offer BPO services. Since we already have the most skilled and ethical appraisers working with us nationwide, we are requesting your help in recommending local brokers who have the same professional ethics that you do. We would greatly appreciate if you would forward their information or have them contact [REDACTED] to get on our roster of brokers.

With your help, we are continuing to streamline the appraisal process. By ensuring that our clients receive a BPO that makes sense, we will help to eliminate discrepancies between the BPO and the appraisal report.

Thank you for your continued service and support.

No, I don't think they're going to go away anytime soon.

 

[Bob Ipock]

In this dynamic appraisal industry, many of our clients have requested that we offer BPO services. Since we already have the most skilled and ethical appraisers working with us nationwide, we are requesting your help in recommending local brokers who have the same professional ethics that you do. We would greatly appreciate if you would forward their information or have them contact [REDACTED] to get on our roster of brokers.

Gosh, If I did not know better...it would sound like BPO's and appraisals are very closely related and all part of this "dynamic appraisal industry".


Man, it is good thing we all know better...or we could get real confused...real fast.


I have heard it far too many times....A BPO? Oh, it's just like an appraisal ...just not as detailed. THAT is what the public thinks...wrong or right.

 

[Ross (CO)]

BPO, CMA, AVM, AAAVM, Desk-this, Desk-that, Drive-By-This, Drive-By-that, Comp Check, BallPark Figure, Database Review, Alternative Valuation Products....whatever stripe and color, done by anybody and his cousin.....so long as you do NOT call it an "Appraisal".......are not only allowed and endorsed, but being actively hyped and sold to the general public......all across the country.

Heh, they're cheap, they're fast, and they're probably free too........and you can't go wrong with "Free", can you ? Don't need no license. Don't need to sign anything......and if you don't like my BPO.......just get another one done by my friend Ralph here. Have I introduced you to Ralph ?

Ralph,...meet Value Curious.
Value Curious, meet Ralph.

Heh, yo, I can still paint that car for........$49.95 !

Yes.......this is one dynamic industry....for sure.

 

[Stone]

Originally posted by Bob Ipock@Jan 16 2006, 04:38 PM
I have heard it far too many times....A BPO? Oh, it's just like an appraisal ...just not as detailed. THAT is what the public thinks...wrong or right.

That's 'cause so many people think of the piece of paper (form) is the appraisal, not the opinion of value. We have only ourselves to thank for that.

 

[Carnivore]

Originally posted by janet rabin@Jan 16 2006, 11:09 AM
Why should they be prohibited from charging for a CMA or a BPO?

They are licensed professionals. As far as I know, there is no law that demands only a commission is permissable as payment for real estate services.

Janet,

It does raise questions when RE Agents dont charge a home owner for a BPO in seeking the listing but do charge a lender for the BPO when supposedly seeking a listing.

Is it because the BPO is being used for something else other than a potential REO listing? Like a Home Equity loan or an extension of credit in some form(illegal in NC).

I was an Active Real Estate agent once. I built the cost of BPO's into the total commission! If I got the listing and it sold I got paid! Real simple.

Lots of BPO's are being done in NC for other than a listing!! Thats a loss of business, because I can not perform those same BPO's to the Real estate standard of practice.

Essentially it is constraint of trade!

 

[Ms. Janet]

What difference does it make if the BPO is free or $50?. What’s evil about charging a lender and not a homeowner? Who cares? Unless prohibited by law, I expect to be able to charge for my services as I choose.

And where in the world is restraint of trade? It’s open competition. A professional appraiser should NOT be providing a product which meets only the standards of general real estate. Saying the public doesn’t know the difference in a BPO and an appraisal is pure malarkey. If I buy a pair of shoes at Payless, I know damn well they’re not comparable to the pair I bought on Rodeo Drive. I bought them because they were cheaper.

I think the most effective way to illuminate the deficiencies of a BPO is to allow the competition. IMO, we don’t like competition because it keeps us accountable to the user; in this case, it gives the users the power to choose a BPO over an appraisal. If we don’t show that there is a quality advantage to using a professional appraisal, then the benefits of a BPO continue to rise. Regardless of whether or not it was paid for.

 

[Stone]

Originally posted by janet rabin@Jan 17 2006, 09:30 AM
What difference does it make if the BPO is free or $50?. What’s evil about charging a lender and not a homeowner? Who cares? Unless prohibited by law, I expect to be able to charge for my services as I choose.

............

I think the most effective way to illuminate the deficiencies of a BPO is to allow the competition. IMO, we don’t like competition because it keeps us accountable to the user; in this case, it gives the users the power to choose a BPO over an appraisal. If we don’t show that there is a quality advantage to using a professional appraisal, then the benefits of a BPO continue to rise. Regardless of whether or not it was paid for.

Janet - the difference is huge. When agents charge for BPO's, how is that different from an appraisal in the eyes of the general public? The vast majority of people see two valuation services. One is the full blown appraisal, with a bunch of forms, etc. The other is a down and dirty number. Many, if not most, folks feel the number is equally valid either way. That is because they do not understand the difference, nor should they. And, if agents can sell this product, it is basically being endorsed by the government as a cheap appraisal. Tha endorsement comes from the regulation of our industry.

I've said this before and will continue to harp on it: In my opinion, many people think of the appraisal as the piece of paper that allows them to get a loan. They do not think of our opinion of value as being the appraisal. They certainly do not understand that we have a set definition of market value, or that the stuff we put down on paper is part of the process to come up with that number. "I don't want an appraisal, I just want to know what my house is worth." These products only help validate that.

It isn't about competition or restraint of trade. It is about two entirely different products, one of which is provided through a strict set of rules enforced (to some degree, anyway ) by the government while the other has no real rules. If regulating appraisals has been deemed necessary, how on earth can BPO's be allowed to simply circumvent the process?

 

[Austin]

Janet:
Look at it this way. What is wrong with appraisers performing brokerage functions by calling the brokerage service "extended appraisal consultation?" After all, appraisers have more hours of real estate training than most Realtors. We don't have all of the built in overhead like MLS dues, key box fees, etc., and we could charge a lower commission. Think how much more competitive that would make the real estate business.
If the Realtors can ignore the letter and spirit of code of ethics standard 11, then why can't we appraisers do the same with USPAP?

I made more money last year in brokerage than I did in appraising so what is good for the gander is good for the goose. Si or No? Don't use the MLS either and don't bay NAR dues. Save about $1,500 per year.