Broker Price Opinions in Nevada

[xmtraterbcra]

... Makes no difference to me who decides to put their head in the sand.

If BPOs are really just being used to price REOs, accuracy is often not that big of a deal. I would suppose the bank adds 5-10% or so to the estiimated listing price, waits a while for the offers to come in and possibly sells to the highest bidder. It's really a question of whether the highest bid provides for an acceptable loss on the property.

Of course, if the buyer has to get a loan ... he is likely going to have to get a real appraisal.

BTW, the foreclosure market is heating up in parts of California. You can buy homes at prices the rent can cover. ....

Bert Craytor, SRA
Certified General Appraiser
California Real Estate Broker

 

[Elliott]

"The horses have left the barn, the barn is empty." (market has spoken,
its why most appraisers are twiddling their thumbs).

 

[mp2277]

"...appraisers are not supposed to do BPOs! - These are to be done only by licensed real estate brokers. The only exception would be appraisers, who are licensed real estate brokers, doing BPOs for the stated purpose of pricing REOs or other real estate. In the latter case, the appraiser should have a written order confirming the restricted use of the BPO (to be on the safe side - if it is not already a legal requirement, such as is the case in the state of Michigan)..."

If an appraiser assigns value, then it is an appraisal and better be USPAP compliant! Am I wrong?

 

[Lost Cause]

Yet Again, Regulators Shirking Their Duty

"...appraisers are not supposed to do BPOs! - These are to be done only by licensed real estate brokers. The only exception would be appraisers, who are licensed real estate brokers, doing BPOs for the stated purpose of pricing REOs or other real estate. In the latter case, the appraiser should have a written order confirming the restricted use of the BPO (to be on the safe side - if it is not already a legal requirement, such as is the case in the state of Michigan)..."

If an appraiser assigns value, then it is an appraisal and better be USPAP compliant! Am I wrong?

You are not wrong.

The fact is, no matter who does a BPO, if it concludes to a value, it is an appraisal. If it is an appraisal, it should be required to comply with USPAP. The fact is that the only reason lenders use BPO's is to avoid paying for state certification. Just another case of blatent disregard for regulations, with no enforcement in sight.

 

[Elliott]

JH said, The fact is, no matter who does a BPO, if it concludes to a value, it is an appraisal.

Only an appraiser (licensed) can do an appraisal, so says USPAP. Realtors, CPAs,
lawyers, can give opinions of value every day, all day long. Lenders, title companies,
AVMs, AMCs, and MBs wanted it that way and it took only one test case in PA to
establish it and the rest is history. Just like Exxon was able to appeal an award for 14 years
and get it reduced 20% on the dollar, big title, et al, would have made sure
they bankrupted the PA board and any other board that stood in their way.

 

[xmtraterbcra]

If an appraiser assigns value, then it is an appraisal and better be USPAP compliant! Am I wrong?

True. But an appraiser who is acting in the role of a real estate broker (assuming he is a licensed real estate broker) can do BPOs to estimate list prices for properties (ref USPAP AO 21). He would probably want to do this to obtain listings from a lender for REOs - in the hopes of making some fairly lucrative commissions on sales. In this case, he would be advised, if not already required by state laws, to get an order in writing that states the intended purpose of the BPO is only to estimate a listing price.

The problem is that there is a lot of misinformation circulating to the effect that BPOs can be used to estimate market value and give the impression that appraisers can do them for that purpose. BEWARE!

Example 1: Coldwell Banker's Residential Real Estate REO Division publishes a BPO form, that very cleverly (or not so if they get caught) requires both a Market Value and Suggested List Price:

http://www.reoexperts.net/forms.aspx
Example 2: Typical crap you find on the internet: http://www.StartBPOs.com .

Bert Craytor, SRA
Certified General Appraiser
California Real Estate Broker

 

[c w d]

True. But an appraiser who is acting in the role of a real estate broker (assuming he is a licensed real estate broker) can do BPOs to estimate list prices for properties (ref USPAP AO 21).

The real issue is USPAP. It has tied our hands and limits our ability to adapt to the demands of the market. On the one hand the market wants cheaper opinions of value. On the other, appraisers can't get much cheaper because we cannot eliminate certain requirements to reduce our times and effort to opine a value. We have to comply with USPAP. Noone else does. And, they are able to throw together some stats and form an opinion.

I'm not anti-USPAP. But, the situation currently has the market circumventing us to get what they want and there is no way we can provide the market with what it wants.

The only solutions are to either do away with USPAP requirements or for the industry as a whole to require that only an appraiser can opine a value. Of the two, the industry would rather see USPAP gone than tie their hands. Unfortunately, noone is going to remove our bindings to USPAP so long as they can get what they want by going around us.

 

[mp2277]

"But an appraiser who is acting in the role of a real estate broker ..."

If you are an appraiser, and you assign a value, you cannot disclaim away your USPAP responsibility. You will have to have a strong argument to change my mind.

 

[xmtraterbcra]

The real issue is USPAP.

Personally, I'm happy with USPAP - as far as it goes. It's much better than it was, say 5 years ago.

To me the "real issue" is Monitoring and Enforcement. Monitoring should include:

1. Registry of all appraisals on a central website, along with issuing a registry number and a minimal registry fee of $20 +/- per appraisal to support the system.

2. At least light desktop reviews of all appraisers at 5 year intervals, using a random selection of 5-10 registered reports. "Issues" could trigger full field reviews.

3. A registry can be used to monitor lenders and mortgage brokers, as well. For example, multiple appraisals for a given loan would be apparent in the registry.

With regard to the market "needs" for quick and dirty value estimates for purposes such as internal analysis, pre-approvals, etc. ... just let them continue to use AVMs - for what they are worth. If competent appraisers try to compete with AVMs and illegal BPOs, they are just selling themselves short.

We need to get fees up to reasonable levels to support quality work and attract quality people into the profession, over the long run.

Bert Craytor, SRA

 

[Fred]

Only an appraiser (licensed) can do an appraisal, so says USPAP.

But who is an appraiser under USPAP is hardly and exclusive group. It's anyone "...who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective." Who is an appraiser under USPAP is not based on licenses, otherwise, per USPAP, personal and business property appraisers wouldn't be appraisers.

Part of the problem with what is being suggested here about BPO's is that it is going to very difficult to prevent at the state level, what is permitted by FIRREA in what are federally regulated transactions.