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Commercial Bpos And The Public Trust

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Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
BPOs aren't allowed here, so I don't know how anyone else deals with this.


Got a phone call from the "buyer" for a property,
175+ acres, some in fee simple, some in lease hold, oh, and some in leased fee,
more than a dozen income streams,
multiple going concerns that are in operation,
last sale price $20m+
In a mineral zone

Me, BPOs aren't allowed under state law, you'll need an appraisal.

"Buyer", that'll take too long, we need a number in 3 days.



Me. :rof::rof::rof::rof::rof::rof::rof::rof::rof::rof::rof::rof::rof:


.
 
Last edited:

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
Sounds like a fairly easy answer in your case. Even if I were a broker, the mix of leasehold and leased fee interests, mineral interests, etc would probably result in deferring to an appraiser.

I don't understand the legal basis for BPOs, in that a non-appraiser can be fined in Illinois for misleading clients into thinking that they are performing an appraisal. But, given the definition of an appraisal, it sounds like a BPO falls under that umbrella. I remember hearing about a broker being brought in as an "expert witness" on an ad valorem case and the assessor's appraiser jumped all over him for offering a value opinion. That held and the appellant's attorney would probably have been better off to stay away from going down that path. Yet, I'm hearing how BPOs are accepted in some cases as an alternative to an appraisal. Anyone have any thoughts on how this holds up or what the fundamental difference is between a BPO and appraisal?
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
I don't know how it works other places, but here, if you opine value it's an appraisal. As a agent you can estimate probable list and sale prices in a CMA. The state actually says a BPO is a misnammed CMA. But the difference is in the terminology of the opinion being opined.

.
 

USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
BPOs aren't allowed here, so I don't know how anyone else deals with this.


Got a phone call from the "buyer" for a property,
175+ acres, some in fee simple, some in lease hold, oh, and some in leased fee,
more than a dozen income streams,
multiple going concerns that are in operation,
last sale price $20m+
In a mineral zone

Me, BPOs aren't allowed under state law, you'll need an appraisal.

"Buyer", that'll take too long, we need a number in 3 days.



Me. :rof::rof::rof::rof::rof::rof::rof::rof::rof::rof::rof::rof::rof:


.
 

USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Are you saying a BROKER can not perform a BPO in your state? A BPO does not require an appraiser.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Are you saying a BROKER can not perform a BPO in your state? A BPO does not require an appraiser.

Nope.

BPOs opine market value.

Brokers can not opine market value, or any value.

Brokers can only suggest a list or possible selling price.

But this buyer thinks he can just come here and get a BPO.

He got that understanding some other place.

..
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Complex problem. BPO or appraisal, I suspect it would take over 3 days
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Complex problem. BPO or appraisal, I suspect it would take over 3 days

I suspect it would take over 3 days just to write up the subject property, the going concerns, the FF&E and the membership ageing report. It is that complex, and of course these are not contigious parcels.

3 days.

HA

where do they get these people?
 
D

Deleted member 130081

Guest
Sounds like a fairly easy answer in your case. Even if I were a broker, the mix of leasehold and leased fee interests, mineral interests, etc would probably result in deferring to an appraiser.

I don't understand the legal basis for BPOs, in that a non-appraiser can be fined in Illinois for misleading clients into thinking that they are performing an appraisal. But, given the definition of an appraisal, it sounds like a BPO falls under that umbrella. I remember hearing about a broker being brought in as an "expert witness" on an ad valorem case and the assessor's appraiser jumped all over him for offering a value opinion. That held and the appellant's attorney would probably have been better off to stay away from going down that path. Yet, I'm hearing how BPOs are accepted in some cases as an alternative to an appraisal. Anyone have any thoughts on how this holds up or what the fundamental difference is between a BPO and appraisal?

We had a change to the state law here to allow BPOs. An opinion of value as a service is an appraisal in WI, plain and simple. However the lobbyists won their case, arguing that brokers needed to provide value opinions as part of their services to potential clients (which makes sense). So, they changed the law to allow a broker to provide an appraisal when and only when it was in connection with obtaining or servicing a listing, limited to their own listings. The abuse is now rampant, with BPOs being performed for all sorts of intended uses, including loans. I experienced two of these myself when I took out a HELOC. The first broker took a feeble stab at being compliant, handing me a card and saying I should call him if I ever wanted to list the property. He then went on to over-value my property by about 20%. Had I not been an appraiser, I might have been underwater very quickly as I was allowed to borrow up to 90%. We changed the terms of the loan shortly after and the bank sent a second broker to do an appraisal. The gal asked me what the first guy came in at stating "I don't like to come in under the first one". She was true to her word. The first broker came in at $115k, the second came in at $118k, I sold my property a few months later for $92k, realizing about $88k after closing costs, and was damn lucky to get the amount I did.

It will be interesting to see what happens. Clearly brokers are breaking the law, but have yet to get in trouble. For the lenders part, they are at the very least relying on an illegally obtained appraisal.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
We had a change to the state law here to allow BPOs. An opinion of value as a service is an appraisal in WI, plain and simple. However the lobbyists won their case, arguing that brokers needed to provide value opinions as part of their services to potential clients (which makes sense). So, they changed the law to allow a broker to provide an appraisal when and only when it was in connection with obtaining or servicing a listing, limited to their own listings. The abuse is now rampant, with BPOs being performed for all sorts of intended uses, including loans. I experienced two of these myself when I took out a HELOC. The first broker took a feeble stab at being compliant, handing me a card and saying I should call him if I ever wanted to list the property. He then went on to over-value my property by about 20%. Had I not been an appraiser, I might have been underwater very quickly as I was allowed to borrow up to 90%. We changed the terms of the loan shortly after and the bank sent a second broker to do an appraisal. The gal asked me what the first guy came in at stating "I don't like to come in under the first one". She was true to her word. The first broker came in at $115k, the second came in at $118k, I sold my property a few months later for $92k, realizing about $88k after closing costs, and was damn lucky to get the amount I did.

It will be interesting to see what happens. Clearly brokers are breaking the law, but have yet to get in trouble. For the lenders part, they are at the very least relying on an illegally obtained appraisal.

You could turn them in to the state.

But really, the companies that hire them should be held just as responsible.

We're lucky here for the way the state has appraisal and appraisal practice defined, along with stating AMCs must make sure (paraphrased) that all appraisals are USPAP compliant. So, AMCs can be held additionally responsible for hiring non-appraisers to produce appraisals. And the board does fine agents and brokers when caught, but so far as I know, I have not seen a "client" in trouble for it yet.

.
 
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