Short sales and foreclosed properties are currently causing depressed property values in cities across the country. Well, that's not news to any of us.
But now, some are now complaining that BPO's or Broker's Price Opinions on short sale properties should not be done by local real estate agents. A broker's price opinion is just that, an opinion of the current value of a property based on comparable sales, typically within the last three months, in the same area as a subject property.
Today, lenders that have an owner requesting their home be short saled are hiring local real estate agents to perform these Broker's Price Opinions. The agents are paid varying fees per opinion, depending on where they are in the country. Fees can be anywhere from $40 per report and up.
A short sale is when a seller negotiates a lower dollar amount than what they owe as a payoff with their mortgage company. For example, a seller may owe $150,000 on their current home. In today's market their home may only be worth $100,000. But, due to extenuating circumstances; financial hardship, job loss, death, etc, the owner asks the bank to take less than the payoff amount for their home. So, the bank may agree to accept the $100,000 as the payoff. The bank may or may not require the owner to sign a promissory note, indicating they will pay back the $50,000.
The short sale lenders are using licensed real estate agents for their BPO's to save money, as a typical appraisal on a home can be $300 and up. Some appraisers are discontent that they are not being hired to perform these "price opinions" as this is what they are licensed for.
In May 2009, the National Association of Realtors will take a stand on whether licensed real estate professionals should be performing these BPO's.
Do you think that licensed real estate professionals should continue performing Broker Price Opinions for these lenders? Or should the lenders be hiring licensed real estate appraisers for the job?
This article is authored by
Sandy Shores Realtor, Melbourne FL Real Estate
Brevard County Real Estate & Investing
Palm Bay Florida Real Estate News
that for you
Sandy, Years ago, I use to do at least 2 to 3 BPOs per week at a price of $60 per opinion, I once asked your question of my broker. Simple, Price. The company I worked for wanted an appraisal, but didn't want to pay for it. My reports looked exactly like an appraisal for a 1/6th of the cost...
Funny I read this as I was uploading a BPO. I don't lowball any BPO that I do and I have done price checks occassionally to see if my price is close to the list price. Usually it is. Recently I was looking at one neighborhood and had to scratch my head. One set of condominiums (new) were selling in the mid 300-400K price range. A block away REO's were selling for $225K. No rhyme or reason as the lower priced units are larger. One low sale and the snowball effect started. I noticed recently that one unit just sold for $300K so wonder if that will finally slow down the continued listings at the lower price range.
BPO's are not a new thing. They have been around for years. Why is this suddenly a problem?
Hi Sandy, I would echo Vickie's question. I need to read up on NAR's upcoming stand. Presently my answer to your 1st question would be Yes, Real Estate Professionals should continue
If the lenders aren't legislated to do so then they're not going to pay for appraisals. The BPO's are serving the consumer well at this stage and shouldn't be eliminated. Many facets of the the "short sale" processes will need scrutiny in due time but not at the expense of the consumer, especially now! The question will be one of accountability and liability.
Ask two people get two different opinions Sandy. I would vote for BPO's to be done by an appraiser but a Realtor could probably equally do a good job.
Paul, Thanks for the feedback.
Cindy, Thanks for stopping by.
Vickie, I don't necessarily know that it's a problem, I have read that some apprasiers feel they should be done by them.
Hi Miss Mary, It will be interesting what NAR says about it.
Kevin, I think accountability and liability are key.
Gary, Differing views make the world go round.
BPO- is just what is it is a BROKER Price Opinion, it's NOT an appraisal. Typically when I do a BPO I don't even have to go in the property, I don't have to measure it I can rely on tax records for size, it's not the same value as a real appraisal and it's not called an appraisal for just that reason. I say yes, we should still be able to do them.
Hey Tammy, Thanks for stopping by and for your point of view.