Just read a fellow Active Rain Members Blog about BPO vs Appraisers - This was my response (Below) which I hope generates a whole nother branch of thought for people. Her question was should Brokers and Agents be paid for BPO's and whether the law stating banks could no longer higher appraisers be supported. ............:
Interesting - I am in Florida and do BPO's. We do not do appraisals, however a current market analysis of the subject property based on a long list of items - which does not include a professional inspection and include such things as electric, plumbing, roofing ect. - however does include square footage, size of lots, amenities included, location, number of buildings, usage, zoning, data from tax records ect. and pictures of the subject properties. This does give a basis of comparison - adjustments may be made to show where the market is. Using sold properties from the last 3 months, pending sales and current actives a analysis will extrapolate where the price points in the market are. Oh, by the way - research as to market factors, environment factors of location and general market conditions are also taken into account. The amount of time and research is significant.
This is an REO market currently and one of the factors in my opinion were that the appraisers did work for the banks. Here is Sarasota we have gone from an inflated price point to some of the steepest losses in equity to the point that many homeowners are in foreclosure and walking away.
In one example I know where the bank appraiser appraised the home at 250K in dec 2005 and a CMA today shows that house would most likely sit on the market as houses around it sell for 50K to 80K - I believe 200,000 to be a significant loss - do you? Location does impact as does what your neighbor's properties go for.
1. I do BPO's and do not take listings at all from the banks.
2. A BPO does not take the place of a home inspection by a qualified engineer.
3. Banks seem to not want to take responsibility for their part in the housing .....debacle. Yet their hands are out to the government for decisions they made that led to it. Hmmmmm
I Think it should be an at arms length whether it is a BPO or an Appraisal.
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I have encountered out of state appraisals services that were doing appraisals for banks that contacted me wanting me to do a bpo because I was local, so they could do their appraisal from their office out of state. BPOs usually are done for a fee much less than an appraisal, which I believe is the motivator behind getting bpo instead of an appriasal done by many banks. In our area, bpos are usually quicker. I need to say here, though, that I do not do bpos. Used to. Not any more.