Some of you may know  that lenders are trying to replace appraisals with BPO's...why? Cause they are cheaper of course.

In the State of Georgia and Virginia and maybe others it is illegal for a Realtor to practice in the capacity of and appraiser without an appraiser's license. It should be illegal in all states. Also those who do provide valuation services must have NO vested interest in the property they value.....I am thinking BPO's on homes where you as a Realtor may have some sort of vested interest in down the road as it relates to a loan that may close, is a conflict of interest.

So when you are doing your BPO's for lenders and you do not really know who the end user will be or the intended user of your BPO ask the lender what they intend to do with your BPO!

It would be another tragedy for the real estate industry if we start cutting corners again and using BPO's in place of a real live appraisal is one serious mistake....Why? Well let me ask the Realtors out there a few questions..

1. Do you even like doing these things.....you are trained to list and sell property and work with buyers and sellers to navigate all the legal stuff along the way....so doing BPO's I am thinking is a pain in the rear, but is a necessary evil for you to get the listing perhaps?

2. Tell me what adjustment in dollars would you make for the following: Finished vs. unfinished basement, 2 baths vs. 3 baths, brick exterior vs. vinyl exterior, decline in market in past 6 months in a certain area, what adjustment would you make and how do you arrive at that conclusion. What kind of adjustment would you make for seller concessions. What concessions are typical. What adjustments would you make if the lender wants a 90 day sale as opposed to the amount of time a home usually sits on the market before it sells in your area. How about a pool vs no pool or an apartment over a garage.

I think you get my point loud and clear, these are things that appraisers are trained to do. They know how to analyze the market to determine what adjustments should be made for the above as well as many other issues.

Also no offense here, but when Realtors have given me a list of the sales they feel are COMPARABLE...sorry to say many times they are NOT..... Also appraisers differ from Realtors in one very important facet of valuation.....We do not include the finished terrace or basement level square footage in what we define as GLA (gross living area). We separate this finished space from the above grade or ground levels and give this area a different per square footage adjustment. Why? because the building costs on basements is typically lower and the market pays less per square footage for this area in most cases, not all, but most.  So as a Realtor how would you differentiate the finished basement level from the upper levels in determining value.?

Let's get the word out load and clear.....Say no to BPO's as a replacement for appraisals or we are haaded right back in the same predicament we are in now!

Weigh in let me know what you think?