What is a good BPO worth in the Sacramento area?
Leila Mortaz wrote an interesting post explaining why she would not accept a $20 BPO (Broker Price Opinion), and saying that she thought it was worth $60-75 to do a proper BPO.
I agree with her, and have turned down BPO assignments from banks offering $20-25 but requiring tons of information that should be accurately gathered only by touring the property and researching the comps. I simply can't justify spending my time to do that amount of work for less than minimum wage (plus the expense of gas). Banks imply that if you do a great BPO at a cheap price you will start getting their listings, but that seldom happens.
If the banks are serious about determining the market value of a property, they need to pay a pro to do a pro job, instead of simply making "I'll call you maybe" promises.
The $20 BPOs contribute to the short sale disputes with lenders. Not all inexpensive BPO agents are lazy or sloppy of course, but a conscientious agent cannot possibly make any money at that price, and they take it as a "loss leader". And the bank has to assume that the BPO agent has followed its instructions.
I know for a fact, however, that some agents never even visit the property - they just look at the MLS, and use those photos and descriptions, and some banks even ask for a "drive-by" BPO. I challenged one BPO on a short sale I was negotiating, and got nowhere, with the negotiator insisting that the agent had toured the house and also toured the homes she used as comparables.
That wasn't possible because I had taken the key out of the lockbox so she would have to call me for access, and that didn't happen. And a drive-by would not show the $250,000 in remodels and upgrades that had been done to one of the comps that she used, which had not been done to my listing. That comp was relied on by the bank in demanding an outrageous price. I know because I finally spoke with the agent who had done the BPO and she had included it with no commentary about the difference in condition.
The buyer finally paid for an FHA appraisal, and after more jousting we got approval. The BPO agent was mad at me because she said she was doing BPOs at a loss in the hopes that she could get the listings, and she shouldn't be expected to do much for $20, and now she probably wouldn't get any listings from that bank.
Sorry - but my concern was for my client, and if she didn't think $20 was enough to be as thorough as was requested (I sure don't), she should have simply refused to do the BPO, as Leila says in her post that she would do.
What do you think?
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