This is a difficult market right now,not too many will argue this.One thing I have noticed is that there are many banks out there that are losing money when they really shouldn't have had to! How is this you might ask? Well for one, banks want to save money, like anyone, so what they do prior to taking a home back in foreclosure is order what is called a BPO (Broker price opinion).They then set there numbers to what the BPO comes in at and base all the latter info on that magic number.
The problem with this is that BPO's are done many times by agents that are either new or have very little knowledge of valuation or both.When an agent thinks they might get a listing they sometimes bring the BPO in at a fairly high price thinking that if the bank likes their number that they might have a chance of getting a listing when the bank takes the home back.
The problem lies in the "Correct" pricing to start with.
Case and point- There was a local bank that foreclosed on a property here locally.They set the starting price at what the BPO came in at....They are still trying to sell this property which is an absolute "MESS" and have reduced the price in the last 3 months about $70k.....I actually called the bank on this one many months ago and was told by the director of the REO dept that the price was $299k and that they wouldn't take much less as "That is what the BPO came in at"!! I mentioned that I thought the property was worth QUITE a bit less and she didn't want to hear about it.....
By trying to cut costs and save a couple hundred bucks the bank now stands to lose MUCH MORE because they started too high and WILL HAVE TO COME DOWN EVEN MORE TO STAND A CHANCE OF SELLING.
This sound advice is good for banks as well as regular sellers....PRICE IT RIGHT IN THE START...Don't cut corners in valuation and hire an appraiser if there is ANY question as to the Current Value, in a Declining Market....
Penny wise and Pound foolish....not a good bet!
Another good example is a listing that I am working on right now. I came up with a value of $169k based on the comp's on the local MLS.We had an actual appraiser do a full blown appraisal on it and I am very glad that we did as it came back $19k lower!! Now with this new, and VERY accurate number we can start out right, and get the home sold quickly and for top dollar...I am so glad that my clients listened to my advice of having an appraisal done!
Mmmm, I wonder how share holders, would view this, who own stock in these banks might feel? Any guesses?
Regards,
Rick Goates
ECO Broker
Redding CA
96001
530-248-5627
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I do BPOs for banks. Many of the BPOs are exterior only. Nobody knows what the true condition of the house is. If it looks decent from the outside, it will get a higher BPO value because the Realtor doing the BPO does not know the condition of the inside.