Don't Be A Hero, Low Ball That BPO! - Response to Ken Harney

Real Estate Agent with Virtual Properties - Atlanta Real Estate 255736

In a recent article in the Washington Post, Ken Harney suggests that real estate agents are low balling BPOs to get listings.  I won't even address this since the thought of a BPO agent getting a listing from a BPO is pretty silly.  There ARE agents who have gotten listings from their BPOs but it was based on how professional and accurate they were and not usually based on them doing something to make the asset manager look like a hero.

In response, Kevin McGrath on Active Rain explains that low ball BPOs are exposed quickly, countering the notion that:

Online, BPOs are hawked to real estate agents as a route to quick profits in a downturn. "This is the easiest and fastest way to make big money in 2009," says one Web site that promises agents "six figures or more" a year. The same site suggests that "bad times put you in the ideal spot" to rack up income by churning out BPOs for lenders.

I'm here to continue the argument.  I think low ball BPOs are just what the country needs!  In fact, I think that supposed low ball BPOs are saving our economy.

To understand my position, you first have to understand the short sale process and market conditions. 

Let's start with the short sale process.

The cliff notes versions is this:

  1. Home Owner is Upside Down
  2. Home Owner contacts bank and finds out they don't care unless they are behind on their mortgage
  3. Home Owner puts home on the market
  4. Home Owner has had home on the market for 3 months and decides they might need a short sale agent.
  5. Agent explains that they need an offer, any offer will do a this point.
  6. Offer presented is on the verge of being called ridiculous, offer is submitted to the bank.
  7. Bank takes the offer and evaluates it.
  8. Time Passes
  9. More Time Passes
  10. Bank assigns a negotiator
  11. Time Passes
  12. More Time Passes
  13. Bank orders a BPO
  14. BPO comes in..... and from here the bank bases all of their decisions to counter or except or reject.

If the BPO comes in too high?

The offer is rejected, the bank forecloses.  Through the process the bank loses additional money but here is where the market comes into play.  Since this is a declining market, the home is worth LESS than it was when it hit the market now 6 to 9 months ago.  The home may be worth 10% less in some cases maybe more.

However, the BPO agent reads the washington post and has decided to be a hero for the community and over evaluated this home. Surely, this will protect home values!

So now the bank is forced to foreclose and assign this to an agent who couldn't be more removed from the active market if they tried.  The agent gets the foreclosure on the market with one photo.

Now the bank has to reduce the price in order to sell the home.  In most cases, foreclosure will sell for far less than a short sale would have 6 months prior. Why?  When price is the only thing selling the home, and the market is declining and dealing with your bank has become more inconvenient than buying from a regular owner, YOU HAVE TO DISCOUNT IT! (pardon the stream of conscientiousness here).

So the next time you do your BPO, don't low ball, give a true MARKET EVALUATION.  This is something that appraisers are NOT trained to do.  BPOs SHOULD take into account the market.  SO in fact a "low ball" BPO might actually be reality, if you take into account HOW LONG the bank takes!

If you would like to contact Ken Harney about how wrong he is, please do at:


Re-Blogged 2 times:

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Colleen Lane
Kennewick Richland (and West) Pasco WA Homes For Sale - Kennewick, WA
Realtor(r) 509.438.9344

Hmm, we do a ton of bpos and have yet to receive a listing from one of them.  Listing a bpo shouldn't even be in the discussion when considering doing bpos.

Mar 31, 2009 12:27 AM #66
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

When I used to do BPOs, I had to call the listing agents for access into short sales. The smart agents provided comps for me. It's true I verified that the comps were appropriate, but it was an excellent move on the listor's part. I was definitely conservative, and wouldn't consider it 'low balling'.

Mar 31, 2009 01:06 AM #67
Karen Hurst
Rhode Island Waterfront!

There are so many possibilities of why a Realtor is doing that bpo.

1. refinancing

2. short sale

3. market value for the buyer getting financing

4. reo foreclosure sale

5. simply a quick sale

Almost every bpo asks for several prices...quick sale 90-120 days 120 days and up, reo value..It is then up to the bank to decide how to proceed.

I do bpo's constantly and when I get my REO listings I personally feel that I am not "removed from the market" but rather right on top of the market!!  In my area REO's "are" the market!

Today I am working with a buyer and I "know personally" every house that we need to look at because of those bpos and listings that I do daily.

I would venture to say that an REO agent, at this time in the Real Estate Market, is probably more on target than anyone because we are really researching the comps both active and sold.

People that write articles about other peoples professions cannot possibly know what is actually going on. That's like me writing about Contractors...let's see, I think maybe "they" are driving the house prices down because they are all trying to get business since new house sales are down! 


Mar 31, 2009 01:13 AM #68
Margaret Kees

Excellent points and good comments.  I just picked up yet another short sale listing yesterday and I know what I'm up against already with not one but two lenders and a property that is upside down.

Mar 31, 2009 01:24 AM #69
Phil Hanner
Keller Williams - Daytona Beach, FL
Phil at

I started out in this business as an investor doing short sales for myself. Now I do short sales and REO as a Realtor.

In ever case, without exception, if the bank did not accept my short sale offer - it sold for less as an REO.

When you add in costs to foreclose, holding costs, and added commission, the losses are even higher.

Mar 31, 2009 01:30 AM #70
Kevin Hicks
Future Home Realty - Jacksonville, FL
Unique Realtor & Attorney Team

Good points and I couldn't agree more. I negotiated short sales for years as an investor trying to buy it outright before becoming a Realtor and specializing in this field. In most cases I am not running into a hige problem with the BPO's coming in too high so I think the agents in Jacksonville who do most of these are are on the mark. If I do have a BPO come in high it just takes a lot of work (and time) to get them to order another (not all banks will do this) costing everyone more money and very frustrating!

Mar 31, 2009 02:26 AM #71
Gary Meek
NewVision Realty Group - Roseville, CA
(916) 995-9385

Thank you for helping to shed some light to those who depend on us that provide the BPO's.  My team does over 1000 BPO's a year.  We are very fair when we complete our BPO's and we do our best to make sure that the values we come in with are indicative of the value for the area, and what is selling in the area.  Many times our BPO companies will give us specific guidelines as to what thy want us to do.  Some will say they want the expected sales price and the low end value to match and the high end value to be the listing price.  Thee are many of that specific systems we use to obtain the correct pricing and values for the properties out there. 

Mar 31, 2009 03:12 AM #73
Karen Mitch

Unfortunately, I do not agree with most of your article. I am a CDPE-Certified Distressed Property Expert and the #1 Reason that a Short Sales does not succeed or takes too long is because of the Realtor's. I have gotten what appears to be the most difficult of Short Sales done and done quickly. DId you know that Countrywide receives 12,000 Short Sale Packages a week, and approximately 99.5 of the packages are incomplete or do not have the Agent's Information. If they receive a incomplete package or do not know who to contact since they are so overwhelmed they shredd the Short Sale Package. They do not have the manpower to do our jobs too. I have since many families go into Foreclosure because of Real Estate Agent claiming they know how to do a Short Sale. When an Agent fails their Seller, the Seller's empirica drops 250-300 points for up to 10 years versus a 50-80 point drop with a Paid As Agreed Short Sale. My suggestion and please do not take this the wrong way, but if you are an Agent claiming to do Short Sales understand the responsibility you are undertaking...IF you do not really know what you are doing, then got out of this niche. You are hurting families more than helping. Too many Bad Agents are going to take these people out of the Home Buying Market for 10 or more years, instead of helping them get into a new affordable Home in 2-3 years. Besides maybe costing them a new job, since most employers will not hire people with foreclosures on their Credit. If you really understand the damage you are doing to these people's lives then you should play around in this market-

Mar 31, 2009 04:36 AM #74
Kerry Jenkins
Prime Properties - Crestline, CA

My contention is that asset managers and banks will submit BPO orders and give so many REO listings to agents who are FAR REMOVED from our specialty maket that it does end up hurting our prices.  We'll have a BPO done by someone from down the hill, as far as an hour away, and they don't have access to two of our three MLS systems.  They don't have all of the comps.  Every day it seems that there are new REO listngs by different agents from down the hill and out of our area.  They send an assistant to come up and shoot only one photo, and put on a lockbox.  9 times out of 10 there's no combo code put into the MLS and I usually can't show the property because I then cannot get ahold of the REO agent, nor their 10 assistants...much less any type of communication about an offer, whether or not they even received it.  How does this help our community and the bank? Do banks understand that they're giving listings to agents who don't serve our local community? 

Mar 31, 2009 05:11 AM #75
Carl Johnson

I think that we need to look at things from the banks perspective. Or more accurately, from the person at the bank processing the short sale offer .

This person knows nothing about the local market other than what they are told. The BPO is a quick and inexpensive way for them to get information on what a home is worth from an "independent" source. They can then make a financial decision on this info. If you think about it, this is quite responsible though somewhat flawed. If a property is worth 200,000 would you want the bank to let it go for the 100,000 that was offered!

However, BPO and appraisals are not always accurate at telling us what a homes value is, mainly because they are using sales from the past to arraive at a value.

The next time you make a short sale offer and the bank responds with a counteroffer that you feel is unreasonable try putting together a market analysis that shows justification for th elower price. This cannot be a long document, no one will read it. But it must give enough information to justify the bank making a decision to take a lower price than the BPO tells them it is worth. Perhaps it includes a graph showing price trends for the area. You will have to be creative and use some market metrics you are not use to using.

I did this on a recent short sale and got the bank to move a significant amount after a 2 week stalemate. Again, the person at the bank is not going to make an emotional decision just to sell a house. They need some concrete data that they can defend their decision with. Imagine you were them and your boss came around and asked you why you agreed to a short sale for 30,000 under the BPO. Wouldnt you want to be able to produce a ocument justifying the decision. (Yes I know, the decisions at banks often go before a group, but the reasoning holds) Give them justification to make the decision you want.

And do not expect the listing agent of a short sale to do this work, you , as the buyers agent may hav eto put this together and give it to the listing agent to send to the bank.


Mar 31, 2009 05:35 AM #76
Mayra Espinosa Realtor San Mateo Pacifica Homes
Sequoia Real Estate| Call 650-996-8961 - San Mateo, CA
Pacifica -San Mateo,CA Real Estate agent, Buy,sell

Hello Joshua,

 I think agents who are doing BPO's should provide an accurate evaluation because the lenders rely on agents expertise and knowledge of the current market condition, remember you are hire to represent the lender best interest. When you provide an accurate BPO report to a lender, you are influence its revenue and provability to sell the asset promptly to prevent additional losses. It is our responsibly to provide the best BPO report by taking in consideration; if the property is located on an area where the market will continue to decline, location, present condition of the property, inventory, number of REO's for sale and notice of defaults, Etc.  If your report is not accurate, eventually the lender will find out. I believe they rate their agents.  About Short Sale, there is a lot of work involve with this type of transitions, if you are not ready to take what it takes to complete a short sale do not bother taking the listing. If do you take the listing make sure to send a complete short sale package to the right department and must follow up with the lender within 48 to 72 hours. Time zone could be important to take in consideration.


Mar 31, 2009 06:10 AM #77
Jim Derkacz
RE/MAX Defined - Rochester, MI

In response to BPO agents saying that their evalutions are accurate, I have been tracking on a spread sheet all our office short sales that don't get approved and 100 % of the time, the banks ALWAYS received LESS money from foreclosure and that's not including the final cost of foreclosing!! 

Mar 31, 2009 07:02 AM #78

FYI -- I believe they just passed a law in California trying to prevent agents from purposely inflating BPOs so that they would get a listing when the short sale/loan mod failed (due in part to their unrealistic valuation).  I don't know where you are going with this blog post. 

My complaint with BPOs is that the constraints they put on the comps used etc virtually dictate the end result.  It's getting ridiculous with everyone trying to control what agents are doing.  We just need to remain professional.  I don't think deliberately low balling a BPO is being responsible and professional.  We don't need to have the legislature babysitting our profession and this type of irresponsibility leads to that.  IMO

Mar 31, 2009 08:15 AM #79
Sonya Loose
Modern Realty - Beaverton, MI
Helping Buyers & Sellers of Waterfront Property

From someone who completes 8-10 BPO's per week I don't try to low ball or over evaluate the subject at all.  I just try to give a clear picture of the market based on the facts, the current active and sold comps and market snapshot tell the picture of what is really happening in this market.  I am the lenders eyes and ears for my market and they trust that I will provide accurate info.  Many times I do not know the purpse of my could be refi, short sale, pre-foreclosure, foreclosure, sale of mortage, etc.

Mar 31, 2009 01:42 PM #80
Joseph Harrison
Avalon Properties Group - Brunswick, GA

Loved your description of the "short-sale process", so true ( especially in regards to "more time passes" )!

It's always been my role to meet the agent who performs the BPO at the property to try to influence a low-ball valuation in order to make it a win-win for every party involved...even the party that is ultimately taking the loss, because as you noted, most times the home does foreclose and then nets the bank less than they would have received from the short sale offer.

Isn't it amazing that these institutions require us to reduce our commissions when we have to work 100 times harder to make a short sale happen.  I think if I was to break down my hourly wage on the last successful short sale I did, I probably made 42 cent an hour!

Mar 31, 2009 02:31 PM #81
. .
Adak, AK

Today filing BPOs I did for bank owned properties in summer of 08 with notes when listing agent or loss mitigation rep from bank complained about my opinion being too low.

Checked the status on those who complained. All of them still on the market today, most at a higher list price than my BPO months ago. A lot happened since then, today each and every one is worth significantly less! 

However third party relocation company BPOs (and I don't remember a relocation specialist whining about them being too low) have Closed or have Sales Pending on about 75% of the properties I did for them, mostly below my price opinion.

So the third party relocation companies are doing a better job of moving their inventory than the banks - I know this is not exactly apples to apples but it sure makes you think about the bank's motivation sell those houses in a timely manner.

Kent Davis


Apr 04, 2009 09:22 AM #82
Broker/Owner - San Diego

What a fascinating chain of comments. I am a broker/owner of a firm in Southern California and consider myself primarily a listing agent. That said, I have done hundreds of BPOs just in the past year. I can tell you that I couldn't give a rip what the bank or particularly the listing agent thinks or wants the value to be. The value is what it is, and banks routinely ask for me by name because my BPOs need review nearly never. But I am quitting them cold turkey. More on that later.

One thing I have done in all my BPOs is to (in detail) explain why the house has been poorly marketed from the point of view of an agent looking at the MLS. If it looks like crap online, expect a crappier offer.  If you're going to be handed an REOlisting, consider it a gift! Get out of your office yourself, drive to the property and maybe take a look at it! Maybe take a few photos! Show a little interest or energy you lazy REO agents! Not all, but most.  Anyway, I have gotten a few listing agents fired, and they deserved it.

By the way, I have had VPs of important national banks call me to talk about my REOs and ask me to show them MLS entries for their other listings, based on me tipping them off that they're hiring idiots who have no clue.  I happily comply. I have to fix this mess myself! One REO at a time.

I feel that in my city, most of the homes I review could have been sold for more. But desperate, arrogant listing agents list them too low, preferring instead to "get it sold" and feel it's more advantageous to get multiple low offers than a decent, more market realistic offer.

There were two listing agents who learned I was the BPOagent and called me screaming into my phone: one trying to scream his offer price at me, like I cared...and he was swearing at me as I hung up on him and I hadn't even done the BPO yet! Want his name? He's on my wall of shame.

Another gave my name and number to her seller, who freaked out that I was going to appraise his home to high, thereby getting his offer rejected for a short sale, and he called me relentless to "give him my BPO number." I called the agent and told her my next call as to the police for harassment or the board of Realtors to deal with her on a ethics issue.

But in the hundreds of BPOs I have done, I haven't really gained anything. I am paid top dollar, always paid and quickly. But it's unrewarding, rarely leads to an REO and the work is draining.

So I am quitting, cold turkey. Vendors are asking me to reconsider. I won't.  There are only two firms I will consider to continue workingwith and haven't asked them to delete my account profile yet. Their forms are easy, they work is fantastic and it leads to REOs.  The rest of the asset manager can find someone else.

Apr 14, 2009 12:33 PM #83
The most accurate appraiser on earth!


Do you know the difference between a evaulation and a valuation?   There is a difference!

Dec 15, 2009 11:07 AM #84
Joshua Jarvis
Virtual Properties - Atlanta Real Estate - Duluth, GA
Moving Families Forward.

"Appraiser" Wondering if you are poking fun at my "gramma" or making a statement.   I guess the world will never know.  

There's a difference between "A" and "AN" too, but we won't poke fun of you. 

Dec 15, 2009 11:16 AM #85
Linda Sposito

Very good points made and well understood.  I began the short sale process in April and the waiting is making me crazy. It is now almost July.  I work for a and with many government agencies, however; if I worked at the pace it is taking the bank to get through Obama's Home Affordable Short Sale procedures I would be without work.  It's a crying shame.  All of my life, like many in the US... I have worked hard, saved a penny where I could, maintained an excellent credit rating and maintained my home until my family and home situation drastically changed beyond the underwater market values.  It frustrates me to no end that I have lost my down payment, paid the mortgage faithfully for six years and have nothing to walk away with after 6 years but a declining credit score.  The American people have suffered through the Wall Street 401K scam losing great percentages of our retirement accounts. Now our home values are worthless and the Wall Street and Bank CEO's as well as those sitting in the White House and Senate involved with government bank de-regulation have reaped high "pay offs". This is a disgrace to the American public. The largest pyramid scheme in American history. I'd like to know just who, how many and how much each have reaped from this pyramid action while the American public suffers. It's a darn shame!  The bank instructed my agent not to submit application until a cash offer and an entire package could be submitted. A cash offer was made on my home about a month ago. We turned all the appropriate paperwork as requested. The paper work had to be re-submitted three times because they kept losing it! They even had the nerve to send me a letter stating I had 15 days to comply.  I also sent a return reciept letter point it out to them they lost the paper work and I have complied with every request asked and returned every single phone call they made. It took a few weeks to get the BPO ordered, then the bank rep went on vacation..While the clock ticks my credit score which was 800 goes down.  After checking repeatedly they have the nerve to ask if I'll be paying the mortgage this month and if I have asked family and friends to borrow money. What nerve. I am my families support system! ...Surprise, the BPO package is still in review. Fifth Third Bank I might add. I will recover stronger than ever and will be very careful about my investments and who I invest with.  Thank you for your time and for listening to me. I know I am one of many but all of our voices count!

Jun 29, 2010 12:43 PM #86
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