I have an REO listing. The BPO came in low compared to the last sale price. The seller - wisely - wanted to get a second opinion. Unfortunately the agent they picked to do it worked for a company 35 miles away. This property is in the oldest section of town, ranch on a typical small lot, and needs about $30K in repairs. This includes a roof, a kitchen, an a/c system, and many other things. The neighborhood has no conformity.
The BPO agent used comps an average of two miles away when there are plenty close by. He used homes on 1 and 2 acre lots, in a superior neighborhood of newer contemporary homes. The land value alone of these properties is higher than the as-is value of the subject.
My value is around 85K, his is close to 150K. The client priced it in between but it is WAY over market value.
The client will suffer additional losses due to extended marketing time in a declining market and due to holding costs.
I don't believe the agent did this on purpose.
I did a BPO on a 4/2 with tons of problems. A huge tree had fallen and punched a hole in the roof. The roof was shot already. There is mold, the ceiling is falling in, some of the ceiling in the living room is only 5' 9" high. A/C is shot, no trim in entire house, eves and exterior wood supports are rotten, etc. Lots of functional obsolescence in the layout.
My BPO came in at around 52K AS-IS. Another BPO was done by a competing REO broker - it came in at $140k ASS-IS. Considering this broker's experience, I cannot believe this was due to incompetence. By all appearances he did this to make it hard to sell, and to create doubt in my competence and honesty with the client.
I HAVE BEEN VINDICATED - the property languished on the market for 7 months. During that time it lost about 11% of its value. It sold last week for around $40K.
This supposed REO "expert" missed the mark by 250%. I would say, adjusted for depreciation, I was pretty darn close. The increased marketing time cosst the seller over $10K in depreciation and holding costs.
Behavior like this makes us all look bad.
Be careful about placing listings on some social web sites. I posted a listing on facebook and some idiot posted a comment on the page and said the property was priced low becasue of some demographics that I won't go into - but it was disgusting. The internet and apparently our industry is full of some unkind and selfish people. Doubt I will post properties there again - but you CAN delete comments.