Home > Blogs > Matt Kofsky > Matt Kofsky's (mattkofsky) Blog

BPO rules and flipping houses

By Matt Kofsky

Real Estate Agent with Transaction Realty 500 Reno, Nv.

January 02, 2010 07:48 AM

There have been many articles recently about people flipping foreclosed houses making hundreds of thousands of dollars. I have been wondering about this. Each foreclosed house has had many bpos done. Could all of those bpos been wrong? I do a lot of bpos. I think I do a good job. The banks think I do a good job, they keep sending me more bpos. Then it most be those other agents who do bpos. But the people I know who do bpos do a good job. How can we be so far wrong on our valuations?

I did a bpo today. It was for a house built on the side of a hill. You walk in on the top level and the bedrooms are downstairs. I said the house was 3250 sq foot. QC called me. He said that a previous bpo showed the house as 2000 sq ft. Technically, he has right and I was wrong. Downstairs is below the front door and main level. It is a basement. You do not count the basement in the sq footage. If I use 2000 sq ft as the basis for my comps I will get a value $100,000 less.

So if i follow the rules, I give an incorrect valuation.

Re-Blog

Comments(6)

Comment

Show All Comments

Sort:

Bill Somerset

Re/Max Realty Group - Dover, NH

ABR, e-PRO - Realtor - NH Real Estate Agent

I usually base my valuations based on the town or cities tax assessment.

Jan 02, 2010 11:38 AM

Mark Ruda

Mark A Ruda - Fox River Grove, IL

Matt: I'm not sure where "hundreds of thousands of dollars" are being made on foreclosed houses. Can brokers and apraisers be wrong on value? Sure, but I doubt to a degree that would allow even the savviest of investors a chance to buy up bargains and flip for quick, hefty profits. I am seeing HUD inventory in the Chicago market being re-priced lower from original appraisals, and sales at prices 50% below list prices. However, that's the market speaking, as those offers don't get accepted unless there's no foreseeable chance of a better offer any time soon. For the most part, it's the same for REOs. Investors are getting back into the game here, and if an asset is priced wrong, it'll either sit with no action (too high!) or bid up, most likely to its market value.

Jan 02, 2010 11:47 AM

Matt Kofsky

Transaction Realty 500 Reno, Nv. - Reno, NV

Hi Bill, What relationship is the tax assessment to the market value?

Hi Mark, There are many articles about flipping coming back on the Internet. I guess it has not hit your area yet. It has here. The simplest flip is buying the house for cash, doing minor fixup and immediately reselling to an FHA buyer.

Jan 02, 2010 12:34 PM

That's great, Matt, is the market there is allowing for quick flips after the proverbial "lipstick on a pig." I won't say there aren't pockets here where that can and is being done, but for the most part, in the northwest suburbs, it's still more of a buy-and-hold climate unless you can get the properties at a discount beyond their already low market value. The investors are back, though, and that's good news.

Jan 03, 2010 04:45 AM

David Jirasek

Jirasek Realty, LLC - Temple, TX

ALC, CCIM

Matt, Savy investors making money in our market are always searching out the underpriced foreclosed listings, on the lower end of value. The lenders don't care what the property is worth, they just want to get out of being the homeowner on "that" house! If they weren't good deals, there wouldn't be so many buyers chasing them. As for rules, what rules? the soon to be foreclosing lender? the new lender? Some want you to just use foreclosed comps, other none. Do they know more than the brokers, agents, or appraisers? Do what's right. Just Do It!

Jan 04, 2010 12:36 PM

Tracy Lee Parker

RE/MAX DFW Associates - Royse City, TX

Buy*Sell*Rent

I did not know you don't count the basements in the square footage, but then we don't have basements in Texas.

Jan 08, 2010 06:32 AM

Comments(6)

Matt Kofsky

Recent Posts