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BPO Values

By Matt Kofsky

Real Estate Agent with Transaction Realty 500 Reno, Nv.

August 14, 2010 04:58 AM

I have been getting many BPOs recently on homes I did in the past. The company calls me up and says you did a BPO on this property 6 months ago, can you do it again?

Comparing the old and new BPOs is interesting. The house was purchased 3 years ago for $1,000,000. 6 months ago, the only comp sales were in the $500,00-$600,000 range. Nothing higher. I had to price the homes in the range. Now we have sales in the $650,000 - $750,000 range. These are the best comps, so I priced the home in that range.

Then quality control gets on the phone and wants to know why I raised the value in a declining market. The rules of the BPO require that it be bracketed by comp sales. If there are few comp sales, that is what you use.

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M. Suzi Woods (Gravenstuk)

NOW Sharing the life and spice of the GC one day at a time - Grand Canyon, AZ

Suzi Woods, Prior Independent REBroker in MS

Hello, Matt. Interesting information. MS does not allow agents to do BPOs for pay. Only licensed appraisers are allowed the privilege. Of course we can do comps...

Aug 14, 2010 05:02 AM

Renée Donohue~Home Photography

Savvy Home Pix - Allegan, MI

Western Michigan Real Estate Photographer

Hello Matt from down south!! I came into a similar yet strange instance yesterday where we were told to start adjusting for declining markets. We used to get away with telling the vendor to pay attention to the lower list pricing active and sellable comps but I guess no more! If the active listings have been sitting on the market for more than the sale DOM I would do that (adjust for declining).

Hope that helps :)

Aug 14, 2010 05:12 AM

Matt Kofsky

Transaction Realty 500 Reno, Nv. - Reno, NV

Thanks for your comments.

I am working on another BPO right now. The subject is pending short sale at $1,200,000. The highest sold comp in the area is $1,000,000. The software will not let me price the home higher than $1,000,000.

Aug 14, 2010 05:19 AM

Katherine Fornale

REMAX REALTY 9 - Howell, NJ

SFR, GRI

Matt - Is the home worth $1,200,000? If so, aren't there any adjustments you can make to bring it up?

Aug 14, 2010 05:28 AM

I really do not know. This is a drive by BPO. The subject is 4500 sq foot home on the Jack Nicklaus golf course. So are all of the comps. They all are on .5 acre lots, have wonderful views and multiple upgrades. In the area, there has been 3 sales in the past 6 months and there are 18 listings. There are comp listings as high as $1,700,000. Yes, it is ridiculous to do a drive by BPO on this property. I can easily be $500,000 off on my value. The company that ordered the BPO knows all this.

Aug 14, 2010 06:05 AM

Laura Filip

Laura Filip Broker , Opening doors for All Seasons of Life - Whitesboro, TX

What can we do for you today?

I understand fully what you mean you can be off by a fair amount you need into the property before you can really give a good price range. What are do you live in million dollar deals are not the norm in Grayson County Texas

Aug 14, 2010 11:41 AM

Marcy Moyer

eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA

Probate, Trust, and Investment Specialist

If the previous comps were under 6 and the new comps are over 6 then it seems like for this particular development it is not a declining market.

Aug 14, 2010 01:46 PM

Marcy, I probably did not explain it very well. Sale 1 is a house that sold for $1,000,000 3 years ago. It sold as a short sale for $500,000. Sale 2 is a house that sold for $1,300,000 3 years ago. It sold as a short sale for $650,000. Sale 3 is a house that sold for $1,500,000 3 years ago. It sold as a REO for $750,000. Those are your 3 sold comp. There are homes in the area that originally sold for $1,000,000. You use those comps. There are homes in the area that originally sold for $3,000,000. You use those comps.

When there are few sales, you are stuck. You could go to another golf course community a few miles away. Then quality control wants to know why you exceeded distance requirements.

Aug 15, 2010 04:07 AM

Matt Peters

RE/MAX Premiere - Albuquerque, NM

(New Mexico Broker)

The rules are the rules. Sometimes it would be nice to be able to bend or break BPO rules, and come up with a more comfortable value. I had a recent assignment that had been on the market for 6 months at $275,000 up to a month earlier. But there were no usable sold or listing comps to allow a BPO value under $300,000.

I do prefer BPO forms that allow for adjustments, more like an appraisal. Sometimes there are not comps available that work well without some adjustment.

Aug 16, 2010 06:49 PM

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