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When does a BPO constitute jail time?

By Andrea Swiedler

Real Estate Agent with Berkshire Hathaway HomeServices New England Properties Licensed in Connecticut

July 01, 2011 12:51 AM

You might be surprised at the answer...

Brokers Price Opinion I know I have vented aired my opinions about "BPO's" here. An agent comes from another part of the state, doesn't understand the local market, gives an opinion of value on a short sale which has no relevance to the home or local market, on and on. And there goes the deal, flushed down the toilet...

Ever thought the agent that provided this wacked out price opinion guilty of a crime? Well they just might be, read on...

According to the Connecticut Association of Realtors, we can give an opinion of value, as in a market analysis, under the following circumstances:

a prospective listing sale of real estate
providing information to a seller or landlord under a listing agreement
providing information to a prospective buyer or tenant under a buyer or tenant agency agreement

"If you are not a licensed appraiser and you provide an estimate of value in the form of a BPO and it is not for one of the reasons allowed, you will have violated the statute by engaging real estate appraisal business without a license and, therefore subject to a fine of not more than $1,000 or imprisoned not more than six months or both." - Connecticut Association of Realtors

Would I turn down $50 bucks they offer me to do a BPO on the other side of the state when I know I have no chance in hell to get a listing? YOU BET I WOULD, and I do. But what I don't understand is how agents are risking a fine and possible jail time for a lousy $50 bucks to do a BPO when it clearly violates our license law in CT?

When I get those calls from a lender to do a BPO on a recent foreclosure, I know it is not in order to get the listing. Let's not kid ourselves here. Lenders have their chosen people to list REO's and I am not on it.

I know if it is a short sale, I am not next on the list to get the listing after I tank the deal with my BPO.

Enough said... or maybe not.

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Anonymous

In Appraisal Hell

As an appraiser, it astonishes me that banks are getting BPO's from Realtor's who are NOT appraisers. I guess that they are happy to save money and get a product that is cheaper! It's bad enough we have to compete with appraisers who are not from our market and we have to give AMC's a chunk of our fee. I hope EVERY state outlaws the use of BPO's by real estate sales people! Appraisers have to be unbiased; they have NO interest in the value and are not trying to get a listing or compromise a short sale.

Jul 02, 2011 09:30 AM

#81

Susan McCall - - Compass Realty Solutions

Compass Realty Solutions - Portland, OR

Listing and Buyer's Agent

In Oregon the state statutes are very specific about who and when and why a BPO may be performed, and what the criteria are. There was a law passed around 5 or 6 years ago that a realtor/broker could not perform "Comparative Market Analysis" = BPO for a financial institution if the property was more than $250,000. Weird???? How does ones know what the value of a property is before an assignment is accepted?

At this time I was doing a few BPO's for a company that I have worked with for a number of years. I was getting paid fairly decently for them. They were Interior BPO's and in the neighborhood so I knew the market faily well. I started doing them because I wanted to expand my knowledge and like to try new things and thought it would be interesting.

When the new law was passed I informed this company that I would not do the assignments any more and they atopped sending me assignments.

Last year for some crazy reason, I accepted some assignments from a different company. I have since stopped accepting assignments again since they were exterior BPOs. I found I could not give an opinion of value from driving by, especially if there are no photos on the MLS from a prior sale.

Another reason that I stopped accepting assignments is that I am NOT GETTING PAID! I currently have 4 assignments completed MONTHS ago that I have not been paid for.

Want to know the laws of your state? Really easy, I googled it! And here it is, all 50 states!!!

http://www.appraisalinstitute.org/newsadvocacy/downloads/StateIssues/BPO_State_Laws_041811.pdf

Jul 02, 2011 11:03 AM

Jeff Hollister

Native Californian with 20 years serving OC Buyers & Sellers - San Clemente, CA

Real Estate Broker, Serving Orange County, CA

I love that law ! Can you get one passed in California too?

I agree with everything you've said. BPO's to be preformed for banks should be outlawed in every state.

Go To Jail

Jul 02, 2011 12:45 PM

Rebecca Gaujot, Realtor®

Lewisburg, WV

Lewisburg WV, the go to agent for all real estate

US Flag Andrea, I've never done a BPO.....a couple of months ago I got a call to do one...I said "no can do". Have a great 4th of July

Jul 02, 2011 03:00 PM

Gerard Gilbers

Higher Authority Markeing - Asheboro, NC

Your Marketing Master

I have never done a BPO, although I heard some discussion about whether a desk agent was going to drive several hours and spend the time to research it for $35. This was two years ago was I was taking my pre-licensing training.

Jul 02, 2011 04:12 PM

Gwen Banta

Sotheby's International Realty - Los Angeles, CA

Andrea, no one should do a BPO, even if for legitimate reasons, in a territory with which they are not familiar. We have seen so many deals tank here in L.A. due to uninformed opinions that I would pay them the money just to get back on the freeway and head home! I know times are tough, but no economic challenges should supersede ethics. Oh wait, I forgot - ethics is not a recognized banking term...

Jul 02, 2011 07:27 PM

Mike Henderson

Your complete source for buying HUD homes - Littleton, CO

HUD Home Hub - 303-949-5848

I haven't done any. One of the reasons is what you wrote about.

Jul 03, 2011 03:28 AM

Liane Thomas, Top Listing Agent

Professional Realty Services® - Corona, CA

Bringing you Home!

I'd rather spend my time looking for ready, willing, and able buyers and sellers. And if the bank wants and appraisal, they should HIRE and PAY FOR an appraiser.

Jul 03, 2011 05:24 AM

John Accornero

Keller Williams Whittier - La Mirada, CA

Accurrate,Accessible,Awesome Realty Experience

The real crime here is listing agents that cannot price their homes correctly as well as the buyers who attempt to steal it by low balling an offer that does not work. "Knowing the area" is smoke for agents protecting their home territory. It is all in the numbers... you cannot sell a property for $400,000 if you live in a $300,000 area andthe reverse is true. We who do bpo's expect that some day we will get the listing. If a propety is marketable for $300,000, there is no reason an offer should be taken for $200,000. Every short sale I take a buyer to see is screwed up somehow, even if it is "approved".

Jul 03, 2011 08:25 AM

Jenny Durling

L.A. Property Solutions - Los Angeles, CA

For Los Angeles real estate help 213-215-4758

Very interesting information. I'll have to check out what the code in CA says.

Jul 03, 2011 03:55 PM

Karl Falk

Summit Mitigation Services - Monument, CO

Summit Mitigation Services

Here you go. http://activerain.com/blogsview/2380969/bpos-lies-and-videotape-film-at-3

Thanks for the inspiration...or maybe it was perspiration...

Jul 03, 2011 09:55 PM

Pamela Seley

West Coast Realty Division - Murrieta, CA

Residential Real Estate Agent serving SW RivCo CA

Andrea, it's legal for agents to do BPOs in California. I will not do them. I agree with Larry in comment #70, I don't start my car for $50! The agents I know who do BPOs don't get REO listings, btw. That's just the banks dangling the carrot.

Jul 03, 2011 10:56 PM

Andrea Swiedler

Berkshire Hathaway HomeServices New England Properties - New Milford, CT

Realtor, Southern Litchfield County CT

Melissa, I don't think you can stretch that one. It should be an appraiser if that is our law in CT. There is no way you can expect to get a listing out of it. For many reasons. I think that this is a law suit just waiting to rear its ugly head, that is truly what I think.

Renee, disclaimers should be used for exteriors. I won't give a value to a house I haven't seen the interior without a disclaimer. The price can vary so much. And if the lenders know it is against license law, they should not be asking for them.

Rob, that is interesting indeed. I have thoughts about all this running through my head but have to be put in order before I put them out there!

Juli, wow, 6? That is incredible! They could have paid for one appraisal for that many BPO's!

Andrew, I take it they are legal in Maine. If they are legal, well, so be it!

Richie, I agree with you 100%. I could do them, with a disclaimer, for the areas I cover only. If they were legal that is!

Nogui, and yet I am sure there are agents that are doing them!

Don, I don't think that being a broker means you are better at it than a sales person. Often times brokers I know are totally out of touch with day to day real estate. Sorry, but they are too busy running things to get out there and see homes on a daily basis.

Jumbo Mortgage #59, really, you are surprised? There is a mixed bag of emotions here, and there are good points on both sides of the fence. But you are surprised at the depth of emotion? Not me, as we are in such a mess here. But jailing someone is not the answer, I know that. Some are so desperate for money they will break the law for it.

Marianne, I assume you do them in your area then. And I assume they are legal where you are from!

Patricia, sorry about that. It is Brokers Price Opinion. And yes, even an appraiser needs to be local. You are correct.

Ric, it is, I am afraid, a law suit waiting to happen. Very scary indeed.

Tim, and they take so long. For 50 bucks my car doesn't start.

Evelyn, thank you for the link!

Bill, seems you are legal in Florida!

Kimo, I have an opinion of value for my own market place. I also am not willing to risk everything by breaking the law. End of story.

David, perhaps....

Stan, the bottom line, it is against CT law, therefore why do we even have them here? Right or wrong. Just because I think certain laws stupid doesn't mean I don't obey them.

Morris, yes, it is not legal here unless it is for the reasons defined in my post.

Larry, I can't afford to start my car for that amount, LOL. Nope, they are not going to hire me to list the house because they called for a BPO.

Liz, interesting you should say that, there is not intent to enforce it. I think there WILL be as I am sure there will be lawsuits soon enough. I can see where this can work to my advantage with a short sale. Just a thought anyway...

Christopher, that is sad indeed. I see the same thing here though.

Sharon, I know an agent who lists REO's here, and I would do a deal with him any day. He has shared with me that even when he already has the listing, the lender sends over agents for BPO's, and often they are such a wacked out price he has a tough time with the lender to price it right. Now.. if he already has the listing why are agents here in CT going out and doing a BPO?

Ken, no, a license does not make someone good. I agree with you. Your story tells it all indeed. It is a double edged sword I believe. My point was speaking to law!

Irene, that is just clear incompetence in my book. Glad you got it back on track.

Woody, one would hope anyway.

Marte, yikes! I wonder why he thought you should do it for free when he wasn't giving you free dental work. The nerve!

Marcy, the investors can be bull headed and stupid for sure.

Jirius, the results are indeed a crap shoot, I agree! Some are better than appraisals, some are so far off it isn't even funny.

Lyn, the fact that lenders don't care speaks volumes... volumes... loud and clear.

In Appraisal Hell, I am surprised you are astonished! I appreciate your opinion and glad you stopped by here. You make a good point!

Susan, that is indeed a strange law, wonder what that is all about? Wow... a head scratcher indeed!

Jeff, I can try to wave my magic wand and make it so, but.. I can't find my wand..

Rebecca, LOL, I don't blame you! Happy 4th to you too!

Gerard, 35 bucks? Wow... wow and wow!

Gwen, it is not.... so what are you talking about anyway? LOL!!!!

Mike, thank you!

Liane, me too! Unless you do a huge amount of them it really isn't even worth it!

John, I disagree with you. I have seen many a home priced properly, but an unreasonable BPO causes issues. Of course we all see homes that are not priced properly by listing agents, or be sellers. The issue is very complex indeed. I think a short sale price should be determined pre listing by the agent AND a qualified appraiser, not by the seller.

Jenny, there are links here to do just that!

Karl, it was perspiration.... thank you!

Pamela, I don't respond well to a dangling carrot... LOL. And my car will slap me if I try to start it for 50 bucks...

Jul 04, 2011 12:35 AM

STAN GRAHAM

ARIZONA ELITE PROPERTIES - Gilbert, AZ

Andrea,

In your response to me (#68), you stated ... “Stan, the bottom line, it is against CT law, therefore why do we even have them here? Right or wrong. Just because I think certain laws stupid doesn't mean I don't obey them. “

Andrea, I was attempting to point out the difference in states and their real estate laws. In AZ and many other states- it’s legal but in CT and many other states - it’s illegal. Legal or illegal, it’s simple - Comply with the laws. And that includes to whom the payments are made, directly or indirectly and of course State, County, and city tax laws and reporting, including the 1099's.

As for accuracy we have all seen good, bad, and ugly BPO's and Appraisals. I am certain that the practice will continue for some time.

Jul 04, 2011 04:49 AM

Gail Robinson

William Raveis Real Estate - Southport, CT

CRS, GRI, e-PRO Fairfield County, CT

Andrea - I've been wondering about this, too. I have a transaction that has been stalled for over six months due to an inaccurage BPO by an agent hired by the lender. Maybe my client will be the first one to sue!

Jul 04, 2011 12:37 PM

Jackie Connelly-Fornuff

Douglas Elliman Real Estate in Babylon NY - Babylon, NY

"Moving at The Speed of YOU!"

I just checked for New York and there is nothing preventing a NY real estate agent from appraising real estate for compensation. Here is the link and scroll down to NY

I for one, will not do a BPO. Too much work for $50! And no guarantee to get the listing either.

Jul 05, 2011 04:20 AM

Tracy Larson

Century 21 Schwartz Realty - Islamorada, FL

Your Florida Keys Agent

I did a few BPO's for a well known vendro and they started asking for adjustments on the smallest of differences. I finally had to tell them to hire a licensed appraiser to do the job. I simply don't have time to adjust, readjust and then defend my pricing. I know I'll never get the listing anyway as most bansk down here tend to list with agents from out of the area who do litle more than slap a lockbox on it and hand out the combination. Is that really the kind of service a bank wants?

But a question: Is it fair to say that as agents we do something similar to a BPO on a regular basis, only we call it a CMA? Is there a real difference to what the opinion of value will be on one or the other?

Jul 05, 2011 08:42 AM

Anonymous

Steven B. Harkness

Fifty lousy bucks for a BPO? You have to be kidding me? There is a lot of work to doing one of those correctly though being a lender I don't know the exact procedure. However, having 18 years experience allows me a fairly good idea of the work involved. What I would like to ask in all sincerity is: isn't your time better spent doing what your an expert at, and that is Real Estate? I am not going to do a commercial here, but there are lenders that help thier agents list and sell more real estate by creating individual websites for each property that come complete with a viirtual tour very similair to open2view.com. The lenders then teach the realtor's how to drive traffic to the website using Carigslist, Facebook Fan Page Google, Linked In, Etc. My favorite is Craigs list but I can't enter the properties for my Realtor's anymore because Craigslist recognizes my computor's IP address, and started ghosting thier listings.

Go find yourselves a kick in the pants lender that can teach you this new way of doing business or at the very least assist you in your efforts. You are already on Active Rain so that tells me you know the old way of doing business is gone.

Lastly, we are all in this togther, and if we are going to survive we need to form coalitions or alliances because there are those in Washington D.C. that are out to put us out of business. Look what they have done to us lenders, and they are coming for you Realtor's right now. Thank God for NAR

Jul 05, 2011 03:51 PM

#98

Gene Riemenschneider

Home Point Real Estate - Brentwood, CA

Turning Houses into Homes

I have pretty much stopped doing BPO's as they are not worth the money. However, the potential for a listing by the lender on the foreclosure is probably enough of a fig leaf to keep them out of Jail.

Jul 06, 2011 07:41 AM

Claude Labbe

RLAH / @properties - Washington, DC

Realty for Your Busy Life

So, can you expect to see some online appraisal schools open up soon?

Although, unless enforcement is being done, you may have agents just doing it to keep their nose in the business.

Jul 07, 2011 05:30 PM

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Andrea Swiedler

Realtor, Southern Litchfield County CT

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Real estate and local area information for Southern Litchfield County CT. I assist buyers and sellers in New Milford, Bridgewater, Roxbury, Washington, Warren, Kent & Sherman.

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Andrea Swiedler

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