I have learned a lot doing BPOs for both the bank that allows me to sell their properties as well as third party concerns (BPO for a Fee). These all are mistakes that I have made-- which gratefully, my asset manager has allowed me to fix or correct-- without penalty. I am fortunate to work with an asset management team that will offer constructive criticism to help me grow-- You might not be as lucky-- so learn from my mistakes!
Here are some of the things that I have learned-- this list will be updated and edited as things change.
-When the BPO calls for adjustments -- Make them
-----The way that I make adjustments is: If the comp property has something better than the Subject Property you subtract the dollar amount that you feel would make it equal to the subject property. If the subject property is better than the comp property-- you Add the dollar amount that you feel would equal the two out. You want the adjusted values to be in line with where your value for the subject property is.
Ex:
Comp 1 Sub Property
Heating: HVAC (-5000) Baseboard (0) (The comp is better than the sub)
**OR**
Heating: Base Board (5000) HVAC (0) (The sub is better than the comp)
This is not an exact science --- and don't play appraiser. There have been several people in my state who have gotten in trouble for doing BPOs and it being considered an appraisal. Check your state regulations CAREFULLY to ensure that you don't cross the line. You don't want to risk your license for a BPO fee -- Or a listing! If you feel the need to mention in the comment section that you are not an appraiser-- Do it!
---- The asset manager that I work with-- pointed out to me -- that if I don't provide adjustments -- Then she has a hard time understanding how I get value. My experience in my market allows me to eyeball comps and figure out value in my head. However, the asset manager has people to report to-- and they must be able to articulate why a property is valued where it is.
-If the property calls for distance to subject property-- Don't be lazy-- goto MapQuest and get the distance.
--- Today I was running a BPO-- and I ran distance-- then I realized that the info in MLS was wrong-- and the property was over 12 miles away.... The MLS Map was populating incorrectly. Had I submitted that BPO-- I would have been fried by the asset manager-- when she found out about my flub up.
-If you are doing BPOs -- and you don't have a picture of a subject property-- Go out and take it-- ESPECIALLY if you are doing a listing BPO. The asset manager might not realize that you went out of your way to get the comp photo-- but they will realize and remember if you were too lazy to do it (and the property does not have a photo). -- Yes, people, I did this TOO.
--- I have never gotten a listing as a result of a BPO (for fee) that I have done. However, even these BPO companies are entitled to the same level of service that you would provide for a listing. If you aren't willing to work for them-- Don't accept the task that they provide.
-Don't do BPOs for free-- Unless the BPO is for a listing client -- you might run into an issue with your E&O coverage. Also, it might run afoul of certain laws in your state. Also, if a company refuses to pay you for your time-- weigh the value of your time vs. the potential benefit from doing free work (cost/benefit analysis).
-Check your data-- If you are adjusting a value one way-- be consistent-- or at least be able to explain yourself if questioned-- and "Uhdunno" doesn't quite qualify .... :)
-If you went outside of the neighborhood (I frequently goto Elem School) due to a lack of comps-- document it on your BPO.
-Print out your BPOs -- to see how the client (Asset Manager or BPO company) will see it. If you see inconsistancies-- you can bet that they too will see them. Better yet, print it out-- sit it down-- go get a soda -- then go back and review it-- with fresh eyes-- This will help you see past "MY Work is Perfect" -- and see what fresh eyes (The Client) will see.
It has taken me over a year to learn these things-- and God willing-- I will be able to learn more. Hopefully, with some of these tips -- you can put together a better product for the client that you are working for. And if you are working with banks already (REOs)-- then I am sure that the AM that you are dealing with -- Will appreciate the better quality of your work!!!
That's it for now!!!
-Jason
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