“BROKER PRICE OPINION”, value what you see, not what you are assigned?!
Written by: James A Browning MRE
Andy received a phone call from Outside values (BPO Company) asking him if he could value a housing development that went into foreclosure.
Andy had 17 years of Commercial experience valuing many types of commercial assets and a preferred Broker with Outside Values. The development had strong sales with single family homes. The development (Cougar Homes) built 200+ houses and then encountered financial difficulties, than went into foreclosure. The development had numerous finished lots that the builder did not dig foundations for start of construction of single family homes!
Fran, the BPO representative asked Andy to value the 54 remaining finished lots to determine the value of them. Andy accepted the BPO and acknowledged the turnaround time of 72 hours.
Andy drove out to Cougar Homes and located the vacant lots; he actually drove around the site and counted 40 lots. These lots were clearly marked by boundary stakes, each lot had green stakes that were surveyed.
He drew a sketch of the vacant lots so when he arrive back at his office, he could remember the details of the layout.
Andy could not document 54 lots; he counted and recounted 40 lots.
He contacted Fran and explained that 40 lots existed and the assignment could be wrong! Fran stated that the assignment was 54 lots and that was the assignment! He mentioned to Fran that he is a preferred Broker in the state of Colorado and knew Debbie (VP of Outside Values) though Industry Conventions.
Andy was upset about the communication he had with Fran. He decided to contact Debbie and explain his concern about the 54 lot assignment. After the conversation with Debbie, Andy learned that this was a new BPO Manager and she was very strict about her assignments and did not possess a lot of experience in the Industry.
Andy understood this and told Debbie: “I will value the 40 lots that I have observed; I cannot value something that does not exist”!
He completed the BPO early as usual, and submitted the value for the 40 lots and went on to his next assignment.
As a BPO professional it is up to you to verify the assignment, the BPO Company does not know what kind of property exists at that is location. They receive the assignment from the Bank/Lender/Investor and pass that information to the BPO Broker. At times they may give you the wrong address, property description, location, legal property description.
It is totally up to the Real Estate Professional to verify what she/he observes and communicate that information back to the BPO department to verify that is what is expected by both parties.
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