You Want Me to do a BPO on a House That is Listed? Say What????

By
Real Estate Agent with Keller Williams Realty at the Beach

So, we've done business before on pre-listed homes and this time you ask me to do a BPO on a home that is already listed and is in fact, under contract. Sadly, I must turn you down-- flat!  Wipe your crocodile tears and let me splain myself Lucy.  Delaware is what is referred to as a Safe Harbor state, but only for the purpose of listing a property. Under Delaware Statute my good friend, specifically Title 24, §40, a Realtor is not allowed to complete an appraisal, even if you call it a BPO, a Comparable Market Analysis, a Price Evaluation, or any other technical term for any purpose other than listing a home.  Don't do a property valuation and call it something other than an appraisal and assume you're ok, you're not. Conducting a property valuation, regardless of what you name it puts you in Danger Will Robins, Danger, Danger! Don't skirt the law because the penalty is pretty darn severe, and more important, it's unethical. 

 

 

     

 

 

Comments (32)

Tom Schoenbeck
Keller Williams Realty at the Beach - Rehoboth Beach, DE

SarahLes, and John,  of course the best thing to do is know your state individual laws with regards to this topic.  A BPO, a CMA, a Property Valuation, etc, are all arriving at the exact same thing; a home valuation, which is the same thing an appaisal does. Here in Delaware, you have to be licensed to do an appraisal and skirting around it by calling it somehting different will still land you in front of the Real Estate Commission, and they're some tough hombres!

Feb 23, 2013 09:34 AM
Tom Schoenbeck
Keller Williams Realty at the Beach - Rehoboth Beach, DE

and if you really want to spin your head, see what Las Vegas has been tackling since the late 2000's: http://red.state.nv.us/realestate/meetings/2008/bpo_minutes_080608.pdf

Feb 23, 2013 09:54 AM
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

BPO's in Maine not hard and limiting language for the scope, not to be used for financing, etc.

Feb 23, 2013 10:03 AM
Thomas Santore Lic Associate Real Estate Broker
Coldwell Banker Realty/Coldwell Banker Commercial NRT - Yorktown Heights, NY
Realtor®-ABR-Land, Residential & Commercial Sa

Did alot of BPO's at one then they stoped paying, leaving me holding the bag. Legal here though to do them.

Feb 23, 2013 10:32 AM
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

I stopped doing BPO's last year. I could smell the potential liability down the road. Especially the "drive-by" BPO product. "Assume the interior is in the same or better condition as the exterior".

On a distressed property? What sort of herbs are they smoking?

Feb 23, 2013 10:41 AM
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

I like that you wrote this piece about BPOs on listed property.  And, I like Richard Iarossi's comment as well.  The laws regarding them, apparently differ from state to state.  Hence, Gary's #1 comment about California.  I wish California was like your state, and Richard's Maryland.

Feb 23, 2013 10:42 AM
Tom Schoenbeck
Keller Williams Realty at the Beach - Rehoboth Beach, DE

Andrew, if your state (I brake for lobsta) allows it, then it's a great thing for you. Thomas, it's a shame they aren't paying you for the service you rendered, maybe shoot them a note reminding them they owe you for the work you did. Doug, it is amazing they could consider exteriors as good as interiors. Maybe it just came down to the amount being financed and the BPO only having to meet a certain threshold. And Myrl, it does seem each state has it's own take on this subject. As an industry we seem to be all over the board on this.  It's somewhat astounding though taking into consideration the Dodd Frank Act, the HVCC, and the shear mess the finance industry is in that they would be so cavalier about placing value on real estate. Kind of makes me feel like we're sliding backwards a bit.

Feb 23, 2013 11:03 AM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Tom, we learn something new here on ActiveRain - almost daily! This is something I thought is 'okay' to do - does not seem so, btw.

Feb 23, 2013 01:20 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M
Tom - Many short sales have BPOs and not appraisals done for valuations purposes.
Feb 23, 2013 03:14 PM
Michael Blue
Home Smart Realty West - Encinitas, CA
REALTOR - 760-889-8877, Encinitas/Carlsbad
(1) "Appraisal" shall mean an analysis, opinion, or conclusion relating to the nature, quality, value, or utility of specified interests in, or aspects of, identified real estate as of a specific date. An appraisal may be classified by subject matter into either a valuation or an analysis. A valuation is an estimate of the value of real estate or real property. An analysis is a study of real estate or real property other than estimating value. A competitive market analysis is not an appraisal. So I am confussed, i read alot of the statues in your link and found the above, the last sentence above...? I dont understand why a lender couldnt order a bpo or cma? If it were my lent money I would want to know the value buyer and seller agreed to is legit! Based on the fraud I see in deals these days regarding short sales it would seem like a good idea.
Feb 23, 2013 04:26 PM
Scott Fogleman
New Home Team 804-573-9592 - Richmond, VA
Greater Good Group

Tom- Wow do companies actually ask that.. Regardless of what it is called.. stay away...

Feb 23, 2013 06:30 PM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

I don't understand the need for a bpo unless there are still negotiations ongoing 

Feb 23, 2013 07:07 PM
Sharon Kowitz
CRS-SRES-ABR-GRI-E-Pro-CREN Fonville Morisey Cary, NC - Cary, NC
Cary, NC Relocation Specialist ~ Buying or Selling

Forget all the rules about doing a BPO-my question is why would someone want you to waste your time if the home is under contract?

Feb 23, 2013 09:02 PM
Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

We used to do BPOs, but never ran into this problem.  Sounds like it's not worth the $40 at all in this case!                                                         

Feb 23, 2013 09:16 PM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

All of my short sale listings have BPOs done by agents after the property is already pending. Nature of the biz with short sales. I'll have to read up on the Florida law related to this. Personally I don't do BPOs.

Feb 23, 2013 09:57 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Tom, an example where it pays to know the law for doing BPO's in your state. I quit doing BPO's a long time ago.

Feb 23, 2013 10:33 PM
Gena Hatch
Keller Williams Realty - Carmel Valley, CA
Realtor, CHMS, CNS

That's interesting. I was stuck on the "under contract" part - didn't understand why you would need a BPO on a property under contract. When I have done them, it was generally for a relo company - a pre-listing agent bake-off. I did have a short sale listing when I had a "drive-by" BPO. The agent did come in the house (45 minutes after the appointed time because she couldn't find the 300 unit condominium complex) and whisked through the home with a toddler on her hip and a camera in one hand, snapping one picture of every room - in and out in under 5 minutes. I'm sure it was a detailed BPO.

Feb 24, 2013 12:42 AM
Marc McMaster
RE/MAX Centre Realty - State College, PA
Putting my clients before myself

In PA BPOs are illegal but CMA's are not.  We have a form we provide to people requesting a BPO to let them know that we will be performing a CMA ad it is not in accordance with USPAP and is NOT an appraisal.  Thye have to sign off on that prior to actually performing the BPO.  

I'll only do BPO/CMA's if they pay enough to make it worth my while.  

Feb 24, 2013 02:44 AM
Tom Schoenbeck
Keller Williams Realty at the Beach - Rehoboth Beach, DE
All great points of view and this really is why we all need to know our individual state's laws and Commission regulations when it comes to these types of matters. There are slight nuances in many aspects of our industry and it's up to us, the professionals, to know and adhere to those laws and regulations. For those of you that are allowed to do post-listed BPO's, I say kudos to you!
Feb 24, 2013 03:44 AM
Morris Massre
Pembroke Pines, FL
Real Estate Instructor Broward County Florida

This is very common in Florida, so I guess Deleware is a bit different.  But I can't see what the big deal is anyway.  Banks continuously do it for valuation purposes every so many months.

Feb 25, 2013 12:11 AM