The Importance of Accurate valuations Part 2: What's Wrong With Agents Getting Together and Submitting the Same Values???

By
Real Estate Agent with Ozarks' Independent Realty

I am about to discuss one of my pet peeves. I don't know about agents in other areas, but this happens a lot around here. I wish more Asset Managers would be aware of this going on and find more honest, conscientious agents to do their BPO and REO work...

"Hi there! I have an order to do an interior BPO on your listing at....."  Great! The bank is moving forward and we are that much closer to getting this foreclosed property on the market and sold for them! I have already submitted my BPO, in most cases, and now the bank has hired another agent (or two) to perform what they refer to as "2nd Opinion BPOs."  Some banks get full appraisals, but most rely on Broker's Price Opinions to set a list price for their properties.  One of the big concerns for the agent doing the 2nd opinion, is property access. It is very important for the listing agent to make sure there is a lockbox on the property as soon as possible so other agents can get inside and do their job, which helps get the property listed more quickly.  Usually the 2nd opinion agents call to let you know, but I have had some who didn't extend me that courtesy. The bank had sent them the lockbox code, they went it and did their inspection and I never knew. Well, sometimes I would find the lockbox left on the code, doors unlocked, or personal property remaining that had been gone through or taken,  and had to wonder who had been there, but that is a whole different subject.... In short, listing agents, cooperate with the agents doing the 2nd opinions, if you want the house to ever get to market!

"Is there anything I should know about the house? " This is a valid question that I get asked a lot, and I ask it when I am the second-opinion agent. It does NOT mean the other agent isn't willing to do their work, it means they realize they cannot see it all in one inspection. Ralistically, the listing agent has probably been inside the house several times and has a good idea of any problems that would impact the value. Things like stolen plumbing lines, water in the basement when it rains, structural deficiencies. This IS the time to tell the other agent to use the side door because the front one was falling off and the property preservation people nailed it shut. This IS the time to tell them to use flea spray before they go inside. This is definately the time to tell them about the soft spots in the floor so they don't get hurt. These are things that are not only for their safety, but also can impact the value. if you have noticed some outlets that appear to be scorched, tell them. If your research discovered the house is actually a mobile home that was built around, tell them. These are things that might not be seen during one inspection, but which will affect the price a property sells for.

"So, where do you want me to bring it in?" This is the question that really upsets me. THIS is a sign that the agent either doesn't know what they are doing, doesn't understand the importance of their report to the bank, or is just plain lazy. My guess is that most just don't realize how important their opinion is. So what do I say when asked that question now? I tell them "wherever the comps you find indicate it is likely to sell." That is what a BPO is about; what price this property likely to sell for, in a specific time-frame, as requested by the bank, the client.  You do remember and keep in mind who your client is, don't you? You understand the concepts of due diligence and confidentiality? If not, you probably need to go back to real estate school, or find a new career.  When I told one agent "You know that I can't tell you that! That information is confidential." she replied, "Well the rest of us all work together on these. We ALL look better when our numbers come in real close."  Do we?   I don't think so! How likely is it for 2-3 people to have matching opinions on any subject you poll them about? How likely are they, when asked to justify their opinions (provide comps and adjustments), will they all have the same reasoning, or worse, different reasoning but the same conclusions? It is highly unlikely!  So where do I want you to bring it in? Wherever your comps lead you to believe it can be sold, in this market, in the time specified by the client. Don't guess, don't pull comps and forget to make adjustments, don't try to buy the listing by pricing it higher than you think I did. Be realistic.

Asset Managers do keep track of these things, you know! Okay, maybe not ALL of them, but many keep stats on the values an agent brings in, and the eventual sales price. If your numbers always come in much higher or lower than where a property ends up selling, you aren't likely to get listings or much more BPO work. If your reports are complete and the values close, they see you're doing a good job and  are likely to keep using your services. I had one asset manager tell me, when I asked about the 2 second opinions done for one of my listings, that they thought it was odd that both agents came in within $50, yet had entirely different comps and had adjustments that were not uniform. They requested another opinion, which came in closer to mine, they listed at my value and sold the house in 30 days. The other 2 opinions? The house would still be sitting there, unsold.

Why do they need my opinion, anyway? Because they are not from your market. They do not see what has sold or what is on the market first-hand. They have to depend on agents, so-called "professionals," to tell them what the market is doing in their area. The rely on your experience and knowledge of the market, current trends, available comps, and understanding of what buyers want and what financing is available there. They need to know how best to get their properties sold. This doesn't mean they want to give them away- they are in business to make money and need to feed their children, too. But they make nothing if the property won't sell. They could rely only on their listing agent's opinion. Obviously they trust it enough to have the agent represent them. But often 2 opinions are better than one. Everyone has a slightly different perspective on the market and see trends differently, based on the people they deal with. The banks need that information to help them see all the factors that may influence the sales price and set a more realistic place to list their properties.

If you do not have enough confidence in your ability to provide a good BPO, don't do them. If you think a "2nd opinion BPO" should merely be the listing agent's opinion with your name on it, don't do them. If you don't think your opinion truly is important, then you have no business providing it to anyone. If you are not willing to do your own research and work on a BPO, then you need to refuse the order and let the bank find someone who will. If you are interested in buying the property or know someone who is, don't bring in the value low hoping for a bargain, turn down the order so the bank can get an objective opinion. Given the current trend, there will be many more bank-owned properties coming on the market this year, and the banks need accurate, high-quality BPOs in order to price them competitively. Prepair your 2nd opinion BPOs as thoroughly as I hope you do for the properties you list. Either way, the bank is your client and deserves your best work.

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Rainmaker
1,412,427
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Amber, I often wondered what qualifications are required for the agents submitting the BPO's. I've done several BPO's over the years. At that time, the only criteria was to submit the BPO on the correct form. It was always a big headache for the Broker because no one wanted to do them. They were always a hassle and a pain in the neck. Not in doing them, but in dealing with companies after the fact who wanted them. I guess now they have turned it into a money making scheme for agents. "Not making money in real estate, make your fortune doing BPO's. Make a $100,000 a year doing BPO's. Sign up today!" The more of them you can crank out the more money you will make, but I am sure the quality goes down with each one of them.

They are called a Broker's Price Opinion. Is the Broker responsible for what is submitted by the agent who does these? Is it the Broker's job to make sure they are done right? Is the Broker Libel?

I totally agree with you. If you can't do them right, then don't do them.

Great Post!

 

Feb 28, 2008 06:17 AM #1
Rainer
10,405
Gina Kay Landis
Home Experts Realty - Dayton, OH

I've done tons of BPO's until I got so busy I was doing them in my sleep - so I stopped. Quality and timeliness it tops, and I refused several, so got put on the broadcast instead of direct-assign list. That said, I still get calls every now and again to do a BPO or a 2nd opinon. For all I do, I have standard criteria and probably spend more time than others I know with the analyzation part of it.

Now to your initial question - what's wrong with agents getting together and submitting the same values? I don't think it would be legal or ethical, really. If people use criteria developed by the BPO company, then values may be similar - or may not. It also isn't quite ethical to change the valuation on the BPO based on the reason for the BPO (there are many reasons lenders or servicers ask for BPO's).

 That said, BPO's have more than put food on my table. I miss doing them but never want to go back to them being a large part of my real estate business. Too much data and too little People Time makes me lethargic. It is a nice way to make extra funds, though, and definitely taught me a lot about valuing property.

 Thanks for your post! gk

Feb 29, 2008 09:52 AM #2
Rainer
20,998
Amber Bourland
Ozarks' Independent Realty - West Plains, MO

Michael: Ultimately, like everything else in real estate, the broker is responsible for seeing that the job is done right. I think too many brokers forget their responsibility, not only in the sales, but especially in their agents doing BPOs. Many brokers, in my area at least, don't offer any real training to their agents and have no clue themselves how to correctly value a property, so how can the agents learn?   Yeah, there is a lot of money that can be made just doing BPOs, but the liability is also high (hence the need for a good E&O policy). But the liability of marketing REO for the banks is even higher, yet everyone is trying to get into that, as well.

Gina: I am on another forum where many BPO agents feel that, if it takes you more than 30 minutes to complete a BPO, you are either incompetent or can't make enough money doing them to be worth it. Well, I spend a LOT more than that on each one, so I guess I am incompetent as well as poor. That's okay- I stand by my work because I spend enough time researching the comps, making adjustments, factoring in all the details that will make a difference in what the subject will sell for compared to its comps...  There are times that I am on data-overload as well, and just have to turn down some orders to get myself grounded. I am a "people person" so i get energized by being around lots of people, and sometimes the BPO work is too solitary for me, so I have really backed off on the amount I do. But I am still feeding my kids and keeping gas in my Blazer (until it goes a little higher, anyway).                                                       

Thanks for your comments!

Mar 02, 2008 02:38 AM #3
Rainmaker
89,332
Paul Moye
Benchmark Realty - Franklin, TN
Broker, GRI, SRES

BPO's like appraisals can vary widely. Back in the day before BPO work a bank woul have 4 appraisals done throw out the high and the low figures and average the 2 middle figures and that was your number.

With BPO's we are essentially doing the same, we all justify our values but the real estate business is as much emotion as it is science so there will and should be varying opinions

Mar 02, 2008 02:45 AM #4
Rainer
10,405
Gina Kay Landis
Home Experts Realty - Dayton, OH
WOW I can't even imagine taking only 30 minutes to complete a BPO. My max is 4 hours ever spent, including driving. Now, I don't want to spend more then 2 and if the drive time would take up 2 hours total round trip, I pass up the BPO.
Mar 02, 2008 04:22 AM #5
Rainer
20,998
Amber Bourland
Ozarks' Independent Realty - West Plains, MO
I do travel over an hour one way- IF I have enough orders to make it worth my while, or they are for listings. I probably average 1 1/2 hours on each, not including drive time. Of course, many agents in this area don't use correct square footage or  enter false information on the MLS, so I have to get the right information from the courthouse for every comp, and sometimes, finding out the right information means I have to search for new comps. It is very tedious and frustrating, but I don't want to turn in reports like I have seen other agents do. I guess I am a bit picky!
Mar 02, 2008 08:00 AM #6
Rainer
10,405
Gina Kay Landis
Home Experts Realty - Dayton, OH

I use the courthouse as well for property/tax records - and always search for new comps, even on a "second opinion" BPO. I do include drive time, because that is time spent away from my other real estate business, thus I consider it part and parcel of what I am getting paid for.

Consistent high scoring and timeliness in submitting the BPO is key, of course.

 I do agree that if you have several BPO's in the same geographic area then it's worth your while to drive more than an hour one way. Unfortunately, I would only get single BPO's (sometimes a few days apart, after the first one was turned in there would be another) in the areas that are not local to me.

Mar 02, 2008 12:58 PM #7
Anonymous
steven
all the adjustments you need  goto www.adjustmentbook.com
Apr 03, 2008 02:33 PM #8
Rainer
20,998
Amber Bourland
Ozarks' Independent Realty - West Plains, MO
Steven- Thanks, but I have talked toseveral appraisers and have looked at enough appraisals to know what is typical for this area. I have heardin some areas bathrooms are adjusted at $5000-$10,000, but here it is more like $2000-$3000. I think working with local people is the best way to be able to value local properties. Others may find the book useful, but I don't think I have a need for it...
Apr 12, 2008 04:43 AM #9
Rainmaker
512,159
Robert L. Brown
www.mrbrownsellsgr.com - Grand Rapids, MI
Grand Rapids Real Estate Bellabay Realty, West Mic
I wont do them. I had nothing but headaches dealing with them years ago and i've decided it's not worth the hassle to me.
Apr 12, 2008 02:28 PM #10
Anonymous
Anonymous

BEWARE!!!! EVALUATION SOLUTIONS DON'T PAY FOR BPO's. IF THEY JUST GAVE YOU AN ORDER THEY TRY TO GIVE YOU ALMOST EVERYDAY IN YOUR DESIGNATED AREAS. ALWAYS RUSH AND ALWAYS THE CHEAPEST PRICE. AFTER YOU ACCUMULATED AT LEAST $500 IN RECEIVABLES, ORDER START TO DIMINISH. WHEN YOU FOLLOW UP FOR YOUR PAYMENT, ORDERS TOTALLY STOPPED. SCAM!! SCAM. IF THEY PAY YOU AT ALL ,THEY PAY YOU AT LEAST 60 -90 DAYS AFTER YOUR JOB IS DONE. WE NEED TO BOYCOTT THEM. IT'S NOT WORTH YOUR TIME.

Aug 09, 2008 10:10 PM #11
Rainer
20,998
Amber Bourland
Ozarks' Independent Realty - West Plains, MO

PLEASE NOTE:  This topic was NOT  designed to become a spot where people come to bash companies. There are other forums where so-called professionals gather and do nothing but complain about company A or bank B. I do not appreciate somebody hijacking my informative post to give negative information. Especially when that person lacks the character to even have their name attached to their comments...

I have worked with Evaluation Solutions and have not had any problems with them paying. Some companies take 60-90 days to pay. It isn't really a big deal to me, as long as they do pay. After-all, I will need money in 2-3 months just as much as I do now...

But please, people, be professional here. This discussion is about doing your work as a BPO agent, and why we should each do our own work and not be in collusion with other agents to set a value on any particular property. Can we limit the discussion to this, please?

Aug 11, 2008 02:31 AM #12
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